Opening statement of Prime Minister of Ukraine Mykola Azarov during Government's meeting on January 15, 2014

Honorable Members of the Cabinet of Ministers!

Dear invited!

Tomorrow the Verkhovna Rada of Ukraine has to consider the draft state budget for 2014 and pass it as a whole.

This is a budget of social stability and development. It is our guarantee that we will retrieve status in the economy in the current year and we will be able better to provide our people with all kinds of social benefits during the global crisis.

It is obviously, this is the scenario of the sustainable development of the country what the opposition does utmost to prevent. What does their decision mean to block the adoption of the budget?

I want that all citizens realize:

it means the opposition want to force the responsibility to the authorities for possible delay in payment of increased salaries to state employees, social benefits for mothers and children, the disabled persons, etc. due to not passed budget. For what that without an approved budget schools, kindergartens, hospitals will not be build, ambulance will not be modernized, and highways will not be constructed.

I ask if the people of Ukraine need a destabilization of the social and economic life. Especially in times of global economic crisis.

The answer is clear: those who are blocking the Verkhovna Rada of Ukraine to continue to work against Ukraine.

They do it every now and then, when critical issues of public life are solved. They do not listen to people, but their ambitions. They do not protect the people, but their own political career, built, unfortunately, only on provocation and creation of tension in society.

It has passed more than enough time to people assure themselves both in Ukraine and abroad: the country does not live by the slogan what people are tried to zombify at the Maidan.

There is no social conflict and desperate social protest in Ukraine, like in other countries. Ukraine needs to bring to fruition the reforms, not to disrupt the reforms through the so-called revolutions.

There is an artificially provoked political infighting in Ukraine, which fueled only by provocation from the opposition and support of some, unfortunately, foreign politicians.

During this time, Maidan has not born any meaningful project for the state yet, has not made any useful things for people, except for the blocking of roads. On the contrary, many people who have been pushed to the illegal actions it already broke destiny, and it can still break destiny of many others.

I was shocked with the notice that in the captured building of Trade Unions twelve years old girl who was in a three-week investigation has been found.

All this time adults, organizers of the so-called Maidan headquarters have not just see this girl near, but attract the child for some work. A child who has no documents was lodged at an apartment and no one was interested in her fate, her health.

It turns out that Maidan is absolutely illegally and immorally lures and in fact bribes many minors to create "revolution". Do you realize what it is a trouble for families? And, God forbid, a tragedy.

Why do you smile? If we were talking about your child, would you smile?

So-called leaders of the Maidan forgot, the moral manifesto of Dostoevsky: "No revolution is worth the tear of a child"?

I’d like to ask all parents in Ukraine whether you want such immoral orders, as on Maidan for your children.

I demand to give tough legal assessment of the facts of the use of children in political actions.

On my opinion, this scurry story demonstrates very clearly, that organizers of protests are indifferent to the fate of the state, indifferent to the interests of the majority of our citizens, even to our children. They, by the way, were deprived of the traditional New Year Tree at the Maidan Nezalezhnosti and in Zhovtnevyi Palace.

You must finally realize that every day of confrontation separates us from the European values, of basic human values. Political processes in the country should be returned to normal and corridor and everyone has to fulfill their constitutional obligations.

The country must normally live and operate.

Returning to the adoption of the budget, I’d like to draw the attention of our opponents, that all in what they accuse us, they must first of all take responsibility on themselves, to remember who created hardship situation for our country.

The representatives of the current opposition brought the country to a standstill of profound social and economic crisis in 2008-2009. They twice devalued the hryvnia, cut people's incomes and social benefits. They stole funds of depositors of failed banks (which then we had to save and return people). It is under their cover scammers-developers left without money and without shelter tens of thousands of our citizens.

Finally, if they are not, who signed the oppressive gas contract that result to the excessive price of gas depleted foreign exchange reserves of the state in more than three years? If they are not, who received orders for signing such unfavorable conditions of accession to the WTO, which arise due to a huge negative trade balance - especially with the European Union?

They are not changing. They continue to do the one thing that they can: convert to ruin everything they touch, and thus they have no responsibility.

I convinced that despite all this time we will overcome the resistance of destructive forces too.

It should be constructive to consider the budget, in accordance with the Resolution of the Verkhovna Rada for which, incidentally, the opposition had voted too, and now the opposition refuses to take it. And the budget has to be passed in one day. So I hope that MPs will make a decision on the maximum liability.

At the same time I demand that all members of the Government today worked on committees, with MPs and once again justified the budgeted balance sheets, which have not to be violated. There are over 3000 amendments to the draft budget and all they are equal to already three budgets in general, absolutely not balanced. You must convince the people's deputies that the only real budget will allow the country to develop stable.

Honorable Members of the Cabinet of Ministers!

The issue of budget revenues and economic development of Ukraine directly related to our economic interests in the European direction.

The Cabinet completed simulation of practical scenarios of action of a free trade area with the EU. There were held numerous meetings with representatives of various business sectors of industry and agriculture. Previous sectoral risk analysis for the national economy in these terms carried out.

It follows certain conclusions on what condition the implementation of the Agreement, we must agree with the European partners.

Today I will focus only on some aspects of the problem.

First of all, it is necessary to resolve the situation about agricultural products. Agricultural production is dynamically developing and, figuratively speaking, "to chip" it we can not.

Ukraine reduces fees from average 9.24% to about 1% (ie, more than in 6 times). Ukrainian agrarian producers will not be able to immediately experience the benefits of reduction of duties in connection with the incompatibility of their products to EU standards on quality and safety. Particularly sensitive areas are the production of meat and meat by-products, milk and dairy products, fruit and vegetable production, food product groups.

