Russian President Dmitry Medvedev visited Ukraine on Monday, where he oversaw the signing of several cooperation deals with the new Moscow-friendly leadership.
Ukrainian President Viktor Yanukovych has advocated stronger ties with Russia, reversing his predecessor’s attempts to decrease the Kremlin’s influence.
Yanukovych said after the talks that the two nations will build civilian aircraft together and create joint industrial holdings in other areas. Officials from the two nations signed several cooperation deals, including one on using a Russian satellite navigation system in Ukraine.
The two nations also signed a border demarcation agreement, but delayed a decision on the delineation of the disputed sea border.
Medvedev said the talks were productive because "we have finally found a true Ukrainian partner" capable of making decisions and implementing them.
Relations between Moscow and Kiev had soured under President Viktor Yushchenko, who sought to have Ukraine join the European Union and NATO.
Yanukovych demonstrated his pro-Moscow tilt last month, when he signed a deal allowing Russia to extend its lease of the Black Sea Port of Sevastopol for 25 years after the current agreement expires in 2017. Russia rewarded Ukraine with deep discounts for natural gas.
The deal drew criticism from Yushchenko and former Prime Minister Yulia Tymoshenko, the pro-Western leaders of Ukraine’s 2004 Orange Revolution, who are now in opposition. They said the deal amounted to ceding control over the nation’s territory.
Yanukovych has broad support in the Russian-speaking east and south, but faces strong opposition in western Ukraine. He narrowly defeated Tymoshenko in an election in February.
Several hundred Ukrainian nationalists held a brief protest Monday against the pro-Kremlin policy of Ukraine’s new leadership, two of them wearing masks of Yanukovych and Medvedev.
Monday’s talks were watched for signs of progress on Russia’s proposal to merge the assets of its state gas monopoly, Gazprom, and Ukraine’s Naftogaz.
The proposal from Russian Prime Minister Vladimir Putin has drawn criticism from the Ukrainian opposition, which saw it as an attempt by Moscow to wrest control over the country’s most prized industrial asset — a sprawling network of gas pipelines carrying Russian natural gas to Europe.
Yanukovych said the merger should leave the parties with equal stakes in the new company, defying Russia’s demand for control.
Previous gas disputes between Russia and Ukraine resulted in shutdowns of Russian natural gas supplies to Europe, prompting the European Union to seek alternate routes.
No agreement on the merger was signed during Medvedev’s trip, but Gazprom chief Alexei Miller said talks on the issue are continuing. He told reporters that Gazprom would fully modernize Ukraine’s gas transportation system if the merger took place.
Standard & Poor’s Rating agency raised the foreign currency sovereign credit ratings on Ukraine to ‘B/B,’ from ‘B-/C,’ and lifted the local currency ratings to ‘B+/B,’ from ‘B/B.’ The outlook is stable, S&P said.
The upgrade reflected "improved policy coordination, the stabilization in Ukraine’s external liquidity position and our expectations of an increase in useable foreign exchange reserves relative to short-term debt, and a relatively moderate general government debt burden," S&P Credit Analysts Frank Gill and Kai Stukenbrock said in a statement.
