Putin pressures Yanukovych on Customs Union

Ukrainian President Viktor Yanukovych traveled to Moscow to meet with Russian Federation President Vladimir Putin on March 4. Little has been reported on their discussions beyond a press briefing held before the negotiations’ start. Putin indirectly pressured Yanukovych to clarify his position on the Customs Union through a pre-rehearsed, out-of-turn question posed to the Ukrainian president by a Moscow reporter, as reported by the Kommersant-Ukrayina newspaper. Ukraine’s GDP stands to grow 1.5% to 6.5% annually if it joins the Customs Union, Putin said, also warning of trade and migration restrictions should Ukraine decline.

As his response, Yanukovych said experts have different projections and that joining isn’t a matter of making a decision, but executing numerous domestic procedures. As further pressure, Putin raised his concern that Russian-Ukrainian trade fell to USD 45 bln from USD 50 bln the year before. He stressed the need to resolve issues in high-tech cooperation. On this point, Yanukovych said that questions remain over intellectual property rights, particularly regarding Antonov planes designed in Ukraine.

Zenon Zawada: Much of the decline in Russian-Ukrainian trade wasn’t for objective factors, but politically rooted disagreements in two specific spheres – Russian natural gas exports and Ukrainian freight railcar exports. The Ukrainian government has reduced its purchases of Russian gas, alleging excessive prices. In return, the Russian government has slapped restrictions on Ukrainian exports, such as freight railcars. So this example serves as further evidence that Russian-Ukrainian trade would be prospering if not for the Russian government pressuring Ukraine to join the Customs Union, which Putin himself admitted at the briefing is more of a political structure than economic.