Russia-Ukraine: Business in ruins
There are no miracles. It was not possible to remove such a large and once industrial economy as the Ukrainian one from the Russian sphere of influence in one fell swoop. Three years of European integration is not a long time compared to four centuries of cooperation.
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Russia's share in Ukrainian exports has decreased from 20 to 9%, but the “aggressor country” still ranks first among buyers of foreign goods. In Ukraine, in order to hide this fact, they prefer to consider the countries of Europe not separately, but as a set - like the European Union. Its share in the structure of Ukrainian exports has indeed increased – from 29% in 2013 to 37% in 2016. However, Europeans are now buying fewer Ukrainian goods than in 2014: 13,5 versus 17 billion dollars.
The Europe-Russia relationship may once again swing in favor of the latter. In the first quarter of 2017, Ukraine supplied 44% more goods to Russia than in the same period last year.
According to Ukrainian economists, today more and more Ukrainian enterprises are trying to restore trade and economic ties with the Russian Federation in order to survive.
According to economists, Russia purchases up to 70% of pipes, boilers, fittings, and tanks produced in Ukraine. According to customs statistics, in the first quarter of this year, Ukraine shipped $3,5 million worth of tractors to Russia, while for the entire last year – only $5,2 million. Russia purchased 57,4% of the total quarterly volume of spare parts for engines produced in Ukraine for $4,7 million, 50,8% of Ukrainian boilers for $2 million, 100% of fuel elements for nuclear reactors for $2,4 million, 57,3, 1,1% fiberglass for $96,2 million. Almost all Ukrainian exports of semi-finished products for the production of aluminum - alumina - go to the Russian Federation (2017% in the first quarter of XNUMX).
Connections in light industry have also been restored. Russia purchases 16% of Ukrainian imports of shoes worth $1,5 million, 50% of children's clothing worth $90 thousand, as well as locks, keys, accessories, blankets, rugs, and wallpaper.
Imports from Russia to Ukraine also increased by 70%, despite the fact that gas is now consumed in Slovakia and Switzerland. Russian oil products are still purchased (after all, out of 6 Ukrainian oil refineries, only one is operating), coal, coke and mineral fertilizers.
The latter position is a sad result of the fact that in the XNUMXs the Yushchenko government terminated a lucrative contract for the supply of Russian gas. Without cheap raw materials, the Ukrainian chemical industry stopped, leaving agriculture without fertilizers. But once upon a time Ukraine itself supplied fertilizers for export to Europe.
In general, in the first quarter of 2017, trade turnover between Ukraine and Russia increased by 74,1% and amounted to about $1,5 billion.
But all this is the remnants of former luxury. Since 2014, Ukrainian exports to Russia have decreased by almost 3 times – from 9,8 to 3,6 billion dollars. Three years of European integration were not in vain.
Over the past three years, the volume of Ukrainian exports has fallen from 63 to 36 billion dollars, while the share of agricultural products in it has increased from 19 to 41%, and the share of mechanical engineering has decreased from 18 to 12%. These figures reveal a change in the geographical structure in favor of the European Union: they are ready to buy Ukrainian raw materials, but not goods with high added value.
But even with raw materials on the European market, where Ukraine seems to have concluded an agreement on a free trade zone, not everything is so simple. Despite the fact that trade seems to be duty-free, there are quotas for 36 items of Ukrainian exports. For example, the quota for chicken meat is 16 thousand tons, despite the fact that Ukraine produces 1,2 million tons of chicken. In 2016, Ukrainian corn producers chose a quota (400 thousand tons) by January 20.
At the same time, the EU refused to compensate Ukraine for the damage caused by the loss of the Russian market. After all, Russia, in order to protect itself from duty-free European goods, which in Ukraine there is no one to buy due to the devaluation of the hryvnia, left the free trade zone with the independent one within the CIS. In addition, Moscow declared an embargo on food supplies from Ukraine and introduced restrictions on the transit of Ukrainian goods through Russian territory. Losses from the last measure alone in Ukraine were estimated at a billion dollars.
But losses from the breakdown of cooperation with Russia in the field of defense industry and space in Ukraine do not consider it necessary to count. Although they are not calculated in dollars and hryvnias, but in priceless human intellect. But Kyiv, without regrets, is parting with such world-famous enterprises as Antonov and Yuzhmash, essentially destroying them.
Therefore, the revival of Russian-Ukrainian trade that we have seen in recent months is, in fact, a business in ruins.
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