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12 Sep, 2014 16:22

EU-Ukraine integration pact postponed till 2016 after talks between Moscow, Kiev & Brussels

EU-Ukraine integration pact postponed till 2016 after talks between Moscow, Kiev & Brussels

Moscow scored a major diplomatic coup after Kiev agreed to postpone the enforcement of its Association Agreement with EU until the end of next year, following three-way talks between Russia, Ukraine and European Union officials in Brussels.

"We agreed on delaying the provisional application until the end of next year and to prolong the autonomous trade measures for the same period. That gives breathing space to discuss whatever problem may arise and then it will be up to the three parties concerned to see what they do after Jan. 1, 2016. I hope by then we come to a solution," said EU Trade Commissioner Karel De Gucht, following the conclusion of the one-day negotiations.

The European official said Ukraine would begin to enjoy unfettered access to European markets starting from the ratification of the EU Association Agreement, which paves the way for the country’s economic and eventually political integration into Europe.

In turn, Russia, which enjoys close economic ties with Ukraine, also promised that it would not introduce tariffs for Ukrainian exporters for the duration of the delay – something it earlier threatened to do.

"The compromise will make sure that Russia has no basis for the imposition of any kind of retaliatory measures," said Ukrainian Foreign Minister Pavel Klimkin, who said that the text of the proposed agreement would be ratified by the Rada "unamended" as early as Tuesday next week.

Earlier on Friday, before the compromise solution emerged, Ukrainian President Petro Poroshenko, who was not at the talks, claimed that the document would come into force in November.

Moscow, has vehemently opposed the divisive EU-Ukraine pact since it was drafted two years. Former President Viktor Yanukovich's decision to postpone the signing of the agreement provoked initial Maidan demonstrations in Kiev last fall, and set the current Ukrainian crisis in motion.

Russia's chief negotiator in Brussels, economic development minister Aleksey Ulyukaev, said that Moscow, which is in the process of creating its own free trade zone with former Soviet states, hadn't given up its hope of attracting Kiev into its economic sphere.

"We will use the next fifteen months to continue our dialogue with the Ukrainian side. We will present our arguments, and the Ukrainian side will reply with theirs," said the Russian official.

There have been varying estimates of the financial impact of the EU deal on Ukraine, and its aspects can not be separated from the geopolitical effects and fallout from Kiev's choice. But the original figures advertised by Europe would see Ukraine save €500 million a year through lower tariffs, while Vladimir Putin said that Russia's western neighbor stood to lose as much as €165 billion in ten years if it stopped free trade with Russia.

Ukrainian businesses have also worried about competing directly with European companies, and on Friday, news agencies reported that Poroshenko asked the EU to gradually reduce Ukraine's import tariffs, to help it adjust. If the EU acquiesced, then the delay helps Ukraine not only to stave off more disagreements with Russia, but to reap one-sided benefits of European trade.