The Cabinet of Ministers of Ukraine has decided to suspend the preparation process to the signing of the Association agreement with the European Union. "This is a difficult decision, but it is the only possible one under the current economic situation in Ukraine ... It is dictated solely by economic reasons and is of tactical nature," Prime Minister Mykola Azarov told the parliament on November 22.
Azarov stressed that the government was clearly fulfilling all EU tasks. However, he noted that Ukraine has a large foreign debt, including to the IMF, formed in 2008-2009. "The stance of the IMF, stated in the letter to the Cabinet of Ministers of November 20 was the last straw. In particular, the IMF demands: to double utility rates, freeze salaries, pensions, social assistance at the current level, substantially reduce budget expenditures, eliminate preferential taxation for agricultural producers and so on."
The PM paid special attention to the lowering Fitch credit rating position, main reason of which is the unsettled economic and trade relations with Russia. "How can we ignore the fact that the CU decided to shut down the free trade regime with Ukraine in case of signing the Association with the EU?" Azarov wondered.
ForUm has asked politicians and experts to comment on the situation:
Oleksandr Yefremov, leader of the Party of Regions faction:
- On the path of European integration we should determine all possible economic losses and find sources to cover them. Let’s suppose we sign the Association with the European Union and the Russian Federation imposes sanctions against us. What will we get? We’ll need decades to switch to new technical standards, to get new product quality. We will lose aircraft engineering completely, we’ll lose the majority of machine-building complex, as we supply 77% of these products to the Russian Federation. We will lose the shipyards, the space industry and a lot of other areas, including the food industry.
When Kwasniewski holds talks with us and does not respond to these questions, I can not understand it. Before Poland’s accession to the European Union, $ 75 billion of debt, which the Poles had, were written off, and then they received tens of billions for development.
Thus, Ukraine will continue its path towards European integration. But today we just need to stop and think about our situation. We have been moving too fast towards Europe and now just need to put affairs in order. And I hope Ukraine will become a European state eventually, but we must not allow anyone to push us around.
Volodymyr Oliynyk, MP from the Party of Regions, head of the working group on development of the draft bill "On public prosecution", member of the temporary working group on development of the draft bill " On treatment abroad for the convicted":
- Nobody has stopped the European integration. I want to remind that this course is stipulated in the law "On basic principles of domestic and foreign policies". Cabinet does not change foreign policy, it does not have the right to do it. But the government is responsible for country's economy, and having analyzed the current situation, the Cabinet has realized that the process of European integration must be suspended for some time to fix internal problems of the country.
We already observe negative consequences of this process, in particular we have lost 25% of trade turnover with Russia. And if Russia continues applying sanctions against Ukraine, we will have to face serious problems - unemployment, delay in payments of salaries, pensions, etc. Thus, before signing anything we must hold talks with both Russia and Europe. Russia must explain its aggressive policy, contradicting WTO norms, and the EU must explain why it does not do anything to help Ukraine in this situation. The EU has pledged to be the guarantor, but behaves like a stranger.
We all should understand that if Ukraine fulfills the requirements of IMF (to freeze social payments, double housing tariffs, etc.), people will go out in the streets, and that integration will no longer be important, as we will face a revolution. Therefore, we need these consultations to find a way out.
Besides, people should not believe the rumors about the end of European integration. It is not an end, it is a working process. The European Parliament has prolonged the Cox-Kwasniewski mission, EU foreign ministers recognize Ukraine's difficulties and demonstrate readiness to assist. Moreover, the opposition should not stir up the situation, but to study it in details. The difference between the authorities and the opposition is that the power answers for the real situation, while the opposition only talks about it.
Valentyn Zemlyanski, independent expert on power economy:
- The latest events may turn out very positive, especially for gas issue. Russia may reduce the gas price from $400 to $200-250, to guarantee maximum volume of gas transit of 110 billion cu m, to forgive the virtual debt for undertaken gas, which is $17 billion, to allocate about $5 billion for modernization of Ukraine gas transportation system, and finally to revise import duties for oil and reduce them for Ukrainian consumers.
But this pause in the process of European integration is just a tactical move, and it does not mean that the government has just upped and cancelled it. The fact is that export and trade turnover losses are present realities, while benefits of the Association agreement are still the future. Thus, there is no point to sacrifice the present for the sake of this future.
Ivan Bozhkov, aide of the "Motor Sich" president:
- The new situation may turn out beneficial for engineering sector of Ukraine. The CIS, East and developing countries are the main market outlet for Ukrainian engineering production, while Europe does not buy it willingly. Recently, in a private talk, Polish businessmen have admitted that Ukraine has a lot of competitive equipment to offer, but Europe does not need it, as it does not know where to sell its own. These are real and understandable interests, thus "Europause" comes logical and useful.