That is, the first thing to determine: where to get the resources and support for the rapid modernization of production capacities.

The second, there is asymmetry in the volumes of state support for agriculture between the EU and Ukraine. Subsidies to farmers in the EU are much higher that is about 10 times larger. Thus, the subsidies per 1 hectare for the EU countries are 316 euros per hectare in Poland or 200 euros per hectare in Romania. And on average - more than 300-400 euros.

What does it mean if to compared with that state support that agricultural production in Ukraine has - about 43.6 euros per hectare?

This means that the funds, which actually go to reduce the cost of production of Ukrainian agriculture, have to be increased by about 10 times to Ukrainian products compete with European. This, by the way, is the salary of million people.

Ukrainian producers simply can not compete with cheap products through grants from the European Union. A striking example of this - Bulgaria, which has been recognized as a leader in the production of tomatoes and peppers, and after joining the EU completely lost this industry.

So, we must reach an understanding of how to use additional protective measures and the terms of trade, for example, the use of input prices, that stipulated in the contract as the right of Ukraine. Does it compensate for this gap in competitiveness?

More, even zero rates from the EU, duty-free export of grain, pork, beef, poultry, etc. is possible only within quotas. Given the significant potential of Ukraine in increasing crop production and livestock products, these quotas are actual barrier to export to the EU and a direct constraint to the development of relevant domestic industries.

Reduction of Ukraine export duties on sunflower seeds, raw hides definitely reduce the export of finished goods and increase exports of agricultural products. Domestic processing industry may lose some of the manufacturers and the leading positions on the world market. And it may be completely destroyed. We need protection from such a scenario.

With regard to steel production and manufacture of fabricated metal products. Apart from the fact that the majority of duties between Ukraine and the EU were almost zero as a result of Ukraine's accession to the WTO, free trade area provides a further reduction of duties.

Given the low value-added of Ukrainian exports of steel products, it could lead to further loss of competitiveness.

In addition, steelmakers may face a sharp increase in production costs due to higher raw material costs and environmental activities. Thus, the rate of export duty on scrap of ferrous metals, non-ferrous metals and semi-finished using them, as well as stainless steel will drop from 15% to 0% after the transition period and implementation of the environmental conditions of the agreement will require significant investment.

Simply to say, if we do not foresee conditions for the protection of our industry in a few years it will be advantageous to cut all the metal in Ukraine and sell it for recasting than invest in jobs in Ukraine. This is an unacceptable way for us, as it comes to a key set of our industry, which employs hundreds of thousands of workers in coal and mining industries, energy, transport and so on. SMEs live by incomes of these workers and so on.

Therefore, we must find conditions favorable for Ukraine in implementation of this part of the agreement with the EU.

Machinery engineering. According to statistics, Machinery engineering brought Ukraine about 19% of export earnings in 2013.

But almost all engineering "can go under the knife" of unfavorable terms of trade for literally 4-5 years.

First of all, because, the implementation of standards in this area requires huge resources and modernization of production several years. But, nobody in the EU is not going to buy Ukrainian locomotives, wagons, cars, cranes, compressors and more. Where can we get money to upgrade production capacities?

The second, wait until Ukraine improves itself, no one will be. We will open borders both for European appliances and vehicles, and equipment that were in use – by the price of transportation and installation at the new location.

At the same, we can import to us their European unemployment. There plants will produce vehicles for sale in Ukraine, and manufacture will be closed in us.

And technical colleges are under the question. As to train specialists for the "screwdriver assembly" in universities it is not necessary.

It is clear that we need to develop protection and from this scenario.

Production and consumption of electricity. Changing the rules of functioning of the electricity market of Ukraine may lead to higher electricity prices at the national market for all types of customers, from growing dynamic of the rise in prices to the public.

And it destroys the prospects of the whole industry in general, as the oversupply of electricity and relatively low price as of today - one of the main industrial competitive advantages of the Ukraine. Our task - to strengthen this advantage for as long as possible time.

And the same virtually on all other sectors of the domestic economy.

I commission the interdepartmental panel led by the Vice Prime Minister Yuriy Boyko, basing on the conducted analysis, in the course of not more than two months to elaborate detailed positions of Ukraine regarding conditions of implementation of the Association Agreement.

Concerning the agenda.

At the last meeting of the Regions President of Ukraine Viktor Yanukovych has set a target to intensify work aimed at fighting corruption.

Today, members of the Government will consider the renewed tasks and measures of implementation of the National Program for Corruption Prevention up to 2015, because since its approval passed more than two years.

Among document aimed at boosting economic development and job creation, it will be considered a draft Concept of the National target economic development program of passenger automobile for the period until 2020.

It is essential that the concept involves the implementation in the automotive industry of international standards (ISO) and European norms (EN) in the national standardization system, the introduction of modern environmental standards, incentives for advanced technologies. So, it comes about, a new quality of products.

Another such program document is the Concept of the Reform Program and the development of the military-industrial complex for the period up to 2017.

The implementation of the program will not only give a boost to equipped the Armed Forces with the latest models of military equipment and strengthen Ukraine's position in the global market of weapons, but also stimulate the development of science and technology and related industries.

International documents also have "commercial" in nature.

So, we plan to adopt the Program of Ukraine's cooperation with the Member States of the Customs Union by 2020.

I would like to note that it is a clear plan for the development of trade and economic relations, with specific projects of industrial cooperation in industry, engineering, aviation and shipbuilding, energy and agricultural sector, the space industry and the transport sector, tourism.

There will also be approved changes to the Protocol to the Agreement between the governments of Ukraine and Belarus on production and scientific-technical cooperation.

Thank you.