Putin warns Ukraine against EU pact
Russian President Vladimir Putin has warned Ukraine he will take "protective measures" if it signs an EU free trade pact.
Speaking on Thursday (22 August) at an economic forum in Rostov-on-Don, near Ukraine's eastern border with Russia, he said: "If our neighbours opt to significantly liberalise customs rules with the European Union, the Ukrainian market will inevitably be flooded with high quality goods … and Ukrainian goods will be forced out of the Ukrainian market."
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He added: "Then, member states of the Customs Union will have to think about protective measures. Such a possibility exists."
The Customs Union includes Belarus, Kazakhstan and Russia.
But Moscow wants to pull in Armenia, Azerbaijan, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine and Uzbekistan as well and to transform it into an EU-type "Eurasian Union" in the coming years.
On the other side, the EU has offered to sign a political association and free trade pact with Ukraine in November if it improves rule of law.
Ukrainian Prime Minister Mykola Azarov is due in Russia for talks on trade on Monday.
Putin's comments come in the wake of severe customs restrictions by Russian authorities between 14 and 20 August which caused a near standstill in Ukrainian road and rail imports.
Russia in July also banned Ukraine's top chocolate brand, Roshen, saying it caused cancer, while Kazakhstan on 20 August banned Ukrainian eggs.
An EU spokesman earlier this week said: "Any economic threat from Russia directed against Ukraine and linked with a possible signature of the association agreement with the EU is unacceptable."
But another risk is that Russia will interrupt gas supplies to Ukraine when its autumn/winter heating season begins in October, as it did in 2009, in a move which also hit eastern EU countries which depend on Ukrainian gas transit.
Meanwhile, Ukrainian leader Viktor Yanukovych is in a tricky spot.
If he goes against Putin, he risks losing the next elections due to pro-EU democratic reforms and Russian-inflicted economic pain.
But if he joins the Customs Union, he risks undermining Ukrainian sovereignty and giving Russian oligarchs a free hand in his country.