Vitaly Kulik, director of the Center for civil society problems studies:
- For the past couple of years Ukraine has been going to Europe really fast, and the process continues, but now it is time to stop and analyze everything that has been done and what is left to do in the future. Kyiv has not turn away from Europe and has not thrown itself on mercy of the Customs Union, it has just stopped to solve urgent matters.
"Europause" is able to revive joint aviation and shipbuilding projects with Russia, including production of "An" airplanes and supplies of helicopter engines.
Kost Bondarenko, chairman of board of the Institute of Ukrainian politics:
- Indeed, the authorities underline that it is just a pause, as there is no certainty on Ukraine's benefits from the deal and economy's future in general.
The EU has always understood that Ukraine needs economic interests, and 80% of the Association agreement is economic. But every process must take into account interests of both parties, while until now it has been a "one-way street" case. Ukraine has been told that whatever its problems are the agreement must be singed under EU conditions. But now, when Ukraine has stopped to think over, Europe demonstrates readiness to continue talks and consider Ukraine's interests. I think on Monday we will hear new offers.
Yuri Korolchuk, member of the supervisory council of the Institute of energy strategies:
- The suspension of the European integration is caused by EU refusal to provide Ukraine with guarantees of financial assistance. To join the Association agreement Kyiv needs money, but Brussels has said it must to finance Greece and Poland first. Moreover, Germany must invest about 100 billion euro into economy of East Germany.
Our country badly needs means to maintain the fuel and energy complex. Ukraine spends about seven billion euro annually for these purposes, thus no surprise that the economic issue tops the agenda of the Association with the EU.
Yuri Kochevenko, director of the Institute of strategic politics:
- The suspension of the European integration process is a good opportunity to bargain for benefits from both Russia and Europe, and it would be silly not to use it. For the first time we have a chance to carry out our own game, not to go on a leash of others.
This Association agreement as it is reminds me the calling of the Varangians - our land is big and rich, come to rule here. People, who have gathered on the Independence square, do not fully understand the situation and economic risks and losses waiting for us in Europe.
Dmytro Vydrin, political scientist:
- On November 21 the world finally heard the voice of Ukraine on the geopolitical arena. The decision to take a pause in the process of the European integration was logical and expected.
Frankly speaking, it was the first time Ukrainian authorities actually spoke on the geopolitical arena. Before they only used to keep silence and nod when others were taking decisions. Current decision of the Ukrainian authorities has come as a surprise for Europe. But having asked for the fist time about our own interests and benefits, everything we've got is a wave of hatred.
Azarov stressed that the government was clearly fulfilling all EU tasks. However, he noted that Ukraine has a large foreign debt, including to the IMF, formed in 2008-2009. "The stance of the IMF, stated in the letter to the Cabinet of Ministers of November 20 was the last straw. In particular, the IMF demands: to double utility rates, freeze salaries, pensions, social assistance at the current level, substantially reduce budget expenditures, eliminate preferential taxation for agricultural producers and so on."
The PM paid special attention to the lowering Fitch credit rating position, main reason of which is the unsettled economic and trade relations with Russia. "How can we ignore the fact that the CU decided to shut down the free trade regime with Ukraine in case of signing the Association with the EU?" Azarov wondered.
ForUm has asked politicians and experts to comment on the situation:
Oleksandr Yefremov, leader of the Party of Regions faction:
- On the path of European integration we should determine all possible economic losses and find sources to cover them. Let’s suppose we sign the Association with the European Union and the Russian Federation imposes sanctions against us. What will we get? We’ll need decades to switch to new technical standards, to get new product quality. We will lose aircraft engineering completely, we’ll lose the majority of machine-building complex, as we supply 77% of these products to the Russian Federation. We will lose the shipyards, the space industry and a lot of other areas, including the food industry.
When Kwasniewski holds talks with us and does not respond to these questions, I can not understand it. Before Poland’s accession to the European Union, $ 75 billion of debt, which the Poles had, were written off, and then they received tens of billions for development.
Thus, Ukraine will continue its path towards European integration. But today we just need to stop and think about our situation. We have been moving too fast towards Europe and now just need to put affairs in order. And I hope Ukraine will become a European state eventually, but we must not allow anyone to push us around.
Volodymyr Oliynyk, MP from the Party of Regions, head of the working group on development of the draft bill "On public prosecution", member of the temporary working group on development of the draft bill " On treatment abroad for the convicted":
- Nobody has stopped the European integration. I want to remind that this course is stipulated in the law "On basic principles of domestic and foreign policies". Cabinet does not change foreign policy, it does not have the right to do it. But the government is responsible for country's economy, and having analyzed the current situation, the Cabinet has realized that the process of European integration must be suspended for some time to fix internal problems of the country.
