Russian sanctions will slow down investment and trade in Ukraine
Although it is still difficult to assess the effect of Russian sanctions against Ukraine, they may have a negative impact on the ongoing growth in trade between the two countries and on Russian investment in Ukraine.
Mikhail Pogrebinsky, director of the Kyiv Center for Political Research and Conflictology, said this in a comment to a PolitNavigator correspondent.
“It is still difficult to assess the possible effect of sanctions. The Decree on Special Economic Measures poses the task of determining sanctions to the Russian government. One can only assume that there will not be any large-scale sanctions that could be catastrophic for the Ukrainian economy. There are at least two reasons to think this way. First, truly serious sanctions could affect NJSC Naftogaz of Ukraine, which is pursuing a policy unfriendly to Russia, including stopping gas transit. But Russia is not yet ready for such a decision and will not be ready at least until Nord Stream 2 is put into operation. Transit ensures the largest flow of funds from Russian-Ukrainian cooperation into the Ukrainian budget, larger than the flow from the IMF and other international financial institutions. Serious sanctions could be imposed on the supply of fuel rods for Ukrainian nuclear power plants; this would literally extinguish half the light in Ukraine. But this would hit millions of Ukrainian citizens, and I think that Russia will not agree to this, at least not yet. Perhaps the sanctions will affect the interests of mineral fertilizer producers who rely on Russian gas. But this is not fundamental.
The sanctions that will be adopted against private individuals do not have much significance for Ukraine. This will not be a blow to its economy. Therefore, I think that the introduction of sanctions is largely a symbolic decision. Ukraine’s actions had to be responded to somehow. Moreover, the Minister of Foreign Affairs of Ukraine Klimkin recently said that Ukraine has been defeating Russia in all areas for quite a long time. Perhaps this statement was also one of the reasons to speed up the introduction of sanctions. But I don't think everything will be serious. However, it can be assumed that the growth of trade turnover between the two countries and the growth of investment in the Ukrainian economy may be inhibited by this decision,” he said.
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