Thursday, August 17, 2006

Russia Makes Hints to Ukraine

Opening the prime ministers’ session, Fradkov cautioned Yanukovych that declarations about Russia being a priority in Ukraine’s foreign policy “should advance from words to deeds” and that Russia “needs full clarity” from Ukraine. Fradkov called for a “market approach” to bilateral economic relations, including energy supplies; Yanukovych, for a “market approach [that] also takes into account the level of Russia-Ukraine relations.” While Fradkov’s “market approach” implies monopoly and price dictation, Yanukovych’s qualification implies favors to Ukraine within a context of Ukrainian economic gravitation toward Russia.

Fradkov urged the Ukrainian side to participate more actively in preparations for creating the Single Economic Space (SES, with Russia, Belarus, and Kazakhstan) and, as an intermediate step, to fully join EurAsEc and its planned Customs Union. Fradkov described such participation in “integration processes” as one of the main factors that will determine the shape Ukraine’s relations with Russia. Yanukovych seemed to demur on SES, announcing only that First Deputy Prime Minister Mykola Azarov would represent Ukraine in the High-Level Working Group on the Formation of SES. Regarding EurAsEc’s Customs Union, Yanukovych answered cautiously that Ukraine would consider selective participation in those activities that would correspond to Ukraine’s national interests. Even so, this would seem to go farther than the previous government’s policy of seeking no more than a Free Trade Zone.

At this Sochi meeting, the presidents of EurAsEc’s member countries decided to accelerate preparations for the Customs Union, aiming to announce its founding by July 2007. Concurrently, the presidents of the three full-fledged SES member countries decided to forge ahead with that project. Such bifurcation would seem to enable Ukraine to opt for the softer form of such “integration.” However, participation in this Customs Union would jeopardize Ukraine’s accession to the World Trade Organizations and relations with the European Union. Yanukovych’s public remarks during this two-day meeting did not include any reference to Ukraine’s relations with the EU.

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