Ongoing trade conflicts with Russia have caused export decline by 13.4% to $11.4 billion. In general, economic losses of Kyiv due to "summer-autumn" conflicts with the Kremlin are estimated at $5 billion. Experts note that the first sectors to suffer are engineering (train cars, pump and compressor equipment, etc.) and food industries.
Indeed, as of 2012 Russia held 25.6% share in the structure of domestic export. According to analysts, no matter how badly we want to integrate into Europe, this factor of the foreign trade cannot be ignored. Yes, Ukraine tries to diversify export directions - thus the realization of Ukrainian goods on African markets alone increased by 68.6% (to $5.6 billion), and in both Americas - by 2.2% (to $2.6 billion) (see article "Export development: Ukraine walks along the globe"). However, it is a slow and gradual process, while trade sanctions of Moscow are immediate and painful.
Thus, for nine months of this year, export of our locomotive engines to Russia has reduced by 29.6% (to $1408 mln), of aviation products - by 55.7% (to $38 mln), and of motor vehicles - by 62.2% (tp $138 mln). Such situation badly hurts the national economy, which has not recovered from previous blows yet. And considering Moscow's aggressive intentions to continue with sanctions, the situation may aggravate, expert on economic policy Vitaly Kulik notes. In turn, member of the EU mission, former Polish President Alexander Kwasniewski confirms that Kyiv's decision on European integration pause has been taken due to unprecedented economic pressure. "Basic industries of Ukraine suffer losses, people get fired, plants get closed down. Ukraine's economy has found itself on a razor's edge, and the government had to take a temporary decision."
What will we get?
Amid such situation it comes logical to stop and deal with "northeast" problem first, and then to continue on the European path. Specialists underline that the authorities and President have already managed to obtain certain bonuses from Russia. Thus, Moscow has started allocating a 10-billion-dollar credit, unlike the European Union, which has promised maximum $2 billion and not immediately. As for the critical gas issue, analyst Valentyn Zemlyanski notes that Russia may reduce the gas price from $400 to $200-250 and to guarantee maximum volume of gas transit of 110 billion cu m. Moreover, he adds, Moscow may forgive the virtual debt for undertaken gas, which is $17 billion, to allocate about $5 billion for modernization of Ukraine gas transportation system, and finally to revise import duties for oil and reduce them for Ukrainian consumers.
Speaking about other industries, the European pause is able to revive joint aviation and shipbuilding projects with Russia, including production of "An" airplanes and supplies of helicopter engines, expert Vitaly Kulik says. In this respect, Ivan Bozhkov, aide of the "Motor Sich" president, adds that the new situation may turn out beneficial for engineering sector of Ukraine. "The CIS, East and developing countries are the main market outlet for Ukrainian engineering production, while Europe does not buy it willingly. Recently, in a private talk, Polish businessmen have admitted that Ukraine has a lot of competitive equipment to offer, but Europe does not need it, as it does not know where to sell its own. These are real and understandable interests, thus "Europause" comes logical and useful."
Moreover, talks with the IMF continue no matter what. The Fund has already declared that signing of the Association agreement with the EU will have no influence on the course of negotiations. Executive director of the International Bleyzer Foundation Oleh Ustenko specifies that Brussels is wrong regarding possible complications with the Fund. "Europeans do not fully understand the IMF strategy, and even if signing of the Association agreement is postponed, the agenda of the talks with IMF will not change a bit."
Moving on
Specialists agree that the European pause is just a pause, and not a change of political course. As a reminder, Premier Mykola Azarov underlined that "this is a difficult decision, but it is the only possible one under the current economic situation in Ukraine ... It is dictated solely by economic reasons and is of tactical nature... We call on Brussels not to make it a tragedy, but to sit down and find a solution, meeting interests of both parties."
In this respect, political scientist Dmytro Vydrin notes that due to this decision the world has finally heard the voice of Ukraine on the geopolitical arena. "The decision to take a pause in the process of the European integration was logical and expected. Frankly speaking, it was the first time Ukrainian authorities actually spoke on the geopolitical arena. Before they only used to keep silence and nod when others were taking decisions." In turn, Yuri Kochevenko, director of the Institute of strategic politics, adds that the suspension of the European integration process is a good opportunity to bargain for benefits from both Russia and Europe, and it would be silly not to use it. There is no need to panic. Europe is not going anywhere, but we need to estimate all possible benefits and losses first. The EU has its own interest in the deal, and nobody does charity there," the analyst believes.
And Kulik adds that for the past couple of years Ukraine has been going to Europe really fast, and the process continues, but now it is time to stop and analyze everything that has been done and what is left to do in the future. Kyiv has not turn away from Europe and has not thrown itself on mercy of the Customs Union, it has just stopped to solve urgent matters.
Summing up, there is not need to wail for the European integration and get ready to the "dark taiga future". On the contrary, balancing between two serious centers of influence, Ukraine has finally dared to take a strong decision, which will force both Brussels and Moscow to respect our position and interest. After all, it is not the end, but the beginning.
