EU says suspends work with Ukraine on trade agreement.

[dipsydoodle]

Source: Reuters

The European Union said on Sunday it was putting on hold work with Ukraine on a trade and cooperation agreement, saying the arguments being made by the Kiev government had "no grounds in reality".

EU enlargement chief Stefan Fuele said on Twitter that he had told Ukraine's first deputy prime minister Serhiy Arbuzov last week that further discussion on the trade agreement was conditional on a clear commitment by Kiev to sign it, but he had not heard back from the Ukraine government.

As a result, work on the agreement was "on hold", he said.

Read more: http://uk.reuters.com/article/2013/12/15/uk-ukraine-eu-idUKBRE9BE05320131215

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Aside from which :

KIEV, December 14 (RIA Novosti) – Ukraine appeared to be on the brink of signing economic agreements next week that may well spell the end of a deal that would bring Kiev closer to Europe, following announcements by the country’s premier that it was ready for a deal with Moscow.

Prime Minister Nikolai Azarov said his government had resolved its outstanding issues with Moscow and would sign a range of economic deals with Russia on Monday in order to salvage economic relations with its neighbor.

That follows a dramatic volte face by Ukraine last month, when it ditched a proposed economic accession agreement with the European Union.

“We understood that signing this agreement would mean bankrupting us,” he told a pro-government, anti-EU demonstration in Kiev Saturday.

http://en.ria.ru/world/20131214/185553850/Kiev-Prepares-Roadmap-for-Joining-Russian-Led-Customs-Union--Report.html

And :

ref. the arguments being made by the Kiev government had "no grounds in reality" :

Ukrainian Prime Minister Mykola Azarov estimates the country would need 160 billion euros ($220 billion) to adapt to the free-trade zone proposed by the European Union.

http://hosted.ap.org/dynamic/stories/E/EU_EU_FIGHTING_FOR_UKRAINE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-12-12-04-51-25 see last but one para in article

Of the 160 billion Euros projected the EU had currently offered one billion only. Ukraine cannot access IMF funds without agreeing to increase consumer gas prices above now levels which are currently below utility pricing / less than paid for by the government.

[Igel]

1. Or perhaps it's best to remember some internal Ukr politics.

Yanukovich is pro-Russian. His power-base is among the Russians in the East, in and around the Donbas, as well as in the Krym. He has some support from the portion of Ukrainians that were early on part of the USSR. He has little support from the Ukrainians and their descendents who missed the massive psychological abuse campaign that was the '20s and '30s.

For all the Ukrainianization of his name, Sergey Arbuzov is Russian, with his life formerly centered in and around Donetsk.

It was always surprising that those who consider themselves Russian, with cultural, linguistic, and ethnic ties to Russia, who view the Ukrainians with a bit of condescension and the Western Ukrainians with suspicion would consider doing something that would piss off Russia and restore easy and fairly natural ties between the Lviv Ukrainians and Poles.

Perhaps he did it because Putin was punishing him somehow. Or perhaps it was good-cop/bad-cop. Perhaps he just wanted to piss off his rivals. There's a strong strain of just wanting to tweak noses in some flavors of politics. Or provoking them.

Numbers that come out of this kind of environment always have to be looked at fairly critically. Even if they're accurate they can be misleading. So take the 160 billion euro versus 1 billion euro numbers. A lot of that would normally be expensed, I'm guessing, but was included in this large number to make a point. Not signing the deal won't reduce that number to zero. A lot of aid from the EU tends to be based on relatively short-term needs, or after a better evaluation. First join, then they work out stipends and subsidies. So the 1 billion euro number is almost certainly too low--but conveniently so for the purposes of spin. However, it plays on the Russians' and former Soviets' paranoia about the West's being out to undermine and destroy them.

[dipsydoodle]

2. The €160 billion is an aggregate accrual figure

Last edited Sun Dec 15, 2013, 04:20 PM - Edit history (1)

presumably based on exports which the Ukraine would likely forego not compensated for elsewhere. I would assume that if they could in fact be compensated for by export of matching amounts to alternative markets to Russia, Belarus and Kazakhstan there would be no issue other than of gas the transit fee income for which will reduce when South Stream comes on line.

[davidpdx]

3. The Ukraine is obviously going to side with Russia and join on to their new economic union

Russia is doing everything they can to pull back in all the countries lost when the Soviet Union collapsed. They are losing their buffer between themselves and Europe.

[dipsydoodle]

4. I don't see how they've got much choice.

If they go in with the EU the Ukraine may land up making Greece look like a picnic.

Things are looking a bit better on the gas front. Yulia Tymoshenko's 2009 agreement to pay the same prices as Europe accompanied by a minimum volume deal might just go out the window soon - Russia is looking at lowering prices to the Ukraine.

Ukraine Plans to Agree on Russian Gas Price This Week - PM

MOSCOW, December 15 (RIA Novosti) – Kiev plans to agree on Russian gas prices and resume talks about a three-party gas consortium to manage Ukraine’s pipeline network next week, the country’s premier said on Sunday.

Ukraine, which has few energy resources of its own, relies heavily on gas imports from Russia. At the same time, Ukraine has been a major transit country for Russian gas supplies to Europe. Ukraine has been embroiled in several gas rows with Russia in the past few years over gas siphoning and gas prices, occasionally interrupting supplies to Europe, which gets around a quarter of its gas from Russia.

In early 2009, Russia halted all deliveries via Ukraine's pipeline system for two weeks after the two nations failed to agree a price for Russia’s gas deliveries to Ukraine. The gas deal that was eventually signed later that year tied the price for Russian gas to international oil prices, which have since risen significantly, boosting Ukraine's bill.

An intergovernmental Russian-Ukrainian commission will convene in Moscow on Tuesday amid anti-government protests in Ukraine.

“The sides have come to an agreement that it’s time to settle the [gas price] issue. We didn’t ask for discounts, we discussed only European-level [gas] prices and I hope we would finally resolve this issue during the meeting,” Prime Minister Mykola Azarov said in an interview with Ukraine’s Inter TV.

http://en.ria.ru/world/20131216/185588112/Ukraine-Plans-to-Agree-on-Russian-Gas-Price-This-Week---PM.html