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No progress on Ukraine peace, but a glimmer of hope on trade

Vladimir Putin Attends EU Summit In Minsk With Ukrainian PresidentVladimir Putin Attends EU Summit In Minsk With Ukrainian President
At least they've got each other: Poroshenko and EU High Representative Ashton struggle for attention from their host, Belarusian President Alexander Lukashenko, and his uncomfortable guest.Sasha Mordovets-Getty Images

Talks between the presidents of Russia and Ukraine on how to end the conflict in eastern Ukraine ended with little obvious progress Wednesday, but the two leaders did at least agree to talk next week on the key issue of shipments of Russian gas to the E.U.

Ukraine’s Petro Poroshenko returned to Kyiv without any meaningful concessions from Russia’s Vladimir Putin on the key issue of stopping the flow of men and equipment from Russia to separatist rebels in Ukraine.

(If anything, the reverse is happening: a paratroop commander admitted to the radio station Ekho Moskvy that his division had suffered combat losses there, while the independent TV station Dozhd reported that a committee of soldiers’ mothers had compiled a list of 400 killed and wounded in Ukraine. Putin, by contrast, claimed on Tuesday that the captured soldiers “had got lost” while on a routine exercise.)

However, there were some tentative signs that Ukraine and the E.U. are preparing to change the terms of their agreement on economic integration to address some of Russia’s concerns. The agreement was the original cause of the current crisis. Ex-President Viktor Yanukovych’s decision, at short notice, to sign an integration deal with Russia instead had led to the protests that led to his violent ouster in February.

Putin said in Minsk on Tuesday that Ukraine’s choice could cost the Russian economy around 100 billion rubles ($2.77 billion) a year in lost trade, because there would no longer be recognition of each other’s technical standards on goods from food to machinery.

Poroshenko said in a statement on his website that an expert group would start talks on how to reduce the impact of the Association Agreement “on neighboring states.”

Meanwhile Russian Economy Minister Alexey Ulyukayev said he will travel to Brussels on Sept. 12 to discuss “concrete amendments” to the agreement.

Pressure is mounting on both sides, as summer ends, to ensure the safe supply of Russian gas to E.U. countries this winter. Around a quarter of Europe’s gas supplies come from Russia, and most of that passes through pipelines on Ukrainian territory.

Despite being almost completely dependent on Russian gas itself, Ukraine has threatened to stop transporting it, and returned a $10 million payment of transit fees from Russia’s OAO Gazprom earlier this month.

E.U. countries have made frantic technological upgrades to their pipeline systems to allow the ‘reversing’ of gas into Ukraine from countries such as Hungary. But, due to a legacy of times when eastern Europe was bound into the economic orbit of the Soviet Union, other countries such as Slovakia and Bulgaria, can only receive gas from the Ukrainian pipeline system, and would be totally cut off if supplies were interrupted.