Ukraine and Russia initial economic cooperation pact (03/01/98)

Ukraine and Russia initial economic cooperation pact

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Ukraine and Russia agreed to a 10-year comprehensive economic cooperation pact on February 20 that they hope will more than double trade between the two neighbors by 2007.

The agreement was initialed by Ukraine's Prime Minister Valerii Pustovoitenko and his Russian counterpart, Viktor Chernomyrdin, after a two-day series of meetings in Kyiv. President Leonid Kuchma of Ukraine was to formally sign the agreement with Russian President Boris Yeltsin during a four-day state visit to Russia that began on February 26.

"It reflects most fully the vital needs of our economies; the economic complexities and the interests of our nations," Mr. Pustovoitenko told journalists after the initialing ceremony.

Mr. Chernomyrdin noted that it is the first comprehensive agreement of such a nature to be signed between two CIS states, and another step forward in improved Ukrainian-Russian relations. "It is a big stride forward since the program concerns all the main aspects of economic relations between the two countries," said the Russian prime minister.

Prime Minister Pustovoitenko said the pact addresses a wide array of aspects of economic cooperation, including "cooperation in broadening trade markets, drafting of proposals to set up transnational structures, and development of new joint programs to broaden cooperation in joint production."

The agreement, which some politicians have labeled an economic union, calls for a reduction of customs barriers, the simplification of customs procedures in reciprocal trade; the standardization of mutual customs procedures for transport, export and import of goods; and standardization of customs freight declarations.

The 10-page document also calls for: creating conditions for "open and honest competition" in trade and regulation of natural monopolies; developing a closer conceptual approach in restructuring the economies of both countries, stimulation of business and increasing investment for its expansion; jointly developing of inroads into science and new technologies; increasing the quality and competitiveness of manufactured products; developing transportation infrastructures; and establishing common procedures in handling illegally transported cultural artifacts.

The two sides hope that the economic cooperation pact will increase trade between the two countries by 250 percent within 10 years. Last year Russia and Ukraine traded $14 billion (U.S.) in goods and services.

Prime Minister Pustovoitenko said the agreement is a logical extension of the "big treaty" signed between the Ukrainian and Russian presidents last May. "The work of our delegation in the mixed commission has once again demonstrated the closeness of our approaches and stands, our desire to consider one another's approaches as much as possible and to give a new practical meaning to the large-scale Treaty of Friendship, Cooperation and Partnership between Ukraine and Russia," said Mr. Pustovoitenko.

But at least one Ukrainian national deputy believes that Ukraine has sold out to Russia. Serhii Teriokhin, a respected economist who belongs to Viktor Pynzenyk's Reform and Order Party, told reporters on February 24 that the agreement is a threat to Ukraine's economic and political independence.

"At least eight paragraphs of the agreement are evidence that its goal is the creation of a common budget, tax system, currency, stock market and property market and, in fact, restores a common economic space guided by Russia," said Mr. Teriokhin.

He called the program the "Belarusification" of Ukraine, and said that the Reform and Order Party would ask Ukraine's Constitutional Court to review it after it is signed by the Russian and Ukrainian presidents in Moscow.

Oleksander Razumkov, deputy secretary of Ukraine's Security and Defense Council, dismissed Mr. Teriokhin's comments. He told reporters on February 25 that the national deputy's comments were baseless and that there is nothing in the text of the documents to support such allegations.

In addition to economic cooperation, the two presidents will discuss a variety of other topics, including military cooperation, during Mr. Kuchma's state visit to Russia. Mr. Yeltsin told Interfax on February 20 that the development of a framework for a military agreement during the visit was possible. "We will reach agreement on how to draft a document on military cooperation," said the ever-optimistic Russian president.