Bad news on trade, but EU-Ukraine ties advance

Russia on Monday said No to EU ideas on resolving a Ukraine trade dispute. But in 2016, Europe will open its doors to Ukrainian exports and visa-free travellers.

Russia’s economic affairs minister, Alexey Ulyukaev, spent the whole day in Brussels in talks with Ukrainian foreign minister Pavlo Klimkin and EU trade commissioner Cecilia Malmstroem.

It was the 20th meeting of its kind. They talked even though Russian leader Vladimir Putin, last week, and his prime minister, Dmitry Medvedev, on Friday morning, said Russia will impose trade sanctions on Ukraine next year in any event.

Malmstroem said: “There wasn’t enough flexibility from the Russian side … this process is now over.”

She said most of Russia’s concerns “aren’t real.” She also said if Ukraine had bowed to Russia’s demands “it would have made the entry into force of the DCFTA impossible.”

The DCFTA - a free trade treaty - enters into force on 1 January, opening the EU market to Ukrainian exporters.

In strategic terms, it means aligning Ukraine’s economy with the single market in what authors of the treaty call “accession-lite.”

In symbolic terms, it represents the fulfilment of last year’s “Euromaidan” revolution, in which dozens of people died, some waving EU flags, after Ukraine’s former regime rejected the trade pact.

Ukraine’s Klimkin told press in Brussels on Monday the Russia sanctions will mostly hit industrial exports.

Previous estimates say they could cost Ukraine up to $1.5 billion a year.

Malmstroem said Ukraine has already “factored in” the losses. But for Klimkin, the political value of the DCFTA is in any case much bigger than the Russia harm.

“Russia’s [DCFTA] concerns are politically motivated - it’s all about trying to keep Ukraine in Russia’s economic sphere of influence,” he said.

He gave example of Russia’s demands, for instance, that Ukrainian railways should maintain Soviet-era standards for the next 10 years.

Russia sanctions

EU capitals the same day, by written procedure, extended the life of Russia economic sanctions by six months.

They did it because even sanctions critics, such as Italy, say it's not complying with the “Minsk” ceasefire accord on Ukraine.

Klimkin said Putin “is in full control of Donbass [east Ukraine]. In every mercenary or other illegal unit there’s a regular Russian officer.”

He said violence is flaring up after a lull in October. He also said Russia is secretly stockpiling weapons and building military infrastructure.

He described Putin’s strategy as “creeping instability for Donbass.”

He also said Putin is creating instability in Syria in order to trade it for concessions from Western states in other areas. “They’re trading in instability, like on a stock exchange,” Klimkin said.

'Visa-free is all'

There were hiccups in EU-Ukraine relations this year.

Klimkin criticised Germany for building a new gas pipeline with Russia, Nord Stream II, bypassing Ukraine.

But looking back on the past 12 months, he singled out visa-free travel as the brightest achievement. “Visa-free travel is all,” he told the press.

The European Commission, last Friday, said Ukraine satisfied criteria.

It did so even though EU officials say several anti-corruption conditions aren’t yet met. It also did it despite the current hysteria on immigration.

Member states must now ratify the move. But the home affairs commissioner, Dimitris Avramopoulos, said he “doesn’t expect” anyone to block it.

He added “there are many” Ukrainian people “who’ve been waiting for a long time to see the green light from the European Union and now they have it. The more they come, the more our open travel will prove itself very successful. They’re most welcome to cross the border of the European Union’s Schengen area.”

Sour grapes?

Talks on EU-Russia visa free travel, by contrast, are also frozen as part of EU sanctions.

For his part, Putin, on Russian TV on Friday, said he isn’t “going to pout over the sanctions” and that he’s open to future EU cooperation.

He said the US steered the EU to impose the DCFTA and Russia sanctions in order to stop him creating his own trade bloc - the Eurasian Economic Union. He also urged the EU “not [to] just nod in agreement” to US instructions.

He said Ukraine’s pro-EU shift has seen it “put under external administration” and led to “drastically falling” living standards and “deindustrialisation.”

Asked to comment on Ukraine’s visa-free breakthrough, he replied: “Is this a worthy fate and future for this beautiful country and its wonderful people?”.