Kiev may sign the economic part of the EU association agreement in June, Сегодня.ua quotes European Commissioner for Enlargement Stefan Fule. On June 27, the economic part of the document may be initialed by Ukraine within the framework of Moldova and Georgia signing association agreements. Ukraine will nullify customs fees for European products in the next 10 years (15 years for the transport industry). The procedure will take 10 years to give Ukrainian manufacturers time to adapt to EU standards.
Meanwhile, it is unclear how Russian-Ukrainian relations will develop in the light of the political crisis in Ukraine. Vladislav Onishchenko, deputy head of the Russian Governmental Analytical Center, believes that Ukraine and Russia need each other: “Despite falling trade turnover, there are sectors where replacing Ukrainian imports is unprofitable. Some sectors of the Ukrainian economy cannot be redirected for exports to other places. For example, mechanical engineering. Ukraine has no other place to sell equipment other than Russia or other CIS countries in much smaller volumes. Some sectors of the Ukrainian economy cannot be of any use other than to keep economic ties formed since the Soviet times. We could, perhaps, make a change and buy the mechanical equipment somewhere else, we can hardly start producing it ourselves shortly, otherwise we would have done so already. It would be less profitable than buying it in Ukraine. But, firstly, it will be more expensive. Secondly, it needs time and, evidently, has additional expenses. There are quite many such sectors.
Besides, many people, relatively cheap labour from Ukraine, work in Russia. This forms a large part, measurable in percentages, up to 4-5% of GDP – money transfers from Ukrainians working in Russia. They simply have nowhere else to go. They will try to work here one way or another.
Concerning Russian-Ukrainian relations in the energy sector, Onishchenko believes that “even if we put aside gas and oil exports from Russia to Ukraine, fortunately or unfortunately we will not be able to avoid gas transit through the territory of Ukraine. Globally, all gas volumes that we need to transfer to companies of the Western and the Eastern Europe according to contracts cannot be transported in any way other than using gas pipelines. In other words, whether we want it or not, we are in the same boat.”
At the same time, in Onishchenko’s words, “if we look at the relations between the Russian and Ukrainian economies, we have had a distinctive difference of trends in the past 20 years. Ukraine started from the same positions Russia did, but it did not achieve, if we mean parity of the purchasing power, any comparable results. This, unfortunately, means that we are dealing with a poor country that has big socio-economic problems with a deteriorating social sector, there are Soviet-era education and healthcare systems that do not need investments, and investments have no place to go or come from, in general. They have a poor position for foreign trade, exports are quite large, but because incomes are low, domestic demand is low, investments, considering the latest events, have almost stopped, hoping for a boost or for at least keeping up with the economic growth rate is complicated. We are dealing with a country with a big socio-economic crisis that is, unfortunately, followed by a political crisis. In these conditions, countries – trade partners supporting the country that will cease being a sufficient economic partner for Russia and the EU – need a coordinated policy in such conditions.
