The Ukrainian government has postponed the signing of an Association Agreement with the European Union, arguing the decision by losses in the economy, as a result of which the political situation in the country aggravated.

Given the recent events, Ukrainian Minister of Industrial Policy Mykhailo Korolenko answered Ukrinform's questions.

Q.: Mr. Korolenko, the political situation in the country is very complicated. Why did it happen and what consequences the disruption of the Cabinet of Ministers may have?

A.: Based solely on national interests, the government could not but prevent the signing of the Association Agreement with the EU exactly in today's economically disadvantaged conditions. One of the reasons for the state budget deficit, lack of sufficient funds to eliminate social payment debts, wage arrears in the public sector, other types of mandatory government spending has been a negative trend in industrial production.

You would probably agree that amid such a situation, disruption of the Cabinet of Ministries and some ministries really poses a major threat to the country. The blocking of the government's work should not be the goal of the opposition. We cannot allow the delay in making important government decisions. Untimely allocation of public expenditures and failure to pass legal acts, very urgent for the stabilization of the economic situation, may adversely affect the well-being of every Ukrainian.

Q.: Why has the government delayed the signing of the Agreement with the EU?

A.: I want to assure that the proposed initiative does not mean changing in the vector or priorities of Ukraine's foreign economic and foreign policies. It is about an anti-crisis step, postponing the signature of the Association Agreement with the aim of saving the domestic economy. I believe that we will find a formula for implementing the national European strategy to maintaine good relations with partners in the East. But, unfortunately, I have to state that Ukraine needs this "pause" now.

Every Ukrainian has to understand that only in a stable economic situation the signing of the agreement will be successful. Thus, neither rallies nor demonstrations, but only systematic work of the government, government agencies and businesses can provide a strong foundation for further rapprochement between Ukraine and the EU. The negative trend in the industrial sector, which has lasted since the autumn of last year, became a reason for postponing the signing of the Association Agreement.

Every day we are making efforts towards European integration. The EU means high tech market, large capital market, inhabited by five hundred million consumers. It is the prospects for infrastructure development of the state, opportunities to open new industries in Ukraine. However, Ukraine should be unified and stable for the successful conclusion of the agreement.

We have got optimistic signals from our European partners and continue to establish cooperation. Today, Ukraine and the EU are working to develop a detailed roadmap, which will record the mutual commitments and guarantees of providing technical and financial assistance for the implementation of association conditions.

Q.: What losses will Ukraine's economy suffer due to worsened relations with the Russian Federation?

A.: We all remember the situation on the Ukrainian-Russian border in August 2013. When only in 2 weeks of downtime direct losses of companies accounted for more than UAH 2 billion.

What does it mean today for ordinary workers? Some pipe, ferroalloy, chemical, rail car companies have currently suspended operation. We can also see job cuts, workers go on unpaid leave. This does not happen at someone's ill will, but because of the stalemate. Today, it already relates, just image, to almost 40,000 people.

Unfortunately, there are hundreds of thousands of Ukrainian workers who may be unemployed. The stoppage in production may affect the related industries - transports, energy, raw materials manufacturers, service companies. As a result - absence of budget revenues and state of crisis with providing pensioners and vulnerable people.

After signing the Association Agreement with the European Union a free trade regime with the countries of the Customs Union will be immediately cancelled. In the context of strong cooperative ties with Russia it means that around 400,000 Ukrainian workers will lose their jobs, largest Ukrainian core companies may shut down.

Complications of trade and economic relations with the countries of the Customs Union have led to significant losses of not only individual enterprises, but export-oriented industries, ore and mining, aeronautics, energy and transport engineering.

The loss of good-neighborly relations with Russia can bring huge losses to each of the industries and the economy as a whole.

Q.: What tasks do you think are the priority in ensuring smooth operation of Ukrainian industrial companies?

A.: Given the current negative trends in the industrial sector, the government is taking all possible anti-crisis measures for the implementation of the national European strategy of Ukraine maintaining good relations with partners in the East.

Perhaps you have had the opportunity to observe the problems with the crossing of the border with the Customs Union by the transit truck transport from Ukraine. Supplies of industrial goods, which are intended for Asia, are at risk of failure. As a result, the companies have significant problems not only with the formation of new, and even the extension of traditional contracts and fulfillment of current liabilities.

The real losses in 2014 from complications of relations with the Russian Federation and the Customs Union may reach UAH 40 billion. However, the government will make every effort to diversify markets and compensate industrial producers for losses.

The realities of the present day, unfortunately, are such that without reopening a constructive dialogue with the Customs Union countries, without finding ways to balance the interests of Moscow and Brussels, the Ukrainian industry will not stand. It just may not be able to adapt, adjust to the new standards, take those promising benefits that the immediate European integration potentially carries.

Q.: How do you think it is possible to stabilize the situation?

A.: First of all, through a stable and systemic work of the government, resumption of institutions, agencies and public sector. We took a break in order to continue to improve the Ukrainian legislation, introduce technical regulations and standards of the European Union, increase the competitiveness of the domestic economy.

We need to remove all the contradictions in signing the association and free trade area agreements with the European Union, while not losing markets either of Russia or the EU. Our partners from the European Union took Ukraine's position and do not deny the possibility of signing the agreement in the future.

АМ