Russia rejects Ukrainian proposal for Customs Union observer status

No agreement will be reached on Ukraine’s relationship to the Customs Union at the Supreme Eurasian Economic Summit in Astana on May 28-29, said Andriy Honcharuk, the director of international relations at the Ukrainian President Administration. His report came after Ukrainian President Viktor Yanukovych met with Russian President Vladimir Putin in Sochi on May 26. Instead, the Ukrainian government expects to agree on – but not sign – a memorandum on deepening cooperation between Ukraine and the Eurasian Economic Community (EurAsEC), which is the executive organ of the Customs Union, Honcharuk said, as reported by Kommersant-Ukrayina on May 28. Ukraine already has observer status at EurAsEC, so the memorandum would propose offering Ukraine deepened authority without a formal change in status, reported Kommersant, citing an anonymous source in the Foreign Ministry. These powers include access to Customs Union drafts, participation in the EurAsEC’s activity at all levels without voting rights, and the right to submit proposals to the EurAsEC, the source said. The memorandum will mention that Ukraine will seek to gain observer status at the Eurasian Union, a political union that will be formed in 2015 on the basis of the Customs Union, Honcharuk said.

Zenon Zawada: As expected, the Russian government dismissed Ukrainian proposals to gain observer status at the Customs Union, which is essentially a PR project aimed at scoring points with the Russian-oriented electorate of the ruling Party of Regions. The Russian government is standing firm on its position that it won’t accept any arrangement short of full Customs Union membership. So the big question for Ukraine at the Eurasian Economic Summit is whether some kind of an agreement will emerge to share with Gazprom ownership of Ukraine’s natural gas transit system in exchange for cheaper gas. Here again, the Russian government is in a commanding position and doesn’t need to act on a Ukrainian transit system that needs more repairs, and lessens in significance, with each passing year. Moreover, Russia would lose a main lever of influence over the Ukrainian government if it were to lower gas prices. So we don’t see any such agreement emerging without a big concession from the Ukrainian side.