Ukraine to quit CIS: Good thing for Russia and blow to our economy

Author : Oleksiy Kushch

Source : 112 Ukraine

Ukraine plans to withdraw from the CIS and to cease all forms of cooperation in the allied coordination bodies, for which the Ukrainian representatives will be recalled to their homeland
23:47, 4 June 2018

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112 Agency

Another noble goal aimed at denial is declared at the highest state level in our country. This time, Ukraine plans to withdraw from the CIS and to cease all forms of cooperation in the allied coordination bodies, for which the Ukrainian representatives will be recalled to their homeland. True, that there are no our "ambassadors" in Minsk, on 17 Kirova Street, where the headquarters of the Commonwealth is located. That is, in fact, we withdrew some vindictive spirit, which in the absence of materialized representatives rushed through the corridors of the headquarters and scared the cleaners at night.

On the one hand, it is difficult to find a convinced supporter of the CIS, who, using methods of system analysis, can prove its feasibility. This has long been understood in Moscow, where they relied on other integration projects, which are moving in a multi-speed mode. This is, first of all, the Eurasian Economic Union (EAEU) and its superstructure in the form of the Customs Union. At present, these structures include the Russian Federation, Belarus, Kazakhstan, Kyrgyzstan, and Armenia. It is this community of countries that should be assessed as the most toxic core for the restoration of the post-Soviet ersatz empire. In this format, the CIS is a kind of vestibule, where countries that used to be former Soviet republics undergo preliminary integration processing. At the moment, Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia, Moldova, Azerbaijan, Tajikistan, Uzbekistan and Ukraine still stay in this peculiar "limbo", although our status is not quite clear after the president's decree, something like suspended membership.

Already from this brief description, it becomes clear that the CIS and the Russian Federation are not the same things. Let's say more, the CIS and the EAEC also do not coincide on the contours. If we turn to purely selfish interests, then we are interested in the markets of Belarus, Uzbekistan, and Kazakhstan. As for the Russian market, taking into account the factor of war, this topic has a highly controversial character, emotions will defeat the economic analysis, which is reflected negatively in our economy.

If the CIS is a "tambour", a "limbo" and its main goal is to keep in the gravitational field of the post-Soviet space those countries that do not agree to integration towards the EAEC, why should we stay in this dubious conglomerate? The answer is obvious - there is no need for us to do this. But the problem is that any decision should be made in time. If it is accepted ahead of schedule, it will cause only significant inconvenience, and if after that, it will not save us from negative consequences. The ability to make timely decisions is what distinguishes politician from other people.

As the Marx Karl Marx once said: "Politics is the quintessence of the economy." Many years have passed since that time, but some of his works, including the theory of value and a dozen other, are still used in economic theory. And we have successfully proven the opposite: "Economics is the quintessence of politics." As a result, we have some creepy surrogate of behavioral theory related to politics. The economy, thus, becomes hostage to behavioral models of 0.1% of the country's population, more precisely, their crazy political technology designs.

The economy in Ukraine is subordinated to the politics as if the tail wagging the dog. Everything is confused, as in the Bulgarian language, where "no" means "yes." Most beautiful thing is when our officials say that we do not completely "get out" of the CIS, but only partially, staying in those "places" that coincide with our national interests.


In fact, when our politicians speak about national interests, "it means they will plunder." There is no definition of what "national interest" is in any law of Ukraine. For example, buying fertilizer from the Russian Federation – is it interest or not? On the one hand, we support the aggressor country, and on the other, our agrarians receive cheap fertilizers and can win a competitive struggle in foreign markets, partially restraining the growth of production costs. To sell industrial products to Russia and to provide factories of the east and south with orders - is it the same? After all, in the EU, they don’t want our equipment, but honey and round timber. As practice shows, our officials take national interest very subjectively, as a rule, through the prism of personal interest and the "window of a personal car".

