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Russia pushes Ukraine into custom union

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Ukrainian officials say the gas price for its consumers is higher than the price Russia charges its neighbours. In the first quarter, Ukraine paid $305 for 1,000 cubic meters of gas consumed, and the price is set to rise over the next quarters. 
According to analysts, if the gas price is not fixed the national gas company Naftogaz will continually experience financial difficulties. Last year, Naftogaz had a lot of trouble with monthly gas payments, caused by its shadow activities, and the government had to step in and use funds given by the International Monetary Fund to bail the company out. 

During his official visit to Moscow last week, Ukrainian Prime Minister Nikolay Azarov, attempted to negotiate the gas price down, but his counterpart, Vladimir Putin, refused to budge. Putin kept the dialogue open, saying he welcomed continuing discussion on the matter.

Russia appears to be leveraging its position to push Ukraine into joining the custom union before considering decreasing the gas price. Belarus and Kazakhstan have already joined the custom union. The union will see the abolition of customs duties on trade goods between participating countries, as well as enforcing common external tariffs with third parties. 

Analysts say that joining the custom union with Russia's leading role will be trapping Ukraine into letting the Kremlin control more business in the country and would contradict with their membership in the World Trade Organisation.
Written by: Publisher Saturday, 03 April 2010 12:09