We already observe negative consequences of this process, in particular we have lost 25% of trade turnover with Russia. And if Russia continues applying sanctions against Ukraine, we will have to face serious problems - unemployment, delay in payments of salaries, pensions, etc. Thus, before signing anything we must hold talks with both Russia and Europe. Russia must explain its aggressive policy, contradicting WTO norms, and the EU must explain why it does not do anything to help Ukraine in this situation. The EU has pledged to be the guarantor, but behaves like a stranger.
We all should understand that if Ukraine fulfills the requirements of IMF (to freeze social payments, double housing tariffs, etc.), people will go out in the streets, and that integration will no longer be important, as we will face a revolution. Therefore, we need these consultations to find a way out.
Besides, people should not believe the rumors about the end of European integration. It is not an end, it is a working process. The European Parliament has prolonged the Cox-Kwasniewski mission, EU foreign ministers recognize Ukraine's difficulties and demonstrate readiness to assist. Moreover, the opposition should not stir up the situation, but to study it in details. The difference between the authorities and the opposition is that the power answers for the real situation, while the opposition only talks about it.
Valentyn Zemlyanski, independent expert on power economy:
- The latest events may turn out very positive, especially for gas issue. Russia may reduce the gas price from $400 to $200-250, to guarantee maximum volume of gas transit of 110 billion cu m, to forgive the virtual debt for undertaken gas, which is $17 billion, to allocate about $5 billion for modernization of Ukraine gas transportation system, and finally to revise import duties for oil and reduce them for Ukrainian consumers.
But this pause in the process of European integration is just a tactical move, and it does not mean that the government has just upped and cancelled it. The fact is that export and trade turnover losses are present realities, while benefits of the Association agreement are still the future. Thus, there is no point to sacrifice the present for the sake of this future.
Ivan Bozhkov, aide of the "Motor Sich" president:
- The new situation may turn out beneficial for engineering sector of Ukraine. The CIS, East and developing countries are the main market outlet for Ukrainian engineering production, while Europe does not buy it willingly. Recently, in a private talk, Polish businessmen have admitted that Ukraine has a lot of competitive equipment to offer, but Europe does not need it, as it does not know where to sell its own. These are real and understandable interests, thus "Europause" comes logical and useful.
Vitaly Kulik, director of the Center for civil society problems studies:
- For the past couple of years Ukraine has been going to Europe really fast, and the process continues, but now it is time to stop and analyze everything that has been done and what is left to do in the future. Kyiv has not turn away from Europe and has not thrown itself on mercy of the Customs Union, it has just stopped to solve urgent matters.
"Europause" is able to revive joint aviation and shipbuilding projects with Russia, including production of "An" airplanes and supplies of helicopter engines.
Kost Bondarenko, chairman of board of the Institute of Ukrainian politics:
- Indeed, the authorities underline that it is just a pause, as there is no certainty on Ukraine's benefits from the deal and economy's future in general.
The EU has always understood that Ukraine needs economic interests, and 80% of the Association agreement is economic. But every process must take into account interests of both parties, while until now it has been a "one-way street" case. Ukraine has been told that whatever its problems are the agreement must be singed under EU conditions. But now, when Ukraine has stopped to think over, Europe demonstrates readiness to continue talks and consider Ukraine's interests. I think on Monday we will hear new offers.
Yuri Korolchuk, member of the supervisory council of the Institute of energy strategies:
- The suspension of the European integration is caused by EU refusal to provide Ukraine with guarantees of financial assistance. To join the Association agreement Kyiv needs money, but Brussels has said it must to finance Greece and Poland first. Moreover, Germany must invest about 100 billion euro into economy of East Germany.
Our country badly needs means to maintain the fuel and energy complex. Ukraine spends about seven billion euro annually for these purposes, thus no surprise that the economic issue tops the agenda of the Association with the EU.
Yuri Kochevenko, director of the Institute of strategic politics:
- The suspension of the European integration process is a good opportunity to bargain for benefits from both Russia and Europe, and it would be silly not to use it. For the first time we have a chance to carry out our own game, not to go on a leash of others.
This Association agreement as it is reminds me the calling of the Varangians - our land is big and rich, come to rule here. People, who have gathered on the Independence square, do not fully understand the situation and economic risks and losses waiting for us in Europe.
Dmytro Vydrin, political scientist:
- On November 21 the world finally heard the voice of Ukraine on the geopolitical arena. The decision to take a pause in the process of the European integration was logical and expected.
Frankly speaking, it was the first time Ukrainian authorities actually spoke on the geopolitical arena. Before they only used to keep silence and nod when others were taking decisions. Current decision of the Ukrainian authorities has come as a surprise for Europe. But having asked for the fist time about our own interests and benefits, everything we've got is a wave of hatred.
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