Ukraine's EU trade deal will be catastrophic, says Russia

The Kremlin has warned Ukraine that if the country goes ahead with a planned agreement on free trade with the EU, it faces inevitable financial catastrophe and possibly the collapse of the state.

Russia is making a last-minute push to derail the integration agreement, which is due to be signed in late November. Instead, Moscow wants to lure its neighbour into its own alliance, a customs union with Belarus and Kazakhstan that critics have referred to as a reincarnation of the Soviet Union. Russia has made it clear that Ukraine has to choose between the two options and cannot sign both agreements.

At a discussion forum in the Black Sea resort of Yalta over the weekend, European politicians gathered to pepper Ukraine's president and political elite with encouragement to cement the country's turn away from Moscow and towards Brussels. At the same palace where in 1945 Joseph Stalin, Winston Churchill and Franklin Roosevelt met and carved up Europe, there were angry exchanges between western politicians and the Kremlin's point man on Ukraine.

Petro Poroshenko, Ukraine's former trade minister, gave Sergei Glazyev, adviser to President Vladimir Putin, a public dressing down in a discussion session during which the Kremlin man was faced with jeering and catcalls for demanding that Ukraine abandon the EU pact and turn to Russia. The minister said that it was the Kremlin's heavy-handed tactics and threats of a trade war that had made European integration inevitable.

"For the first time in our history more than 50% of people support European integration, and less than 30% of the people support closer ties with Russia," said Poroshenko. "Thank you very much for that Mr Glazyev."

Radek Sikorski, the Polish foreign minister, accused Russia of a "19th-century mode of operating towards neighbours", and said that it was only when Ukraine was properly allied with Europe that Russia would begin to respect the country. "Poland's relations with Russia are better now that we are a member of the EU and Nato," said Sikorski. "When the question is open people feel entitled to exert pressure; when the question is closed they have to live with a sovereign country."

Glazyev, speaking on the sidelines of the discussion, said the exact opposite was true: "Ukrainian authorities make a huge mistake if they think that the Russian reaction will become neutral in a few years from now. This will not happen."

Instead, he said, signing the agreement would make the default of Ukraine inevitable and Moscow would not offer any helping hand. "Russia is the main creditor of Ukraine. Only with customs union with Russia can Ukraine balance its trade," he said. Russia has already slapped import restrictions on certain Ukrainian products and Glazyev did not rule out further sanctions if the agreement was signed.

The Kremlin aide added that the political and social cost of EU integration could also be high, and allowed for the possibility of separatist movements springing up in the Russian-speaking east and south of Ukraine. He suggested that if Ukraine signed the agreement, Russia would consider the bilateral treaty that delineates the countries' borders to be void.

"We don't want to use any kind of blackmail. This is a question for the Ukrainian people," said Glazyev. "But legally, signing this agreement about association with EU, the Ukrainian government violates the treaty on strategic partnership and friendship with Russia." When this happened, he said, Russia could no longer guarantee Ukraine's status as a state and could possibly intervene if pro-Russian regions of the country appealed directly to Moscow.

"Signing this treaty will lead to political and social unrest," said the Kremlin aide. "The living standard will decline dramatically … there will be chaos."

Ukraine's cabinet of ministers signed the agreement last week, and the choice for European integration is about the only thing that all major Ukrainian politicians agree on. However, European leaders have frequently said in the past that they will only sign if President Viktor Yanukovych orders the release of Yulia Tymoshenko, the former prime minister jailed for seven years in 2011 on charges of abuse of office, which most observers believe to be politically motivated. She is currently under armed guard in a hospital, being treated for back problems.

Assorted European leaders again told Yanukovych over the weekend that he must free Tymoshenko. There are also concerns in Brussels about human rights, rule of law and corruption among the political elite in Ukraine. Ironically, however, the Russian pressure has led many Europeans to put their quibbles on the backburner.

"Russia's threats has made both Ukraine and Europe more serious about integration," said Oleksiy Haran, a Ukrainian political analyst. "It's now a matter of principle."