User Registration
or Cancel

Ukraine suspends talks on EU trade pact as Putin wins tug of war

A European Union summit focused on the fate of Ukraine looks likely to become a debacle after President Viktor Yanukovych ordered the suspension of preparations for a historic pact between Kiev and Brussels aimed at shifting the country out of the Kremlin's orbit.

The announcement signalled that the tug-of-war between Europe and Russia for the future of Ukraine has swung in favour of Moscow. Following talks between the Russian and Ukrainian prime ministers, a government decree abruptly suspended preparations for the signing of a trade pact and political association agreement between Ukraine and the EU at a summit next week in Lithuania.

Vladimir Putin's spokesman said Russia welcomed the move. "We welcome the desire to improve and develop trade and economic co-operation," Dmitry Peskov told reporters. He called Ukraine a "close partner" and said Russia would respect any decision it made about the EU deal.

Earlier in the day, the parliament in Kiev rejected six pieces of legislation aimed at meeting the EU's terms for integration, mainly the release of the former prime minister Yulia Tymoshenko from prison and permission for her to move to Germany.

Yanukovych's Party of the Regions did not vote on any of the six bills, condemning them to failure, amid calls of "shame", "scandal" and "treason" from the pro-European opposition, which is planning a big demonstration in Kiev this weekend in favour of Ukraine's "European option".

Yanukovych's brinkmanship came as a humiliation for Stefan Füle, the EU commissioner for enlargement, who went to Kiev for talks with the president before the vote. "I am encouraged to see the determination of the president in co-operation with all parliamentary factions to adopt key legislation on 21 November," said Füle before the fiasco in parliament.

According to reports in Kiev, Yanukovych told Füle that he was not prepared to sign the pact with the EU in Vilnius, potentially setting back by years the country's prospects of quicker integration with the EU.

At stake is a trade agreement and a political association deal stemming from 2005 when the EU launched its eastern neighbourhood policy, which offered trade and political benefits to post-Soviet states traditionally falling within Moscow's orbit. The policy falls short of offering eventual membership of the EU or negotiations to join.

Moldova and Georgia are expected to sign agreements with the EU in Vilnius. Armenia, under strong Russian pressure, has already dropped its European ambitions in favour of joining the Kremlin's Eurasian customs bloc. But of the four countries, Ukraine is the main prize because of its size, geography and history.

Putin, who appears to view the contest for Ukraine as a zero-sum game between Russia and the west, has been tightening Russia's trade screws on Ukraine and the other countries, and the Moscow media are issuing daily warnings of the bleak future facing Ukraine should it risk turning westwards.

The main terms for a breakthrough concern what the EU calls an end to "selective justice" in Ukraine, meaning that the courts and the judiciary are no longer manipulated for political and business reasons.

The touchstone for these criteria is the fate of Tymoshenko, with Germany insisting she be allowed to leave the country. Others such as France and Poland argue that the prospects for such a geostrategic shift in Russia's backyard should not be tied to the fate of a single individual.

"The future of EU-Ukraine relations remains very unclear," said Hannes Swoboda, leader of the social democrats in the European parliament, before Ukraine announced it was freezing preparations for the pact with the EU.

"The parliamentary decision raises profound doubts about how serious Ukraine's commitment to the EU really is. We deplore the pressure and blackmailing tactics that Russia has used against Ukraine and other countries. It is equally deplorable that Ukraine seems to have given in to this pressure."

Business News

US food inflation predicted to remain steady despite drought and disease

Overall US food inflation will remain near the historic norm in 2014, even as prices for meat and seafood are pushed higher by disease and widespread drought, the US Department of Agriculture said on Friday. USDA said wholesale pork prices will jump by 10-11% in 2014, hurt by declining supplies after a virus has killed millions of piglets in the past year. Wholesale beef prices, meanwhile, are… Read More

FTSE ends week on negative note but Anglo American sparkles on diamond sales

As the market ended the week on a downbeat note, one share to sparkle was mining group Anglo American.The company's first half profits fell 10% to $2.9bn, in line with analyst forecasts, and helped by a good performance from its De Beers subsidiary, which accounts for around a sixth of the group's earnings. The figures came despite strikes at its platinum subsidiary in South Africa, and it… Read More

Strong pound is good for travellers abroad but less so for the economy

The strength of sterling is good news for those jetting off to the beaches of the Mediterranean this weekend, because their pounds will buy them more euros than they did a year ago. The same goes for travellers to the US, given that the pound is trading at its highest level in five years against the dollar.Sterling has risen in the past year for three main reasons. Firstly, it had plenty of… Read More

We must be wary of caring capitalism

If ever a story deserved to be filed under the heading “irony” it is the one about a “caring capitalism” summit ending in a bitter legal dispute among the organisers over money. Thursday’s Evening Standard reports that Lady Lynn Forester de Rothschild – the former financier, director of Estee Lauder and the Economist and member of one of the world’s wealthiest families – is suing the charity that… Read More

Supermarkets forced to abandon plans for new stores as shopping habits shift

A quarter of UK supermarkets granted planning permission during the past five years have either been cancelled or mothballed, new research reveals.The study commissioned for a Channel 4 Dispatches documentary, called Supermarket Wars, which airs on Monday – underlines how the sector is being battered by changing shopping habits, as customers shun large out-of-town stores in favour of smaller… Read More

Virgin Money to repay £154m of Northern Rock financing package

The government is to receive a boost to its coffers after Virgin Money agreed to repay £154m of a financing package it arranged when the lender bought the troubled Northern Rock in January 2012.At the time of the acquisition, Virgin paid £747m in cash up front, followed by a further cash payment of £73m in June last year.The Treasury received £150m in capital notes, essentially taking a share in… Read More

Eurozone recovery picks up except for France

The dip in fortunes that has spread across the eurozone since spring was reversed last month after businesses expanded output and order books swelled – with the exception of France, which is nearing its third recession since the banking crash.A survey of French businesses found sentiment had improved in June, but they still signalled another period of contraction in the currency zone's second… Read More

Walmart replaces head of struggling US business

Walmart, the world's largest retailer, has removed the boss of its ailing US chain, in the second major personnel change among the global supermarket elite this week.Bill Simon will be replaced by Greg Foran, a 53-year-old New Zealander who is currently running its Asian business.Sales in the domestic market, which account for 60% of the huge retailer's sales, have been going backwards on Simon's… Read More

Balfour Beatty and Carillion in £3bn merger talks

A £3bn construction and services company is likely to be created after Balfour Beatty and Carillion revealed that they are in talks about a merger.Carillion, one of Britain's biggest support services companies with annual revenues of more than £4bn, made an approach to Balfour Beatty, which has been under pressure since Andrew McNaughton departed as chief executive in early May after just a year… Read More

American Apparel adds its first woman to revamped board of directors

Embattled retailer American Apparel, dealing with plunging sales and attempting to distance itself from founder and suspended CEO Dov Charney, unveiled a new-look board of directors on Wednesday. Four people, including the company’s first female director, are joining the board, leaving one slot open. The new board will be tasked with repairing the company’s damaged reputation and financial… Read More

Business Broker Spain

Web Design Spain