Next week, hard decisions are to be taken by Kyiv on whether Ukraine will side with the East or West. The bargaining chips are gas prices and links with the EU, The Segodnya said Apr. 4.
Ukraine will soon have to make a geopolitical choice which will impact the country’s development for decades to come.
On the one hand, talks with the EU on the creation of a free trade area catalyzed the situation. Unexpectedly, the talks made a big headway, with the FTA just round the corner and the tangible possibility for Ukraine to sign an agreement on association with EU, something that opens the door to EU membership.
True, it will take years, but the process cannot be stopped once started.
All this got Russia very concerned. The Kremlin doesn’t want Ukraine to go into Europe’s orbit. Instead, Russia is pushing to drag Ukraine into integrating with Moscow and its CIS allies.
The first warning came from Putin several weeks ago when he told his Ukrainian colleagues that, as soon as Ukraine joins the FTA with EU, Russia will shut its borders to Ukrainian import. The Kremlin ruler proposed to Ukraine to weigh the chances of joining the customs union with Russia, Belarus and Kazakhstan, saying this would open Russian markets to Ukrainian goods.
The next move would be to jointly hold talks with EU on FTA - understandably, with a lot more ammunition, Putin argues.
This time Putin wants to hammer the idea in Yanukovych and Azarov personally, probably, when he comes to Kyiv next week. However, Ukrainian politicians are skeptically viewing Putin’s proposals, cabinet insiders say.
“First, our goal is to join the EU, and we are not going to sacrifice it for the sake of ephemeral trade preferences from Russia. (Look at Belarus which is in a non-stop trade war with Russia).
Second, the likely losses from the closure of the Russian markets will be compensated by the access to much more hefty European market after FTA with EU is created,” one of the cabinet officials says.
However, everything may change if Russia throws in her major ace, the price for gas. Presently, the price is calculated based on the discriminatory Tymoshenko-Putin contract. That is why Ukraine now pays more than many European countries. At present, the price is $260 per 1,000 cu.m. But by the year end it may jump to $350.
Talks to change the method of price calculation are stalled due to Russia’s refusal to change it. However, Moscow may soften its stand if Ukraine scraps its FTA talks and joins the customs union with Russia.
So far, the Ukrainian cabinet is not prepared to get cheaper gas in exchange for giving up its EU aspirations. “We’re not giving up on ourplans to join the EU. We will build a terminal near Odesa for receiving liquidized gas and we will search for shale gas jointly with Americans. This will minimize the dependence on Russia for gas,” says one of the ministers.
There’s one rub, however, The projects will take 5-7 to complete, while the gas will be expensive already by the yearend.