You're reading: Chocolate tycoon clashes with architect of trade war against him

 YALTA – It looked anything but sweet when Ukraine's top chocolate tycoon Petro Poroshenko clashed publicly with Sergey Glaziev, adviser to Vladimir Putin who allegedly inspired the Russian president to start a trade war with Ukraine.

Sitting in front of a distinguished
international audience in the luxurious White Hall of Livadia Palace where the Yalta European Strategy conference was held, the
two men on Sept. 21 traded verbal jabs that reflected just how high passions run
in the Russian-Ukrainian relationship at the moment, in the wake of a
recent trade war.

For Poroshenko, it’s personal. Russia
banned imports of chocolates produced by his Roshen confectionery
empire, one of the biggest in Ukraine, under the pretext of health
risks – a typical tactic in Russian trade wars. Glaziev, Putin’s
aide, is believed to have been behind the July ban.

The outlawed Ukrainian chocolates are
in good company, through. In recent months and weeks, Lithuanian
cheese, Moldovan wine and other foods were proclaimed dangerous by
Russian health inspector Gennadiy Onishchenko. Even Belarus, Russia’s
close ally, was not spared as its milk was deemed dangerous for
health.

This trick is widely viewed as a bully
tactic to make nations more pliable in foreign policy issues ahead of
the Eastern Partnership summit in Vilnius on Nov. 28-29, when partner
nations intend to make steps towards integration with Europe. Eastern
Partnership is a European Union initiative designed to govern and
improve its relationship with neighbor countries.

Poroshenko was not shy about the
Russian ban.

“Neither in this hall, nor in the
world (people) would believe that Georgian mineral water, or Moldovan
wine, or Ukrainian chocolates or Lithuanian cheese, or Belarussian
milk, are harmful to the health of Russians,” Poroshenko told
Glaziev.

Hillary Clinton, who spoke at the same
conference a day earlier, made it very obvious that she is in the
league of non-believers. Cheered by the crowd, she talked about
“excellent chocolates that Ukraine produces that can be exported to
many countries of the world.”

Poroshenko said he was inspired by the crowd’s reaction. Glaziev, however, was not.

“Mrs.Clinton said here that Ukraine has such benefits as chocolate and shale gas. I understand the chocolate. It’s your Pyotr Alekseevich (Poroshenko), personal achievement. But if someone can find cocoa in Ukraine, it will be a new word in botany,” he said.

Lithuanian President Dalia Grybauskaite also talked about chocolate and other Russia-driven trade wars in the region.

“We have no chocolate war, but we
have milk war and cheese war. But the method is the same,”
she said on Sept. 21. Her country, which currently presides in the Council of
Europe, will host the Eastern Partnership summit and has been
actively involved in promoting European integration agenda.

Grybauskaite says pressure on Lithuania
and partner nations such as Moldova, Ukraine and Georgia, are a
warning from Russia, but the tactic itself is nothing new.

She said Lithuania, a nation of 3
million people, underwent an eight-months trade blockade in early
1990s before signing a trade agreement with EU in 1994 that
eventually was expanded to full membership in the club of 28 nations.

Now it’s Ukraine’s turn. Russia is
particularly unhappy with Ukraine’s intention of potentially singing
an Association Agreement with the European Union in November that
would move Ukraine closer to the European orbit and away from its
former patron.

Poroshenko told Glaziev that joining
the Association Agreement is Ukraine’s sovereign choice, and is
supported by over 50 percent of the population for the first time in
22 years since Ukraine’s independence, mostly the young and active
part of the population. “That means the European integration is our
future, and the Customs Union is our past,” Poroshenko said.

Glaziev shot right back, saying “I
have an impression that you live in different country.” He then
added that he knew many people who do not support Ukraine’s European
choice: “I know a different Ukraine, not the one sitting in Livadia Palace, but the one working in mines and factories.”

