Disruption of trade relations with Russia will reduce Ukraine exports and imports by a third

24 july 2014 | Voice of Russia

The economic crisis in Ukraine is getting deeper. How will this affect the Russian economy? What does it mean for Ukraine to break trade relations with Russia? On these and other questions answered the First Deputy Director General of the Analytical Center Vladislav Onischenko in an interview given to the “Voice of Russia”.

Vladislav Onischenko
Vladislav Onischenko
First Deputy Director General

“At the present moment there aren’t close links between the economies of Russia and Ukraine, except for a few industries - said in a broadcast of “Voice of Russia” Vladislav Onischenko. - First, regarding the scope of hydrocarbon exports - we cannot export them in other way than transporting a significant quantity through the territory of Ukraine. Then there is the issue of labor migration - a large number of Ukrainians is currently working in our country. It is beneficial for us and for them and it is the only source of income. And thirdly - the existing connections in machine engineering and military-industrial complex”.

 According to the expert, the rupture in relations with Russia in the military sphere is extremely unprofitable for Ukraine, as the companies in this sector, from the beginning, were oriented towards collaborating with Russia.

“This is not profitable for Ukraine. Because companies from the military-industrial complex which were built during the Soviet years, practically sold their products to a single buyer - said Mr. Onischenko. - If the Russian Federation disappears as a client, then it is necessary to fundamentally restructure production. That can be achieved, but it requires large amounts of investment that currently, in our opinion, is impossible for the Ukrainian industry to attract".

According to the expert, disruption of trade relations with Russia results in the reduction by at least a third in export and import for Ukraine, and it is a painful blow to the Ukrainian economy.

“For Russia, the situation is not that tragic, we are talking about few percents in Russia's foreign trade. However, given the general decline of investment in the Russian economy - including sanctions, the crisis and the development decrease - finding additional resources for import substitution is extremely difficult. And this is our main issue. All this happened at a wrong time” - said Mr. Onischenko.