Russia to sue Ukraine over $3 bn debt

Russia's finance ministry said Friday it was suing Ukraine for defaulting on a $3-billion debt to
Moscow, following an order by President Vladimir Putin.
Kiev is "in a state of default" regarding its obligations toward Moscow and legal proceedings
would ensue, the ministry said.
"Russia's finance ministry (...) has initiated procedures required for an immediate lawsuit against
Ukraine," the statement said, adding that the lawsuit would be heard in a British court.
Ukraine announced last month it would not make the payment on its debt to Moscow after Putin
vowed to sue Kiev if it failed to pay by the end of 2015.
The debt stems back to 2013 when Russia loaned $3 billion to the Kremlin-backed president
Viktor Yanukovych, before pro-European protests that led to his downfall.
Ukrainian authorities say it is not a sovereign loan by one state to another but rather a transaction
made via the financial markets that is subject to terms agreed with other creditors.
Kiev reached a restructuring deal in August with its private creditors, including major banks and
investment funds, which agreed to reduce their claims by 20 percent.
Moscow however, maintains that the loan cannot be considered private debt and has refused such
conditions.
The Russian government instead offered to spread out the payment over three years, an offer
Kiev rejected.
"Ukraine preferred defaulting on its debt obligations to holding honest negotiations," the finance
ministry said, adding that the legal proceedings "do not preclude constructive dialogue to reach
an acceptable settlement of the debt."
The dispute has been hampering the International Monetary Fund's $17.5-billion rescue plan for
Ukraine, which restricts Kiev's ability to restructure billions of dollars in debt.
The Ukrainian parliament last week adopted its 2016 budget with a deficit of 3.7 percent of
GDP, a crucial step for unlocking much-needed aid from the IMF and Western countries.
- Food embargo -
The announcement of the lawsuit coincided with the coming into force of a Russian food
embargo against Ukraine in protest at Kiev's free-trade deal with the EU.
Furious at seeing its former Soviet satellite turning towards the West, Russia has banned the
import of Ukrainian food from Friday.
Ukrainian Prime Minister Arseniy Yatsenyuk has put the cost of Moscow's measures to his
country at some $600 million.
And President Petro Poroshenko admitted earlier this month that Russia's retaliatory move would
"damage" Ukraine's economy but said he was "ready to pay the price" and press on with efforts
to join a European Union free-trade zone.
He blasted the embargo in his New Year address, saying Moscow was trying to "economically
strangle" Ukraine.
Tensions between the two countries continue to simmer despite a lull in fighting in the eastern
part of Ukraine.
A peace deal signed in Minsk in April 2015 brought hostilities between Ukraine and pro-Russian
rebels in the east to a halt after more than 9,000 people had been killed in a year of fighting.
However, sporadic outbreaks of violence continue and a Ukrainian soldier and two civilians were
killed in fighting on December 27 despite the truce.

FTAs allow Australian exporters new round of tariff cuts in new year

CANBERRA, Jan. 1 (Xinhua) -- The new round of tariff reductions under the China-Australia
Free Trade Agreement (ChAFTA) and the Korea-Australia Free Trade Agreement (KAFTA)
kicked in on Friday, giving Australian exporters an extra reason to celebrate this New Year.
Tariffs on Australian exports to China have now been cut twice in less than a fortnight, following
initial reductions when ChAFTA entered into force on Dec. 20, 2015. The tariff reductions on
exports to Korea will be the third round of cuts under KAFTA since its entry into force on Dec.
12, 2014.
Minister Assisting the Minister for Trade and Investment Richard Colbeck quoted the case of
RBK Nutraceuticals in his press release saying the Sydney-based company have increased their
exports into South Korea by a huge 161 percent since the beginning of the agreement.
Tasmanian cherry growers have also enjoyed huge increases in demand due to the
commencement of KAFTA with the state exporting 185 tonnes of cherries into South Korea over
last summer compared with just five tonnes the previous year.
Australia's beef exports increased more than 30 percent to be worth over 550 million AU dollars
(401.5 million U.S. dollars) after the 2015 tariff reduction.
"The conditions are right for this year's tariff cut to strengthen the tailwinds for this valuable
trade even further. Each year KAFTA puts up to 40 million (29.2 million U.S. dollars) back into
the Australian beef industry instead of into paying tariffs," Colbeck said.
For the dairy industry, exports of processed cheese, butter and dairy spreads to South Korea are
up by over 50 percent. Infant formula tariffs will be reduced to half under ChAFTA since New
Year's day, providing extra momentum to this already booming trade.
"There's growing demand across Asia for Australia's world class goods and services; the
opportunities are there for the taking and, if seized upon, will help create jobs, build our
economy and lead to greater prosperity for everyone," Colbeck said.