Glaziev, a native of Zaporizhya in
Ukraine, has been one of the Kremlin’s most visible envoys and
campaigners to Ukraine to join the Customs Union instead of signing a
Deep and Comprehensive Free Trade Agreement with EU (DCFTA), which is a part
of the Association Agreement.

He was the first Russian official who,
in the wake of a brief trade war with Russia that blocked Ukrainian
imports for about 50 companies for six days in August, came out with
a public warning that this was just a taste of things to come should
Ukraine proceed with DCFTA. He said Ukraine would “seize to be
Russia’s strategic partner” as a result, and will face further
sanctions.

It appears that he may have authored
the very sanctions that Russia brandishes in front of Ukraine, as
well as other tactics of pressure to prevent Ukraine from signing an
Association Agreement this fall.

On Aug. 16 authoritative Ukrainian
weekly Zerkalo Nedeli published a paper that had been leaked to the
press, which laid out suggestions of pressure tactics that could be
applied to Ukraine. The newspaper said that Glaziev was a co-author
of this paper. When confronted about it in Yalta, he did not comment
on his authorship.

“Despite an obvious economic need for
Ukraine’s objective interests to partake in the CU (Customs Union)
and SES (Single Economic Space), its political leadership continues
the course towards European integration… After (signing), the
joining of Ukraine to Customs Union will become impossible and will
create a threat of dilution of free trade in CIS,” the paper reads.

It goes on to lay out a strategy for
prevention of Ukraine’s signing. “The general logic of measures to
involve Ukraine in CU and SES lies in a concentrated and all-sided
influence on decision-making centers, with a reliance on friendly and
pragmatic forces in the government, parliament, business circles,
academic and journalistic communities and activation of proponents,
as well as neutralization of opponents, of Ukraine’s participation in
CU and SES.”

One of the recommendations that follows
is pressuring oligarchs to campaign against the European vector and
in favor of CU.

Poroshenko features as one of the
recommended targets. His Roshen company exports 12-15 percent of its
produce to Russia worth $150-200 million annually, according to
Forbes.ua.
Half of the company’s exports traditionally went to Russia. But Roshen has been
unable to ship to Russia since the July ban.

Other tycoons listed by the paper as
good targets were Rinat Akhmetov, Dmytro Firtash, Andriy Klyuev,
Borys Kolesnikov and many others. The president’s son, Oleksandr
Yanukovych, got a special mention as a target of “utmost importance
for influencing the family business with the aim of creation and
increase of dependence of this business on Russian structures.”

Apart from owning businesses heavily
dependent on Russia, many of these tycoons from the list are close,
in varying degrees, to President Viktor Yanukovych, the ultimate
decision maker on whether to sign up for an association with Europe.
They also own media empires that could potentially shape the public
opinion to pressure the authorities to move closer to the Customs
Union, a trade organization that includes Russia, Belarus and
Kazakhstan.

But the Russian tactic of pressuring
the business backfired, if anything. Prime Minister Mykola Azarov
said at the Yalta conference on Sept, 21 that when he gathered
representatives of industry executives and business organizations in
the Cabinet to talk about their concerns with effects of the
Association Agreement and the DCFTA, they only voiced “random
concerns.”

“I asked them a simple question: do
you share the catastrophe forecasts sounding in the press? None of
them said they agreed with these consequences, not even one tenth of
it,” Azarov said. He then proceeded to attempt to pacify Russia,
which often voices concerns that after the border between Ukraine and
EU opens for trade, goods of European origin will infiltrate the
Russian market.

“Signing an association agreement
presents absolutely no risks to the countries of the Customs Union,”
said Azarov. He also suggested solutions, such as creation of a joint
commission that would examine certificates of origin, the shipping
papers that accompany goods.

But Glaziev was not buying it. He said
Ukrainian goods will flood the Russian market as they are be squeezed
out by the domestic markets by better quality European commodities,
and warned that opening up trade with Europe will be a disaster for
Ukraine.