Russia ratchets up economic pressure on Ukraine

Customs Service stepped up controls on imports in move that slows passage of goods across border

 Ukraine’s border guard service announced that all its vessels have left Crimea, and Crimea’s naval ports are now under the control of Russian forces. Photograph: Reuters

Ukraine’s border guard service announced that all its vessels have left Crimea, and Crimea’s naval ports are now under the control of Russian forces. Photograph: Reuters

Fri, Mar 21, 2014, 01:00

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Russia is applying trade pressure on Ukraine in a stark reminder of its power to undermine its neighbour’s already shaky economy.

The Russian Federal Customs Service stepped up controls on imports from Ukraine yesterday in a move that slowed the passage of goods across the border.

Alexander Smelyakov, a spokesman for Russian customs, said information about a possible weapons-smuggling operation had necessitated tighter scrutiny of Ukrainian imports. “There’s no discussion about a halt to trade flows,” he added.

Ukrainian businesses in Russia are also facing attack. Riot police in Lipetsk in western Russia seized a factory a warehouse owned by Roshen, a Ukrainian confectionary maker, on Wednesday and sent all the workers home.

Russia has ratcheted up pressure on Ukraine since opposition protesters in Kiev overthrew the government in November and installed a pro-European administration. Early this week Russian president Vladimir Putin signed a treaty transferring Crimea to Russia in a move that breached Ukraine’s territorial integrity. Ukraine is braced for a possible Russian military intervention in its eastern regions, home to large numbers of ethnic Russians.

Adding to tensions, Russian secret services said yesterday they had foiled an attempt to smuggle armaments from Europe to Russia’s violent North Caucasus via Ukraine. Russian and Ukrainian nationals had been arrested and a dozen pistols seized.

Russia has frequently used trade wars in the past to wrest political and economic concessions from Ukraine.

Last August Russia blocked almost all imports from Ukraine as part of a prolonged campaign to persuade Kiev to drop plans to forge closer trading ties with the European Union and instead join a Moscow-led customs union. Imports of chocolates made by Roshen, which is controlled by a pro-Ukrainian billionaire and opposition politician, were banned on grounds they might contain carcinogens.

The EU is accelerating plans to sign a political pact with Ukraine that would anchor the country in Europe.

With its economy in turmoil, Ukraine is negotiating with the International Monetary Fund to receive a financial rescue package.

Ukraine would look to the World Trade Organisation to resolve trade disputes that arise with Russia, Ukraine’s ambassador to Switzerland Yuri Klymenko said.