Opinion: Only Russia can help Rebuild Ukraine’s Infrastructure, Economy after years of mismanagement, corruption

By Olga Samofalova

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By Olga Samofalova – Ukraine is beginning to realize the scale of the damage that it caused itself due to cutting economic ties with Russia. In just five years the country managed to lose about $ 80 billion and to stop many industrial enterprises.How much time will it need to return to the level of 2013? And under what conditions is this in general possible?

Over the last five years Ukraine lost $ 75-80 billion from the reduction of trade with Russia, said the deputy of the Verkhovna Rada Vadim Novinsky . “Our enterprises that were oriented towards the Russian market and the market of the CIS countries are just idle,” he noted.

Ukraine needs at least 35 years in order to return the economy to a minimum level of 2013, and the main condition for this purpose is restoring the ties with Russia, assured Novinsky. “It’s our neighbors and there is no getting away from it.Throughout centuries it will be our neighborhood. It is necessary to live with our neighbors in normal relations – only a bad owner lives with a neighbor in a state of constant fighting. A good proprietor is on friendly terms with the neighbor, “summarized the deputy.

After Vladimir Zelensky’s victory in the presidential elections, the Federation of Employers of Ukraine recognized the huge losses from the severance of commercial relations with Russia. In 2018, in comparison with the figures for 2013, it was reduced by more than three times, considered the Director of the Department of Economic Policy of the Federation of Employers of Ukraine Sergey Salivon. “At the same time, our exports fell more than four times, the import from Russia fell slightly less than three times,” he added.

These calculations do not take into account the Russian gas that is purchased by Ukraine in Slovakia, Poland and Hungary with surcharges for mediation.

“If we consider that we, after all, buy gas from Russia, then our export to Russia and our imports from Russia dropped approximately by $ 11.5 billion. But $ 11.5 billion for Russia is less than 0.8% of its GDP, and for Ukraine it is 10% of GDP. Ie, the difference in losses is 13-fold, “said Salivon. In other words, because of the decline in trade with Russia, Kiev lost 13 times more than Moscow did.

The five-year period 2014-2018 is undoubtedly a failure for the economy of Ukraine and the citizens of its country, said the economist of “Ukrainian Choice” Aleksandr Koltunovich. The new economic model of integration proposed in 2014 by the EU and the severance of ties with the Russian Federation has not paid off. Thus, according to Koltunovich, the volume of GDP was reduced from $ 183.3 billion in 2013 to $ 112.1 billion in 2017. In terms of economic volume, Ukraine was overtaken even by 10 million [population-ed] Hungary (139 billion).

Even more clear is GDP per capita. In all the global rankings Ukraine trudges at the end of the list. Even the countries of North Africa are richer than Ukraine.

“Ukraine is de facto the poorest country in Europe. In terms of GDP per capita we were overtaken by Moldova, and we are turning above Papua New Guinea. Now Moldova claims 133rd place in the world with $ 2690 of GDP per capita, and Ukraine is at 134th place with $ 2660. The GDP per capita of Ukraine is 10.3 times less than the indicator for the countries of Europe ($ 27,000) and 4.5 times lower than the countries of East Asia ($ 12,000), and is also lower than North Africa ($ 3,000). This is what Ukraine really is in economic terms, and this is unacceptable with such a high intellectual and innovation potential, “ noted Koltunovich.

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In the 1990s, Ukraine was among the top 10 most industrialized countries in the world. In 1991, its economy was the 60th best in the world and, according to forecasts of the World Bank, towards the middle of the 2000s the country was on course to enter the top 10 most developed states in the world. Now it is impossible even to dream of such things.

If after the collapse of the USSR Ukraine was a country with a high industrial and technological potential, then after 2017 its GDP was 61.5% of what it was in 1990, notes the Ukrainian expert. If in 1991 the role of industry accounted for 44% of the GDP of Ukraine, then today it is less than 20%. The specific weight of mechanical engineering in 1990 was 30.5% of industrial production of Ukrainian Soviet Socialist Republic, and now it fell to 14-15%.

After 2014 the legendary aviation company “Antonov” , the major plane-building company “Yuzhmash” , and many other industrial enterprises have passed through the worst of times.

A large-scale social crisis was the result of an economic fiasco, added Koltunovic. Ukraine claimed 7th place in the rating of Bloomberg for the top-10 most unfortunate states of the world. According to the UN, over 60% of its population is below the poverty line. The average monthly salary is only $ 313, ie, one third less than it was in 2013 – $ 409. The minimum pension was reduced to half to $ 52 per month, while in 2013 it was $ 112.

At the same time, the cost of housing and communal services rose even seven times, domestic gas and heating prices rose even more. Many Ukrainians living in villages are forced to save on heating, in other words, to freeze in their own houses.

It’s always easier to destroy than it’s to build again. And without a multi-vector nature of economic policy it will be impossible to return to pre-crisis figures.

“Only the restoration of the destroyed cooperation with the CIS countries in the hi-tech sectors of industry will allow Ukraine to increase the volume of exports of goods to the CIS markets four times, or for $ 20 billion – up to $ 26 billion annually. The deepening of trade and economic ties with the countries of the EEU will allow to further increase Ukraine’s exports of goods by $ 10 billion annually, “ Koltunovich believes .

In addition, according to him, it is necessary to review the discriminatory conditions within the framework of the Free Trade Zone with the EU. Integration with the European Union is at an initial stage, it is necessary to move to a new level, to achieve the actual free movement of goods, services, and labor. So far the situation is such that Europeans can deliver to Ukraine any goods in an unlimited number and without duties, whereas for Ukraine there are restrictions in the form of a quota system for most quick-selling export goods.

Lastly, Ukraine needs to develop its transit potential and trade with the countries of BRICS, SCO and APEC, rather than focus on Europe alone.

Koltunovich considered that the implementation of these tasks will allow to increase exports twofold from the current $ 43 billion to $ 80 billion and to increase the volume of GDP by 1.6 times – from the current $ 112 billion to $ 180-185 billion.

 

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