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Ukraine Ditches Plans for EU Deal, Turns to Russia

Ukraine’s government decided Thursday to call off the planned signing of a landmark association agreement with the EU that could have weakened the former Soviet nation’s bonds with Russia.

KIEV, November 21 (RIA Novosti) — Ukraine’s government decided Thursday to call off the planned signing of landmark agreements with the EU that could have weakened the former Soviet nation’s bonds with Russia.

The Cabinet said in a decree that the decision was motivated by the need to consolidate economic ties with Russia and members of the Kremlin-led Customs Union trade bloc.

The stunning reversal will be greeted with dismay in the European Union, which had been hoping to steer Kiev toward closer economic integration with Europe.

Earlier in the day, Ukraine’s parliament rejected draft laws aimed at allowing jailed opposition leader Yulia Tymoshenko to seek medical treatment abroad, which EU officials had stipulated as a condition for the agreements to go ahead.

Tymoshenko, who is an avowed political rival to President Viktor Yanukovych, is currently serving a seven-year jail sentence on corruption charges that she insists are politically motivated.

Association agreements and free trade deals with the EU were expected to be signed next week at a summit in Vilnius.

Instead, Ukraine’s government proposed Thursday the creation of a trilateral commission between itself, Russia and the European Union to explore ways to deepen mutual ties.

The decree also ordered the resumption of an “active dialogue” with the Moscow-led Customs Union, which includes Russia, Belarus and Kazakhstan.

Kremlin spokesman Dmitry Peskov welcomed Ukraine’s decision to build up cooperation with Russia.

“We clearly welcome the desire of our close partner Ukraine to optimize and develop trade and economic cooperation,” Peskov said.

Kiev’s volte-face is likely to be hailed as a foreign policy victory for Russian President Vladimir Putin, who has not hidden his distaste for Ukraine-EU integration.

Ukraine has come under sustained pressure from the Kremlin in recent months as diplomatic negotiations over its alignment with the EU intensified.

As well as the threatening the imposition of a strict new customs regime, Russia also ratcheted up pressure on Kiev, which depends on Russia for its energy supplies, over payments for gas imports.

Putin said Thursday that Russia would be willing to take part in a trilateral commission with the EU and Ukraine, as long as Ukraine halted its current European integration plans, Russian media reported.

There have been signs of growing nervousness among Ukraine’s leadership in recent days about the impact that the EU agreement could have on all-important economic relations with Russia.
Prime Minister Mykola Azarov acknowledged on Wednesday that his country had already registered significant losses because of shrinking trade volumes with Russia and other members of an alliance of former Soviet countries, the Commonwealth of Independent States.

“Trade turnover grew significantly in 2012, but in 2013 we have lost nearly one-quarter of our trade turnover with CIS markets,” Azarov said. “Those economic losses are significant for us, and Ukraine has been facing serious [financial] hardships lately.”

Azarov said that his government’s top priority for next year was to have Russian trade barriers removed and to bring the rapidly worsening state of trade with Russia back to normal.

“It’s no coincidence that when drafting the budget, the main economic figures for 2014 will depend on whether we are able to create mutual understanding with Russia,” he said.

Azarov made the remarks after meeting with Russian Prime Minister Dmitry Medvedev on the sidelines of a CIS prime ministers’ council in St. Petersburg.

President Yanukovych, who was in Austria on a state visit Thursday, said that his country remained open to integration with Europe, hinting that the issue could be revisited at a later stage.

“We have a little way left to the peak. We are not afraid of difficulties, we are certain that we should in future go along the path of European integration,” he said.

Asked about the likelihood of Tymoshenko's release, Yanukovych said that any decision on the former prime minister could only be taken in parliament.

“This matter has spilled out into society and into the international community,” he said. “The release of Tymoshenko should be resolved primarily within the framework of the law.”

Ukrainian deputy Prime Minister Yuriy Boiko said Thursday that the decision to reverse course on EU policy was in the national interest.

“The government based itself on exclusively national interests, the interests of protecting employment, increasing the economic stability of the government and boosting productive potential,” Boiko said.

Boiko added that Ukraine had given up hopes of receiving International Monetary Fund credits as Kiev was unwilling to comply with demands to hike prices for household utilities by 40 percent.

“The position of our president is that we cannot impose the conditions of this onerous contract, which was signed by the previous government, on the shoulders of our people. So there will be no increase in tariffs,” Boiko said.

Updates with comments from Kremlin spokesman, deputy Ukraine prime minister.

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