KIEV – The massive decline in Russia-Ukraine trade represented heavy losses for the Ukrainian economy, according to the Federation of Employers of Ukraine, which claims that the financial damage is 13 times greater than the losses suffered by Moscow.
The anti-Russian rhetoric adopted by Kiev in recent years has resulted in a drastic reduction in trade turnover between neighboring states, removing 10% of its Gross Domestic Product (GDP) from Ukraine, according to Sergey Salivon, the head of the Department of Economic Policy in the Business Association.
“Ukraine’s cross-border trade with Russia has shrunk more than three times over five years to 2018,” the official said in an interview with CapitalTV. “At the same time, our exports fell more than four times when imports from Russia fell less than three times.”
The expert pointed out that these calculations do not include purchases of Russian gas by Ukraine via Slovakia and other European countries.
“If we take into account gas imports, we will see the decline in mutual trade of about $11.5 billion,” said Salivon, noting that the figure represents only 0.8% of Russia’s GDP, while for Ukraine it is 10% of the economy.
Ukraine is aware that Kiev is losing much more than Moscow due to a deterioration of political and economic relations, according to political analyst Aleksandr Dudchak, who said that the policies of Kiev in recent years have made the Ukrainian economy non- due to a slow development of technology.
“The Ukrainian business was trying to defy restrictions, but most businessmen ended up under close scrutiny of the country’s security service,” the expert told RT, stressing that it was difficult for companies to overcome the crisis under a total dictatorship.
Trade relations between Russia and Ukraine have declined significantly over the past five years. In 2015, Moscow suspended the free trade zone agreement with Ukraine after the decision of Kiev to sign an association agreement with the European Union (EU).
Ukraine was automatically included in Russia’s list of counter-sanctions against the bloc introduced by Moscow in 2014 in response to European penalties for reunification with the Crimea and Russia’s alleged military involvement in the eastern regions of Ukraine.
The Ukrainian authorities have imposed a ban on imports of a wide range of food products from Russia including meat and fish, coffee, dairy products, chocolate and confectionery, grains, cigarettes, beer and many others. Last year, Kiev added fertilizers to its endless list of restrictions. In December 2018, Kiev extended the measures for another year. The country has also introduced sanctions against a number of Russian individuals and entities.
In response, the Russian government has banned the import of more than 50 Ukrainian products worth $ 510 million. According to Moscow, restrictions may be suspended if Kiev gives up its own restrictions on Russian products.
The trade dispute intensified earlier this year when the Kremlin banned oil and oil exports to Ukraine shortly after Kiev expanded the list of trade restrictions aimed at more Russian products. In addition, Moscow has banned the importation of clothes, tractors, tubes and vehicles for placement of pipes, among other goods. The measure targets assets worth $250 million last year, according to Russian Prime Minister Dmitry Medvedev.
Restrictions on oil exports to Ukraine are currently the most vital, according to the chairman of the independent Ukrainian-based Analytical Center based in Kiev, Aleksander Okhrimenko.
“The fact that we stop buying the network is not serious.But prohibiting sales of crude oil to Ukraine is huge, while the sanctions of Kiev against Russia are a simulation. The Ukrainian authorities can not inflict damage to the Russian economy,” declared Okhrimenko.
He emphasized that lifting mutual restraints would not help restore the previous volume of mutual trade.