Saturday, June 28, 2014

Donetsk Peoples Republic intends to leave Ukraine

Donetsk Peoples Republic intends to leave Ukraine

Self-proclaimed Donetsk People's Republic intends to leave Ukraine's jurisdiction and integrate with Customs Union to avoid economic fallout from Ukraine's association agreement with the EU, Donetsk Republic's deputy prime minister Andrei Purgin said.

"By making this decision Ukraine in fact cuts itself off from the Russian market. It is 99 percent machine manufacturing, metals industry, partially agriculture, etc... Possibly, from the side of the Customs Union and the Eurasian Economic Community [reaction] will not be head on, but more pin-pointed. In any case, losses in trade with Customs Unions will be upwards from 50 percent," Purgin said.

Deputy Prime Minister Andrei Purgin
Deputy Prime Minister Andrei Purgin
"We need to resolve the issue of exiting Ukraine's jurisdiction and integration with the Customs Union, as our industries are the most vulnerable in case we lose these markets," Purgin stated.

According to him, machine manufacturing in Donetsk region employs a large number of people and feeds the whole region.

"If it stops, the republic's budget will be hit hard," Purgin said.

On June 27 Ukraine signed the economic part of the association agreement with the European Union, which includes creation of a free trade zone. Russian government has repeatedly stated that in case of negative influence of Ukraine's association agreement on Russian market it will have to respond with protective measures.

Leaders of the self-proclaimed Donetsk People's Republic promise to take urgent measure to quit from Ukraine's legislative environment in a bid to protect the economy from negatives impacts of the association agreement official Kiev signed with the European Union on Friday. "Having signed this agreement, Ukraine actually cuts itself from the Russian market," Andrei Purgin, the first Deputy Prime Minister of the Donetsk People's Republic, said on Friday.

"To 99%, it is machine-building, metallurgy, partially the farming sector, etc. Losses in trade with the Customs Union (of Russia, Belarus and Kazakhstan) will be from 50% and more."

"We need take urgent measures to withdraw from Ukraine’s legislative environment and to integrate with the Customs Union, since our industrial sectors are the most vulnerable in case these markets are lost," he noted, adding that the machine-building sector provided jobs to nearly the majority of the local population. "If it is stalled, the republic’s budget will suffer serious losses," he said.

Earlier on Friday, Ukraine’s President Petr Poroshenko signed the final economic block of the association agreement with the European Union, which provided for the creation of a free trade zone between Ukraine and the European Union.

Moscow thinks that this agreement might open way for uncontrolled flows of European-made goods to Russian markets through re-export via Ukraine, which is currently a member of the free trade zone within the Commonwealth of Independent States (CIS). Given this, Russia has warned that it might take appropriate measures to protect domestic manufacturers, since in the foreseeable future Moscow does not plan to sign a free trade agreement with the European Union.


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