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Ukraine Angers Russia by Ending 'Nonaligned' Status
From the Wall Street Journal of Tue, 23 Dec 2014 13:31:20 EST
Foreign Minister Pavlo Klimkin, above right, and deputies of the Ukrainian parliament react after a vote for a bill dropping Ukraine's nonaligned status. Nonaligned is a classification given to states such as Switzerland that refuse to join military alliances and play no part in wars.
Foreign Minister Pavlo Klimkin, above right, and deputies of the Ukrainian parliament react after a vote for a bill dropping Ukraine's nonaligned status. Nonaligned is a classification given to states such as Switzerland that refuse to join military alliances and play no part in wars. Agence France-Presse/Getty Images

KIEV, Ukraine—Ukraine ended its status as a nonaligned nation on Tuesday, reopening aspirations to join NATO and drawing a quick rebuke from Moscow, which has accused the West of bringing hostile forces to its borders.

Though largely symbolic, the move highlights the depths of differences between Kiev and Moscow, which has long thought of Ukraine as its satellite and buffer against the West. Ukraine had pursued North Atlantic Treaty Organization membership when a pro-Western government was elected 10 years ago, but declared itself as nonaligned under the recently ousted pro-Russia president, Viktor Yanukovych, after he was elected in 2010.

Ukraine’s chances of joining NATO anytime soon are practically nil, however, as members in Europe especially have little stomach for a confrontation with Russia. On Tuesday, Russian Foreign Minister Sergei Lavrov condemned the move, which he said would make a resolution of the crisis in Ukraine more difficult.

“This is counterproductive and only worsens confrontation, creates the illusion that the path of taking up such laws can solve the deep inner crisis in Ukraine,” Mr. Lavrov told journalists. Moscow has been urging Kiev to hold talks with rebels, whom the West say Russia has been supporting with arms and some of its own military units.

Russia denies sending any weapons, and says some members of the military have been fighting in Ukraine while on vacation.

Ukraine’s move comes as international diplomatic efforts to restart the peace talks between Kiev and separatists appear to be making some progress, with discussions in Minsk expected as early as Wednesday. A tentative cease-fire announced in eastern Ukraine appears to be holding, with the number of shootings and casualties down significantly, Ukrainian officials say.

In Minsk, representatives of Ukraine, the rebels, Russia and the Organization for Security and Cooperation in Europe will be looking for ways to cement the cease-fire, arrange a prisoner exchange, create a line of demarcation between government and rebel forces, withdraw heavy weapons and supply humanitarian aid to the battle-worn region.

While neither side has fulfilled their military objectives, neither wants to continue fighting through the winter, fearing that a flow of refugees amid subzero temperatures could create a humanitarian crisis of yet unseen proportions.

Russia has recently scaled back its rhetoric against Kiev, whose government it once referred to as a junta, after a drop in oil prices sent the ruble into a rout. Moscow says the Russian economy could shrink as much as 4.5% next year, due partly to a sharp rise in interest rates as the central bank attempted to defend the ruble.

Ukraine, meanwhile, has been teetering on the edge of financial collapse, with the government reliant on the West for handouts. Kiev expects the economy to shrink by at least 4.3% in 2015, after a 7% contraction this year.

Ukraine’s finance minister submitted a 2015 budget to parliament on Tuesday that it is asking delegates to pass quickly so that Ukraine can get its next tranche of a $17 billion loan package, which the government seeks to expand by as much as $15 billion.

The government is under pressure from the International Monetary Fund to slash its budget deficit at a time when revenues are collapsing and its military must fight a Russian-backed insurgency. In her report to parliament, Finance Minister Natalie Jaresko said 30% of next year’s budget would be spent on defense and servicing the country’s debt.

In the proposed budget, the government plans wide-ranging cuts outside the military, and to impose extra taxes on imports and large businesses, as well as lifting privatization restrictions. Overall, the budget deficit is seen falling to 3.7% of gross domestic product, down from 4.1% this year.

But the numbers don't include the deficit of the largest state energy company, Naftogaz, which has for years provided natural gas to Ukrainians at rates far below the market. This year Naftogaz is expected to lose about $6.5 billion.

Ukraine’s split with Moscow was sparked by its turn away from economic integration with Russia. Ukraine’s last president, Mr. Yanukovych, had called for closer ties with Moscow, and when he indefinitely postponed an economic cooperation agreement with the European Union, pro-western protests erupted in Kiev that escalated until he was ousted. Moscow denounced the events as a coup, annexed the Ukrainian peninsula of Crimea, and pro-Russian rebellion erupted in Ukraine’s east.

On Tuesday, the Kremlin moved on with its economic alliance without Ukraine, as Russian President Vladimir Putin met the leaders of Belarus, Kazakhstan, Armenia and Kyrgyzstan to put final touches on the Eurasian Economic Union.

The collapse of Russia’s ruble this month and rounds of sanctions between Russia and the West have created frictions within the alliance, with the president of Belarus questioning whether the Russian ruble could be used in trade within the block. “We very actively and I would say stormily discussed the details of our work together,” said Mr. Putin, according to the Interfax news agency. “And in the end we found compromises.”

Mr. Putin said the union will create a common market of 170 million people whose economic output totals $4.5 trillion, Interfax reported.

Write to Alan Cullison at alan.cullison@wsj.com



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