Two re­ac­tions to Ukraine-Rus­sia trade amid war

Kyiv Post - - National -

Brian Whit­more,

Se­nior Rus­sia an­a­lyst for Ra­dio Free Europe/Ra­dio Lib­erty and au­thor of The Power Ver­ti­cal blog “This presents a thorny dilemma for Ukraine. For Rus­sia, there isn’t re­ally a dis­tinc­tion be­tween pol­i­tics and busi­ness. The Krem­lin has essen­tially weaponized trade, com­merce and fi­nance. The goal is to en­snare elites in the for­mer Soviet Union and be­yond in the web of cor­rupt deals that em­anate from Rus­sia and es­tab­lish a so-called Eurasian busi­ness space. I call this a zone of cor­rup­tion and it is a key tool in es­tab­lish­ing a sphere of in­flu­ence. It is also one of the main rea­sons the Krem­lin was so op­posed to Ukraine sign­ing an As­so­ci­a­tion Agree­ment with the Euro­pean Union. Given ge­og­ra­phy, his­tory, and es­tab­lished net­works, and Ukraine’s de­pen­dence on Rus­sia for things like en­ergy, it will be dif­fi­cult – but not im­pos­si­ble – for the au­thor­i­ties in Kyiv to es­cape Moscow’s em­brace. An ob­vi­ous first step would be to re­ally tackle cor­rup­tion, not just in words but in deeds. An­other would be to de­velop sec­tors of the econ­omy – like in­for­ma­tion tech­nol­ogy – that can be­come sources of wealth but are in no way de­pen­dent on Moscow. Ukraine and Rus­sia are not just in a war in the tra­di­tional mil­i­tary sense. They are also en­gaged in a war of gov­er­nance. If Ukraine can prove that a trans­par­ent rule-of-law-based sys­tem can flour­ish on its soil it will win the war of gov­er­nance – and have a stronger hand in the mil­i­tary con­flict. If Kyiv fails here, it risks be­ing ab­sorbed by Rus­sia’s zone of cor­rup­tion.”

Ti­mothy Ash,

Lon­don-based an­a­lyst with Blue­bay As­set Man­age­ment com­pany “Since the EuroMaidan (Rev­o­lu­tion that ousted Ukrainian Pres­i­dent Vik­tor Yanukovych on Feb. 22, 2014), and (Rus­sia’s war) in Don­bas, there has been a marked de­cline in trade, en­ergy, and fi­nan­cial ties be­tween Rus­sia and Ukraine. For ex­am­ple, only 4–5 years ago Rus­sia still ac­counted for around 40 per­cent of Ukraine’s to­tal trade turnover, which is cur­rently down to around 10 per­cent, and set to go lower again this year. Mean­while, whereas five years ago Ukraine was still im­port­ing 20 bil­lion cu­bic me­ters of gas from Rus­sia – close to half con­sump­tion – last year it was close to zero, and over­all Ukrainian gas im­ports have gone down to around 10 bil­lion cu­bic me­ters from 40+ bil­lion cu­bic me­ters 10 years ago. The re­cent bat­tle over trade flows to (Krem­lin-con­trolled ar­eas of the Don­bas) have also seen Kyiv put ad­di­tional pres­sure on the re­main­ing Rus­sian banks op­er­at­ing in Ukraine, which have now been levied with sanc­tions which are just likely to ac­cel­er­ate their exit. Even in the mil­i­tary field, while the talk is of a frozen con­flict in Don­bas, the re­al­ity is that the Ukrainian econ­omy has learned to live with the sta­tus quo, as re­flected in the 2.3 per­cent real gross do­mes­tic prod­uct growth posted last year, and ex­pec­ta­tions – pre-block­ade of 2.5–3 per­cent growth this year, and broader macroe­co­nomic sta­bi­liza­tion. Any eco­nomic lever­age which (Krem­lin-con­trolled ar­eas of the Don­bas) ex­erted seems to have been re­duced over time – and in­deed, Kyiv’s de­ci­sion now to cut off trade to (sep­a­ratist ar­eas) sug­gests a de­ci­sion to adapt a worse-case sce­nario, and put the cost of main­tain­ing (sep­a­ratist ar­eas) onto Moscow di­rectly, as is the case with Crimea, but also Transnis­tria (in Moldova), Ab­hazia and South Os­se­tia (in Ge­or­gia).

Newspapers in English

Newspapers from Ukraine

© PressReader. All rights reserved.