Sanctions against Russia: What Yatsenyuk dooms Ukraine to
Kyiv, August 13 (Navigator, Sergey Stepanov, Vladimir Bogun, Vladimir Mikhailov) – Arseny Yatsenyuk’s blitzkrieg with sanctions against Russia was thwarted. The adoption of the law in the Verkhovna Rada has suspiciously stalled. Perhaps Kiev scratched their heads and came to the conclusion that getting involved in an economic war with Moscow would be more expensive for themselves? In any case, this is what Ukrainian experts themselves say.
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Doctor of Economic Sciences Yuri Makogon:
“Sanctions against Russia will lead to serious losses for the Ukrainian economy. Sanctions are a double-edged sword; any sanctions cause symmetrical counter-sanctions. All countries that are drawn into a spiral of sanctions lose. Before our eyes, three levels of sanctions were imposed on Russia by the United States and its satellites, and the European Union, and this spiral still does not stop.
Russia did not respond to sanctions of the first level, but began to respond to sanctions of the second and third with similar sanctions. This has caused a stir in business because the decision on sanctions is made at the political level, but political considerations are not always consistent with economics, back-of-the-envelope economic calculations and economic impact assessments.
And then it turns out that, it turns out, many business entities that are dependent in the chain are involved, on whose activities the state budget, jobs depend, and these are contributions to the local budget, etc.
In any case, Ukraine is, first of all, a transit zone for Russia - a large one, for all types of transport. Ukraine is crossed by highways, air routes, sea transport, river transport, and finally, pipeline transport. Three types of pipelines pass through the territory of Ukraine - gas pipelines, an oil pipeline, and there is also an ammonia pipeline, from Tolyatti to the port plant in Odessa.
This will all suffer greatly, and the budget primarily earned money from this transit. We must take into account that we had a serious positive balance in transit services, which now, of course, will be lost in our foreign trade relations.
In addition, many of our production facilities are quite seriously dependent on the sales market or cooperation with the Russian Federation. Our economy depends by more than thirty percent on relations with the Russian Federation, the Customs Union, and the CIS, and Russia depends on us by less than 5%. For Russia, Ukraine’s sanctions are minimal losses, and it will easily endure them. I’m afraid that we will also have serious consequences at the business level, and for some regions and sectors of the national economy very noticeable.”
Vice-President of the Ukrainian Union of Industrialists and Entrepreneurs Miroslav Tabaharniuk:
“Sanctions, of course, have a double-sided effect; they will affect the volume of GDP and industrial production in Ukraine. There are a lot of industries where the introduction of sanctions by Ukraine will have a serious disadvantage. First of all, this is the defense industry and mechanical engineering.
It is difficult to assess the damage now; this is at the level of expert statistics. Revenue from sales in the defense industry is one and a half to two billion hryvnia per year, but losses can only be discussed after the fact, when statistics for 2014 are already available.
In any case, sanctions against Russia will affect almost all industries. The supply of food, agricultural products, and engineering products will cease. Companies such as Motor Sich JSC and Yuzhmash seriously cooperate with Russia, and sanctions will hit them first.
In general, Russia accounts for a large percentage of Ukrainian industrial exports, so the losses will be serious.”
Economist Alexey Plotnikov, deputy of the Verkhovna Rada:
“Sanctions are a very serious thing, sensitive for the national economy, therefore, if Ukraine goes to impose sanctions, it is necessary to very carefully calculate how this will affect the country, whether it will lead to a worsening of the already difficult economic situation.
Thus, restrictions are being introduced on banks with Russian capital, and such banks are included in the top five. This is a rocking of the banking system in the country. Restrictions on the transit of goods are a blow to domestic carriers, domestic transport hubs, etc.
It is difficult for me to say to what extent this will damage Ukraine. But there is no doubt that these sanctions will not cause significant damage to the Russian side against which they are directed.
From a political point of view, Yatsenyuk is quite consistently doing what he promised. From the point of view of economic feasibility, I think it is necessary to clearly calculate all the pros and cons that this will give to Ukraine. I'm not very sure that there won't be any tangible disadvantages here. The consequences cannot be one-sided. Naturally, the Russian Federation will respond in a mirror way, or even asymmetrically. This means a reduction in Ukrainian exports to Russia, jobs, an increase in unemployment, a decrease in payments to the state budget from exports to Russia, and, consequently, a failure to fulfill the state budget and the impossibility of implementing social programs. It is enough to “pull the string” of sanctions to get quite negative consequences. You can get entangled in this rope yourself.
Ordinary Ukrainians will feel not just the disappearance of some consumer goods produced in a neighboring state. This is not the worst thing. What’s worse is that enterprises that are tied to the neighboring state and that supply products to the neighboring state will stop. The shutdown of enterprises means non-payment of wages and increased unemployment.”
Spiridon Kilinkarov, deputy of the Verkhovna Rada:
“Sanctions are introduced to weaken your opponent, and not to incur losses yourself. I think that seven billion dollars, which are predicted to be potential losses for Ukraine, will not be superfluous for the country’s budget. In general, all political issues must be resolved exclusively using political tools through negotiations on various situations that arise in relations between states. Applying economic mechanisms without deep calculations and forecasting is wrong and irresponsible. I think what we're seeing is an emotional attempt to solve a complex problem in a simple way."
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