UPDATE 1-Putin urges measures to protect trade group from Ukraine fallout

Wed Mar 5, 2014 10:08am EST

NOVO-OGARYOVO, Russia, March 5 (Reuters) - President Vladimir Putin said on Wednesday that the crisis in Ukraine could have a negative effect on the Customs Union linking Russia, Belarus and Kazakhstan, and called for measures to protect the three nations' producers and exporters.

"The extraordinary situation ... in Ukraine arouses serious concerns," Putin told Belarus President Alexander Lukashenko and Kazakh President Nursultan Nazarbayev at his residence outside Moscow.

"Negative consequences for the Customs Union markets are possible too, and therefore we should think together about measures to protect our producers and exporters," said Putin. He made no mention of any specific possible measures.

The downfall of President Viktor Yanukovich at the hands of pro-Western protesters has dealt a severe blow to Putin's hopes of bringing Ukraine into the Customs Union, the springboard for a Eurasian Economic Union he is creating among ex-Soviet states.

Yanukovich sparked the protests in November, when he spurned a trade deal with the European Union after Putin warned that Moscow would have to impose trade restrictions on Ukraine to avoid a flood of goods that could put Russian producers out of business.

Ukraine's new leaders want to sign the EU trade deal, and the United States and European Union are threatening to impose sanctions on Russia over what they say is its seizure of Ukraine's Crimea region and its warning it could invade Ukraine.

Putin also said the three nations need to work out ways to support the Ukrainian economy. Russia has suspended release of a $15 billion bailout Putin promised Yanukovich in December, and

the EU said on Wednesday it was ready to provide Ukraine 11 billion euros ($15 billion) over the next couple of years.

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