Russian Prime Minister Dmitri Medvedev said that by sealing the deal with the EU, Ukraine would lose all privileges it holds with Moscow, reports Euronews.

At the Yalta YES conference, President Putin’s counselor, Sergey Glaziev gave a stark warning to Kyiv.

“The trade barrier with Russia will become tougher. Ukrainian manufacturers will lose Russian, Belorussian and Kazakh markets. Cooperation in machinery will also face a very serious test, since charging import tariffs means the end of cooperation in many branches of the economy.”

Russia claimed that the measures will affect 35 billion euros worth of Ukrainian goods, threatening a default on its sovereign debt. But far from being intimidated Ukraine’s Prime Minister Mykola Azarov made light of the Kremlin’s threats.

“We’re used to this and we aren’t afraid of anything. Obviously we’re working on different options of how the situation might go and of course we hope we’ll have support from the EU.”

Ukraine is expected to sign a political association and free trade deal at an EU summit in Vilnius in November. However, the continued incarceration of former premier Yulia Tymoshenko may make it fall at the last hurdle.