Last-ditch negotiations aimed at addressing Russia's concerns about a free-trade agreement between the European Union and Ukraine ended without result December 21.
EU Trade Commissioner Cecilia Malmstroem said the landmark trade agreement will go into force as planned on January 1 after three-way talks failed to reach a breakthrough at a daylong meeting in Brussels.
The trade deal has been at the heart of a battle for influence between Brussels and Moscow in Ukraine, and played a role in triggering Kyiv's conflict with Russian-backed separatists in the east.
Moscow claims the trade accord undermines its economic interests in Ukraine, a former Soviet-era satellite, and will allow a flood of cheap EU products into Ukraine that could eventually make their way onto the Russia market unless they are barred or taxed heavily.
With that in mind, Russia on December 21 announced a ban on food imports from Ukraine starting next year, which Ukraine estimated would cause about $600 million in economic losses.
Russian Prime Minister Dmitry Medvedev said Ukraine cannot take part in two free-trade zones, one with Europe and the other with Russia. Moreover, he declared that neither Ukraine nor the EU were prepared to agree to Russia's demand for a legally binding agreement taking into account Russia's trade interests.
Malmstroem blamed Russia for the collapse of the negotiations, which had gone on for 18 months, saying Moscow failed to show the "flexibility" needed to reach a deal despite agreement in several "technical" areas that could have formed the foundation for a deal.
Malmstroem said she had "been very open to listening to concerns from Russia" at her meeting with Russian Economic Development Minister Aleksei Ulyukayev and Ukrainian Foreign Minister Pavlo Klimkin in Brussels.
"We were quite close in finding some of the practical solutions, and I think had there been a will, we would have been able to do that," she said.
"However, today there was not enough flexibility from the Russian side to do that," she said. "There was no agreement, so this exercise is now over."
Charging that some of the concerns brought forward by Russia were not "real," Malmstroem said the EU was "surprised" by Russian President Vladimir Putin's decision last week to end his country's free-trade zone with Ukraine, arguing that it went against the spirit of the Minsk peace deal forged earlier this year between Russia and Ukraine over the conflict in the east.
Malmstroem said that while Russia's sanctions against Ukraine will be "painful," the impact will be limited since trade between Ukraine and Russia has already fallen dramatically.
Ukrainian President Petro Poroshenko said during a visit to Brussels last week that his country is ready to pay the price of Russian trade retaliation "for our freedom and for our European choice."