Andriy Boyarunets
Indeed, as of 2012 Russia held 25.6% share in the structure of domestic export. According to analysts, no matter how badly we want to integrate into Europe, this factor of the foreign trade cannot be ignored. Yes, Ukraine tries to diversify export directions - thus the realization of Ukrainian goods on African markets alone increased by 68.6% (to $5.6 billion), and in both Americas - by 2.2% (to $2.6 billion) (see article "Export development: Ukraine walks along the globe"). However, it is a slow and gradual process, while trade sanctions of Moscow are immediate and painful.
Thus, for nine months of this year, export of our locomotive engines to Russia has reduced by 29.6% (to $1408 mln), of aviation products - by 55.7% (to $38 mln), and of motor vehicles - by 62.2% (tp $138 mln). Such situation badly hurts the national economy, which has not recovered from previous blows yet. And considering Moscow's aggressive intentions to continue with sanctions, the situation may aggravate, expert on economic policy Vitaly Kulik notes. In turn, member of the EU mission, former Polish President Alexander Kwasniewski confirms that Kyiv's decision on European integration pause has been taken due to unprecedented economic pressure. "Basic industries of Ukraine suffer losses, people get fired, plants get closed down. Ukraine's economy has found itself on a razor's edge, and the government had to take a temporary decision."
What will we get?
Amid such situation it comes logical to stop and deal with "northeast" problem first, and then to continue on the European path. Specialists underline that the authorities and President have already managed to obtain certain bonuses from Russia. Thus, Moscow has started allocating a 10-billion-dollar credit, unlike the European Union, which has promised maximum $2 billion and not immediately. As for the critical gas issue, analyst Valentyn Zemlyanski notes that Russia may reduce the gas price from $400 to $200-250 and to guarantee maximum volume of gas transit of 110 billion cu m. Moreover, he adds, Moscow may forgive the virtual debt for undertaken gas, which is $17 billion, to allocate about $5 billion for modernization of Ukraine gas transportation system, and finally to revise import duties for oil and reduce them for Ukrainian consumers.
Speaking about other industries, the European pause is able to revive joint aviation and shipbuilding projects with Russia, including production of "An" airplanes and supplies of helicopter engines, expert Vitaly Kulik says. In this respect, Ivan Bozhkov, aide of the "Motor Sich" president, adds that the new situation may turn out beneficial for engineering sector of Ukraine. "The CIS, East and developing countries are the main market outlet for Ukrainian engineering production, while Europe does not buy it willingly. Recently, in a private talk, Polish businessmen have admitted that Ukraine has a lot of competitive equipment to offer, but Europe does not need it, as it does not know where to sell its own. These are real and understandable interests, thus "Europause" comes logical and useful."
Moreover, talks with the IMF continue no matter what. The Fund has already declared that signing of the Association agreement with the EU will have no influence on the course of negotiations. Executive director of the International Bleyzer Foundation Oleh Ustenko specifies that Brussels is wrong regarding possible complications with the Fund. "Europeans do not fully understand the IMF strategy, and even if signing of the Association agreement is postponed, the agenda of the talks with IMF will not change a bit."
Moving on
Specialists agree that the European pause is just a pause, and not a change of political course. As a reminder, Premier Mykola Azarov underlined that "this is a difficult decision, but it is the only possible one under the current economic situation in Ukraine ... It is dictated solely by economic reasons and is of tactical nature... We call on Brussels not to make it a tragedy, but to sit down and find a solution, meeting interests of both parties."
In this respect, political scientist Dmytro Vydrin notes that due to this decision the world has finally heard the voice of Ukraine on the geopolitical arena. "The decision to take a pause in the process of the European integration was logical and expected. Frankly speaking, it was the first time Ukrainian authorities actually spoke on the geopolitical arena. Before they only used to keep silence and nod when others were taking decisions." In turn, Yuri Kochevenko, director of the Institute of strategic politics, adds that the suspension of the European integration process is a good opportunity to bargain for benefits from both Russia and Europe, and it would be silly not to use it. There is no need to panic. Europe is not going anywhere, but we need to estimate all possible benefits and losses first. The EU has its own interest in the deal, and nobody does charity there," the analyst believes.
And Kulik adds that for the past couple of years Ukraine has been going to Europe really fast, and the process continues, but now it is time to stop and analyze everything that has been done and what is left to do in the future. Kyiv has not turn away from Europe and has not thrown itself on mercy of the Customs Union, it has just stopped to solve urgent matters.
Summing up, there is not need to wail for the European integration and get ready to the "dark taiga future". On the contrary, balancing between two serious centers of influence, Ukraine has finally dared to take a strong decision, which will force both Brussels and Moscow to respect our position and interest. After all, it is not the end, but the beginning.
Andriy Boyarunets
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