Before the start of a full-scale war, Russia and Ukraine were major trading partners. In 2021, Ukraine ranked 15th on the list of Russia’s major foreign trade partners, its share was almost 2%, and the trade turnover between the countries exceeded $12 billion. But during the year of the war, these numbers were reduced to a minimum. BBC Russian Service saidhow economic ties between Moscow and kyiv collapsed, Meduza tells this material.
According to Rosstat, in 2021 Ukraine supplied Russia with goods worth $4.2 billion, Russia, in turn, exported goods and services worth $7 billion. dollars to Ukraine. In March 2022, imports from Russia to Ukraine fell to $42 million and exports to $4.2 million.
The BBC notes that the Ukrainian economy under conditions of war and aid from other countries “is becoming more open and integrated with the world”. At the same time, Russia must “invent complex supply chains in order to move goods around the country”.
According to experts interviewed by the publication, a parallel trade market will develop between Russia and Ukraine. In addition, Ukraine continues to ensure the transit of Russian gas to Europe, which is paid for by Russia under international contracts. In the first nine months of 2022, Gazprom paid around $700 million for gas transit through Ukraine. Economists regard these figures as insignificant: in the same year, kyiv received $32 billion in aid from Western partners, including $14 billion in grants.
Oleksandr Kharchenko, director of the Ukrainian Center for Energy Studies, noted that after the start of the war in Donbass in 2014, Ukraine made a strategic decision to switch to the European Union energy system. Before that, Russia and Ukraine had a common energy system, which was preserved after the collapse of the USSR.
The decision to switch to the EU energy system was due to fears that Russia would start blocking Ukraine’s electricity supply, when the country would not have enough of its own capacity. The synchronization of the energy systems of Ukraine and the EU was planned for 2023, however, due to the start of a large-scale Russian invasion on February 24, 2022, this synchronization was carried out earlier “in an incredibly short time. short “. Oleksandr Kharchenko noted that if Ukraine was still working in sync with the Russian and Belarusian energy systems, “we would have had a national blackout.”
On February 24, 2022, the Russian fuel supply also stopped. According to Sergey Kuyun, director of the A-95 consulting group, 60% of the gasoline and diesel market in Ukraine was associated with supplies from Russia and Belarus. Officially, kyiv claims that since the spring of last year it no longer buys petroleum products from Russia, but, according to some data, they are still imported into the country on documents from other jurisdictions. In Ukraine, Lukoil also continues to operate, which probably transports oil from Russia.
After February 24, Ukraine refused to supply nuclear fuel from Russia, which is used in nuclear reactors. If before the large-scale invasion, Westinghouse and Russian TVEL supplied fuel, now this is just an American company. In addition, Ukraine uses its own fuel reserves. Ukrainian authorities have said they plan to start producing nuclear fuel themselves and supply it to other countries that refuse Russian supplies.
Since February 2022, the Ukrainian market has lost a “significant share of imports” of mineral fertilizers. Previously, Ukraine received raw materials for the production of fertilizers (ammonia and natural gas) from Russia, and from Belarus – potassium, phosphorus and complex fertilizers. However, there was no shortage of fertilizers on the Ukrainian market, since about a third of agricultural land was either exploited or left uncultivated for economic and technical reasons. Further damage to Ukrainian agriculture was caused by Russia’s blockade of Black Sea ports, which prevented kyiv from exporting grain.
According to experts, Russia is unlikely to feel the loss of the Ukrainian fertilizer market.
In 2014, three Russian state banks (Sberbank, VTB and Vnesheconombank) and several private banks, including Alfa-Bank, operated in Ukraine. Russian state-owned banks provided loans to major Ukrainian state-owned enterprises, industry, and the military-industrial complex. In 2014, two Russian banks were closed – the Ukrainian subsidiary of VTB and the small bank Petrocommerce-Ukraine. Sberbank and Prominvestbank (a subsidiary of VEB) closed on February 25, 2022.
Alfa-Bank, which had been operating in Ukraine since 2001, was renamed Sence Bank after February 24, then control of it was transferred from Mikhail Fridman, Petr Aven and other shareholders to an independent manager, the former Bulgarian Finance Minister Simeon Dankov.
This industry accounted for the largest market share of Ukrainian exports to Russia. In 2021, mechanical engineering accounted for 23% of Ukrainian exports to the Russian Federation. In 2014, Ukraine banned trade with Russian defense companies, so Russia was no longer able to buy turbines from the Nikolaev plant in Zorya-Mashproekt. The BBC calls it a strategic loss for both countries. Later, Ukraine agreed to supply turbines to India.
At the same time, despite the start of the war in Donbass in 2014 and a large-scale invasion in 2022, the trade in equipment continues. In October 2022, the SBU reported about the detention of Vyacheslav Boguslayev, 83, former head of the country’s largest aviation company, Motor Sich. According to investigators, the factory, in agreement with Rostec, illegally supplied military goods for Russian attack aircraft.