John Armstrong: Ukraine crisis puts Russian free-trade pact on hold

Trade Minister Tim Groser, who is currently in Moscow, has been told by John Key to leave immediately if he has not done so already. Photo / APN

Well might you make wisecracks about the mouse that roared. Or resurrect memories of the pre-World War I editorials of a long deceased newspaper that repeatedly issued warnings to Germany's Kaiser from that global repository of international power and influence otherwise known as Greymouth.

With military intervention by the West simply out of the question as a means of forcing Russia to abide by international law and respect the territorial integrity of Ukraine, that leaves diplomacy, trade policy and sanctions - either economic, financial or targeting specific members of Russia's ruling elite - as the only means of getting Vladimir Putin to think again.

Any New Zealand contribution to that response is going to be minor in its impact. But merely condemning the "invasion" is insufficient.

It may already be too late. Crimea is now effectively part of Russia. The genie is now well and truly out of the bottle in large tracts of eastern Ukraine with large populations of ethnic Russians who are now hardly likely to kow-tow to Kiev any more.

New Zealand's initial response has been about as rigorous as the circumstances demand.

Russia's ambassador in Wellington has been hauled into the Ministry of Foreign Affairs to be told of New Zealand's displeasure.

The next step would be to summon the ambassador for a dressing down by Foreign Minister Murray McCully.

If things continue to deteriorate, New Zealand's chief envoy in Moscow could be recalled. Ultimately, the Russian ambassador could be expelled. Meanwhile, the Prime Minister has made it clear that there will be no signing in the immediate future of a free trade pact that New Zealand has been negotiating with Moscow for the past three years.

Trade Minister Tim Groser, who has been hammering out the final details of the pact during talks in Moscow, has been told by John Key to leave immediately if he has not done so already.

It is arguable which country is the bigger loser from this halt in proceedings. New Zealand sees a free trade pact as a means of tapping into the spending habits of Russia's new, fast-growing and affluent middle-class. Russia is New Zealand's 28th-largest trading partner, taking around $230 million worth of exports, mainly dairy products, meat and fish.

The potential pact's value to Russia lies in it showing the world that - as a country that has been plagued by dodgy trade practices - it has lifted its game to the point where it can satisfy the rigorous rules of a "clean" trading nation like New Zealand.

That is all now somewhat academic as no Western country is likely to be seeking a free trade pact with Moscow until the crisis in the Ukraine has been resolved - and to the West's satisfaction.