Ukraine and Russia: Who helped whom for all these years?

Author : Oleksandr Okhrimenko

Source : 112 Ukraine

The topic of who "feeds" whom is quite popular in the Ukrainian and Russian media
21:30, 15 August 2018

112 Agency

After all the conflicts that have taken place in recent years in relations between Ukraine and Russia, the topic of who "feeds" whom  is quite popular in the Ukrainian and Russian media. As it is not difficult to guess, the Russian media write that Russia “has been feeding" Ukraine all these twenty-seven years, and in the Ukrainian media everything is the opposite. Who is right? Let's look at the figures and facts.

There are data from the State Statistics Committee of Ukraine on the export-import of Ukraine and Russia, since 1996. These calculations are conducted in US dollars and show how many products Ukraine sold to Russia and how much it bought in Russia. During the period from 1996 to 2017, Ukraine sold goods to Russia for $ 253 billion, and bought goods in Russia worth $ 378 billion. It turns out that Ukraine paid Russia $ 124 billion more than it received from Russia. It turns out that Ukraine "fed" Russia.

But what about the myth about the "cheap gas" that Russia supplied to Ukraine? This is really a myth. Until 2006, Russia really supplied gas to Ukraine at a low price, but then on the world market natural gas prices were low too. But when the price of oil in the world increased, as well as gas prices, Russia began to supply natural gas to Ukraine at very high price. Russia has never sold gas to Ukraine at below-cost prices. Therefore, all these conversations in the Russian media about "Russia's losses of $ 200 billion from cheap gas to Ukraine" is an ordinary fake. All is just the opposite. Ukraine largely subsidized and financed the Russian economy. And now it continues to do this. For the first half of 2018, Ukraine sold to Russia goods worth $ 1.8 billion, and bought goods in Russia worth $ 3.8 billion. Thus, we can say that Ukraine subsidized the Russian economy this year at $ 2 billion. And this is despite all the anti-Russian hysteria in Ukraine.

It is clear that Russia is offended that the subsidy of its economy at the expense of Ukraine has decreased. If the level of Ukraine-Russia trade turnover for the period 2014-2017 would have been at the level of 2013, then Ukraine would additionally receive export revenues from the supply of goods to Russia -$ 38 billion. This is the loss of Ukraine's exports from the severance of trade relations with Russia. At the same time, Russia lost $ 60 billion from the break of trade relations with Ukraine. This is the amount the import of goods from Russia to Ukraine decreased.

The question arises: where does Ukraine find the currency to subsidize the Russian economy? Partly from the sale of metal and grain to the countries of Asia and Africa. Our trade with Turkey, Egypt, Saudi Arabia, Iraq, India is always surplus. In this situation, these countries are subsidizing Ukraine at the expense of buying Ukrainian goods. But this currency amount is small, and therefore it is necessary to spend currency on the purchase of goods from Russia at the expense of the currency that entered Ukraine in the form of foreign investments, foreign loans and guest workers’ money. But this solves the problem partially. There have been several precedents when Ukraine had to hastily borrow money from foreign companies and organizations in order to pay for imported gas bought in Russia, which was considered "very cheap." Therefore, when they say that the Ukrainian authorities have many foreign debts, this is really true. Because part of these debts, since the days of president Kuchma, were used to pay for the import of Russian gas.

Let’s draw a conclusion. Ukraine should trade with Russia, and not only with Russia. The economy of Ukraine needs natural gas, oil and oil products, and they can be bought in Russia, or you can buy Russian gas through the EU, and Russian gasoline through Belarus. In any case, for Ukraine it is currently difficult to achieve a surplus in foreign trade with Russia. We can only partially reduce the deficit, by increasing exports from Ukraine to Russia. But Russia does not really want it, and Volodymyr Groysman's government helps Russia to close the Russian market for Ukrainian goods. Therefore, the decline in exports from Ukraine to Russia in recent years is a mutual "merit" of the leadership of Russia and Ukraine.

Is it possible to restore normal trade relations with Russia? Everything is possible, but so far unlikely. And it is clear that it is necessary not only to restore the foreign trade of Ukraine and Russia, but also to make it more profitable for Ukraine, so that subsidizing the Russian economy at the expense of Ukraine would be minimal. Foreign trade should be mutually beneficial, but now and before it was more profitable for Russian side. This is the picture of our foreign trade in the talk about "who feeds whom".

P.S. Just for your information. During the entire period of Ukraine's existence, investments from Russia into the Ukrainian economy amounted to $ 4.5 billion. But, most likely, soon they will be stopped, as the policy of the Ukrainian government towards Russian investors is very aggressive.

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