Starting from 2014 and ending in 2017, the annual export of Ukrainian goods and services to the CIS countries decreased from $ 20.6 billion to $ 11.4 billion, or almost double. As for exports to the Russian Federation, these figures were $ 13.9 billion and $ 7.1 billion, respectively. The topics of falling exports to the CIS markets, and in particular to the Russian one, roughly coincide. At the same time, imports from the Commonwealth countries to Ukraine fell from $ 22.5 billion to $ 14.3 billion, or 1.5 times, and similar figures for Russian imports were $ 14.4 billion and $ 8.3 billion in 2014 and 2017 years. It is not difficult to see that the rate of falling imports from the CIS is noticeably inferior to the rate of decline in our exports. That is, we are losing the markets of the CIS countries, but we are not defending our own.

In parallel, an export paradox is observed, which is revealed in the analysis of relative indicators. If in 2014 the share of exports to the CIS and Russia (including) in comparison with the general indicators of trade amounted to 31% and 21%, respectively, in 2017, these figures fell to 21% and 13%, while the share of imports " from there "decreased from 32% / 20% (CIS / Russia) to 23% / 13% (CIS / Russia). What is the paradox? In absolute figures, imports from the CIS decreased more slowly than our exports there, and in relative terms (shares), the data on exports/imports with this market almost coincided. This is due to the fact that over the past few years, after a catastrophic decline in trade turnover in 2014-2016 in all areas of Ukraine's foreign trade, imports began to recover faster than exports. These leading dynamics led to the fact that we again had a negative trade balance. That's why any export direction for us is worth its weight in gold. With regard to the CIS markets - their share in our exports is still high and every fifth dollar earned by Ukrainian enterprises is from there.

If you take the top ten countries in the total commodity turnover of Ukraine (according to the results of the fourth quarter of the previous year), then two out of ten countries are the CIS members: the Russian Federation and Belarus, where Russia takes the first place with an indicator of $ 3.3 billion, and Belarus - the sixth ($ 1.1 billion). Of the $ 14.1 billion in quarterly turnover, the two countries gave $ 4.4 billion, or 31%.

At the moment, the markets of the CIS countries, if look only at Russia, Kazakhstan, Uzbekistan and Belarus - have the total GDP of $ 1.8 trillion and the population of 204 million people. The gross product per capita is an average of 8.8 thousand dollars per year for this group of countries, which is more than twice as high as ours. To lose such a market, as the French say, "this is worse than crime, it's a mistake." For example, from Ukraine's exports of goods in 2017 at a rate of 5.6 billion dollars (in the above group of countries), 1.34 billion dollars, or 24% were industrial goods with a high level of added value (boilers, reactors , turbines, electrical engineering, optics, locomotives, ships, aircraft). We have no such proportions with any other market and the specific weight of industrial goods is 5-8%.

In the near future, we can’t establish bilateral relations with the Commonwealth countries that will replace the format of the CIS. The Russian Federation already looks askance at the format of the Commonwealth that is unprofitable for Moscow. On the other hand, Russians also sin in the politicization of the economy and, as a consequence, cannot afford to be against the CIS format. In this regard, any exits from the Commonwealth for Russia are the gifts which only facilitate the format of international cooperation that is unprofitable for them. Kazakhstan and Belarus are bound by the rules of the Customs Union and the EEA. The only thread that connects these markets with Ukraine is the CIS regulations. Among them: an agreement on mutual recognition of rights and the regulation of property relations; agreement on the general agrarian market; agreement on interstate transportation; the convention on the protection of investors' rights and others.

The loss of several billion dollars in export earnings is not only a reduction in jobs and a slowdown in GDP growth but also an additional burden on the national currency, devaluation and inflation. That is, this universal tax will pay 90% of the population or all those who do not have time to migrate by that time. Well, political elites opened the season of buying the votes of their "own" electorate. Previously, they lured them with the help of buckwheat, and now - with insane ideas.

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