Russia and Ukraine: Bilateral relations now and in the future

Sergei Mikheyev thinks the talks did not go smoothly, considering the sides did not sign any documents or made any official statements. It was rumored in Kiev before the talks that Putin had asked Yanukovych to come and discuss the issue of Tymoshenko. This rumor has not been confirmed. The agenda included important issues – gas prices, the problems of Ukrainian gas transportation network and the possibility of Ukraine participating in the Customs Union. Judging by everything, no breakthroughs were made.

Speaking about the format of Ukraine’s potential accession to the Customs Union, Mikheyev said it is pointless to discuss the possibility of Ukraine becoming an observer in the Customs Union as this status does not exist.

Alexei Mukhin also did not see any signs, direct or indirect, of a breakthrough at the talks. Yet, there has been some progress. The concern expressed by Ukraine’s West European partners bears this out. The conduct of the European Union on the eve of Yanukovych’s visit was symptomatic. According to Mukhin, the EU presented Ukraine with an ultimatum on the eve of the talks – a free trade zone with Europe or the Customs Union. The Putin-proposed real economic bonus (up to 6% of GDP) is tempting and hard to ignore. Mukhin said Ukraine has reached its boiling point, and it will soon become clear "whether we will drink tea with Ukraine or take the teapot off the gas stove.”

Mukhin does not agree with the widespread opinion that Ukraine’s "sore spot” has moved to Europe. He thinks it is still the Ukrainian economy.

 

Mikhail Pogrebinsky believes that Ukraine’s participation in the Customs Union, in whatever form, is one of the most important issues for its European partners, who hope that Ukraine will not integrate with Russia. He emphasized that Putin called Ukraine’s membership in the Customs Union a political issue. Pogrebinsky quotes Putin as saying that Ukraine will get benefits from joining the Customs Union, notably, an increase of its GDP from 1.5% to 6% depending on how deep the integration is. Pogrebisnky thinks this is a hint that Ukraine may only partially integrate into the Customs Union. In other words, Ukraine will get 6% of its GDP for full membership and less for partial. This is one interpretation of Putin’s words. Pogrebinsky thinks Russia may somewhat ease its position on Ukraine’s participation in the Customs Union. For the time being, before the issues of association with Europe and membership in the Customs Union are settled, he suggests that the two countries agree on a road map for 10 to 15 years, which will eventually lead Ukraine to full membership in the Customs Union.

Konstantin Zatulin thinks that nobody can say for sure whether agreements were reached or not. Only the two presidents know the results of the talks. Judging by the news conference, Putin would welcome Ukraine’s membership in the Customs Union but stressed that this is a political decision that only Ukraine can make. 

Regarding gas prices and the possible lease of the Ukrainian gas transportation network, Zatulin said that a delay in the talks does not benefit Ukraine. The sooner the decision on a discount is made, the better for Ukraine. He thinks it is wrong to tie bilateral relations to the results of Ukraine’s talks with Europe. Even if the agreements on association and a free trade zone are signed, the issue of discounted gas prices will remain there.

Zatulin recalls that Yanukovych did not come to Russia in December as planned. Russia postponed his visit because Ukraine failed to guarantee the agreements that the two states had already been approaching. These were agreements on renting the Ukrainian pipeline system rather than membership in the Customs Union. If Ukraine is ready to lease its gas transportation system to a Russian-Ukrainian joint venture, it should lift all restrictions that its laws have imposed on this system. Zatulin said this issue remains unresolved, although the agreement is almost ready. 

An agreement on the lease of Ukraine’s gas pipeline system would upset those who favor an alliance with Europe. Zatulin said such a lease agreement would amount to a de facto rejection of Ukraine’s energy package with the EU.