Ukraine Suspends Europe Trade Talks, Turns to Russia

Ukrainian prime minister Mykola Azarov during talks with Latvian officials in Riga, February 10, 2012

Ukrainian prime minister Mykola Azarov during talks with Latvian officials in Riga, February 10, 2012 (Saeimas Kanceleja/Ernests Dinka)

Ukraine suspended preparations for a trade pact with other European nations on Thursday and turned to its former Soviet master Russia instead.

Prime Minister Mykola Azarov said his country was pulling out of negotiations to sign an association agreement with the European Union in order “to ensure national security.” He further promised to “renew active dialogue” with Russia and other former Soviet satellite states that have come together in a customs union.

A day earlier, Azarov had insisted that preparations for a summit in Lithuania, where the associated agreement was due to be signed, were still underway. “Our plans have not changed,” he told a press conference in Saint Petersburg on Wednesday.

Russia’s president Vladimir Putin had warned Ukraine, though, that a European trade deal — which could be a first step toward full membership — would “squeeze out” Russian goods and compel the customs union states to take “protective measures” of their own.

Ukraine’s economy relies heavily on coal, fuel, grain and steel exports. More than 60 percent of its exports go to other former Soviet republics while the country imports some 60 percent of its natural gas and more than 90 percent of its oil, virtually all of it from Russia.

Ukrainian president Viktor Yanukovich nevertheless insisted in an Independence Day speech in August that “association with the European Union must become an important stimulus for forming a modern European state.” The agreement would force Ukraine to liberalize its economy while deepening its access to Europe’s single market.

Although Yanukovich was elected in 2010 with the Kremlin’s blessing when he was seen as the more pro-Russian candidate than his opponent, former prime minister Yulia Tymoshenko, his administration has since continued a policy of waning Ukraine off its dependence on Russian imports by developing Black Sea and shale gas reserves in cooperation with Western companies like ExxonMobil and Shell instead of Russia’s Lukoil.

Ukraine suspended gas imports from Russia earlier this month and in recent days, various media reported that European Union officials were closing in on an agreement to supply it with natural gas through Slovakia.

Russia’s stick seems to have made a great impression in Kiev than Europe’s carrots, however. A “European” Ukraine would have dashed Putin’s hope of turning the customs unions into an Eurasian Union that could compete with Europe’s. By keeping Ukraine in its sphere of influence, Russia maintains a foothold in Europe, indeed, a European identity, whereas the alternative, an Eurasian Union that includes only Central Asian republics besides Russia, would relegate it to a less pivotal role in world affairs.

Ukraine is the most populous of former Russian satellite states, a major trading partner and shares Russia’s culture and Orthodox faith. Even many liberal Russians like to think of it as an extension of Russia proper and regret the separation of the two after the collapse of communism in Eastern Europe.