Publication: Monitor Volume: 3 Issue: 216

The presidents of Russia and Ukraine, Boris Yeltsin and Leonid Kuchma, met on November 16-17 at Zavidovo, outside Moscow, for the first "no-necktie summit" in CIS history. Yeltsin and Kuchma agreed in principle to eliminate value-added taxes, which are considered primarily responsible for the sizable decline in bilateral trade this year. They instructed their respective cabinets to draft a mechanism for reciprocal elimination of the VAT — a process, however, that may well result in bargaining over exemptions. The two presidents also approved an agreement, drafted last week in Kyiv by Ukrainian prime minister Valery Pustovoytenko and Russian first deputy prime minister Anatoly Chubais, setting an annual Russian import quota of 600,000 tons of Ukrainian sugar, to be exempt from the 25 percent surcharge imposed last May. Ukrainian sugar in excess of that quota will, however, remain subject to the surcharge and is limited to 1 million tons. Ukraine for its part will lift some customs duties that it currently levies on certain Russian goods, including military items and motor vehicles.

Yeltsin and Kuchma further agreed to set up a bilateral "strategic team" that will plan long-term cooperation programs, and confirmed their intention to draft a 10-year economic cooperation plan for signing at their official summit, planned for February in Moscow. (Russian and Ukrainian agencies, Eastern Economist Daily, November 17)

There was no word on the other contentious economic issues discussed by Chubais with Kuchma and other Ukrainian leaders last week in Kyiv. These include Russian import restrictions on Ukrainian alcohol, cutbacks in the purchase of Ukrainian booster rockets for space launches, the division of the former USSR’s assets and debts between Russia and Ukraine, and the restitution of Ukrainian deposits held in the ex-USSR’s Vneshekonombank. However, the political atmosphere of the Moscow meeting was highly positive, apparently indicative of an effort by both sides to signal a new and more cooperative stage in bilateral relations.

Ukraine Follows Russia’s Lead, Raises Interest Rates.