Kyiv and Moscow: from partnership to competition

Since 2014, the Russian propaganda machine has been spreading misinformation throughout the world about how Ukraine’s economy is about to collapse. However, time goes by and Ukraine is not falling apart. Indeed, despite the war, Ukraine is even developing, reorienting its economy.

Nevertheless, some people believe that the resumption of close ties with Russia will be key to accelerating Ukraine’s development – although, in reality, Russia’s social model and stagnant economy mean the country is increasingly declining in world rankings. In addition, many Ukrainians understand that the story of “brotherhood” and “one nation” is just a tale and that Ukraine and Russia are competitors in the world market.

Despite the war in Donbas, the dynamics of Ukraine’s key socio-economic indicators in recent years have not been worse, but indeed sometimes even better than Russia’s.

Ukraine changes its partners

In 2019, Ukraine finally escaped from its economic dependence on Russia. Earlier, Russia accounted for more than a third of Ukraine’s foreign commerce, but last year China took first place (according to the State Statistics Committee, in January-November 2019, China accounted for 7.2 percent of Ukrainian exports and 15.1 percent of imports). So far, Russia is ranked second, but Ukraine’s economic gap with its northern neighbour is increasing. At the same time, the share of the European Union (EU), which accounted for 41.5 percent of total Ukrainian goods exports and 41.1 percent of imports, is greatly increasing.

Ukraine has much to offer in the world market, and 2019 witnessed a serious increase in agricultural sales (44.3 percent). In general, experts state that Ukrainian agricultural products have improved significantly, and most of them are exported to China, Turkey, Egypt, India, and the EU (35 percent of the total). The title of world breadbasket is increasingly associated with Ukraine. In 2019, Ukrainian farmers harvested a record crop of 75.2 million tons.

The title of world breadbasket is increasingly associated with Ukraine. In 2019, Ukrainian farmers harvested a record crop of 75.2 million tons.

At the same time, our officials address the issue of expanding bilateral cooperation with the EU. Ukraine could supply much more to this market, but EU quotas currently prevent this from happening.

Allocated volumes are sold by our manufacturers in just a month or two. For instance, in mid-February 2020 Ukraine has almost fully used 32 positions out of 42 quotas in the European Union.

According to Taras Kachka, Deputy Minister of Economic Development, Trade and Agriculture, in 2019 the volume of agricultural export to the EU increased by 22 percent, amounting to $19.2 billion.

Meanwhile, even the most optimistic forecasts do not predict a boost to the Russian economy.

Over the last eight years of Russian President Vladimir Putin’s rule, the local economy has increased a little more than 6 percent. Russian metallurgy and mechanical engineering experience export problems due to sanctions and Russian energy exporters suffer from great losses because of the abnormally warm winter, the novel coronavirus outbreak, and competition. Only Russia’s agricultural sector managed to improve its position during the year. And in this sphere, Ukraine is the main competitor.

Only Russia’s agricultural sector managed to improve its position during the year. And in this sphere, Ukraine is the main competitor.

The digital future is here

In the last year, Ukraine significantly improved its position in the IT-sphere. According to Global Finance, Ukraine was ranked 44th in the list of the 67 most technologically advanced countries, outpacing Russia by two positions.

Meanwhile, Russia continues to exploit the technological accomplishments of the Soviet Union, with a focus on the defense sector. However, Russian-made weapons are not in demand on the global market. Turkey and Indonesia recently refused to buy Russian-made Su-57 and Su-35C fighter jets.

Russian-made weapons are not in demand on the global market. Turkey and Indonesia recently refused to buy Russian-made Su-57 and Su-35C fighter jets.

Jump off the energy needle

One of the main challenges of the Ukrainian authorities since 1991 is the implementation of a strategy of energy independence from Russia.

The European experience is encouraging, demonstrating that the economy can develop effectively with minimal gas and oil consumption. However, developing renewable energy is necessary. The year 2019 has proven that the trend of renewable energy resource development has reached Ukraine. According to the State Agency for Energy Efficiency and Energy Saving, over the past year investors have put around €3.7 billion into the construction of solar, wind, and bioelectric power plants in Ukraine, tripling the capacity of alternative power plants.

The year 2019 has proven that the trend of renewable energy resource development has reached Ukraine.

According to the State Agency for Energy Efficiency and Energy Saving, over the past year investors have put around €3.7 billion into the construction of solar, wind, and bioelectric power plants in Ukraine, tripling the capacity of alternative power plants.

Over the past year investors have put around €3.7 billion into the construction of solar, wind, and bioelectric power plants in Ukraine, tripling the capacity of alternative power plants.

To keep Europe on its gas-oil needle, Russia is trying to stem the global trend towards alternative energy resources. In anticipation of the financial losses, even Vladimir Putin has criticized renewable energy at the Second Global Manufacturing and Industrialisation Summit. According to the Russian President, these directions have a negative impact on nature – “birds die from windmills and worms get out of the ground”. He compared a bet on alternative energy sources with a desire to dress in leather and settle in a cave. Europe laughed at these statements and continued to build capacity.

It must also be mentioned that in recent years Ukraine has started cooperation with the US company Westinghouse, which produces fuel elements for nuclear power plants. In 2018, the Ukrainian state-owned enterprise Energoatom fully loaded the Yuzhnoukrainsk Nuclear Power Station unit with fuel from the United States for the first time. Russia has made every effort to disrupt these agreements by consistently spreading “horror stories” about possible accidents at Ukrainian nuclear power plants, but everything is still working successfully without any accidents.

“Get away from Moscow!”

The Russian authorities are well aware that they are dependent on the energy market, and their economy remains oriented to raw materials and exports, but they are unwilling or unable to do anything about it. Instead, Russia tries to keep Ukraine’s economy in the orbit of its influence. At the same time, Russian experts state that the economic crisis in the country will start this year, and one of the main reasons for future difficulties is a state policy, coronavirus pandemic, and recession of the world economics.

Russian experts state that the economic crisis in the country will start this year, and one of the main reasons for future difficulties is state policy, coronavirus pandemic, and recession of the world economics.

Thus, Ukraine has to further develop relations (including bilateral) with the EU, the US, and China, which are the largest markets in the world. In addition, this cooperation will stimulate economic development in Ukraine along a new direction, rather than reproducing archaic, “Soviet” economic models.

Ilya Tarasyuk is a well-known Ukrainian journalist whose articles have been published by leading Ukrainian business publications for the last 15 years. Specializes in economic and political topics. He graduated from the Kyiv-Mohyla Academy with a degree in Philology.