Economic tensions between Ukraine and Russia

Though the fighting may be slowing down between Ukraine and the Russian back separatists there is no shortage of rhetoric between Russia and Ukraine. Russia is threatening retaliation against Ukraine for the signing a trade agreement with the European Union on September 12. Russia argues “the pact would lead to a flood of EU imports entering Russia and undercut Russian exports to Ukraine” this lead to the packed being delayed until 2016 to allow for both sides to adjust to the changing economic and trade atmosphere between the two countries.

The threat of Russia using military force as a means of adjusting trade agreements is a form of tying their hands because they are laying out a clear message of this is what could happen if the agreement between the European Union and Ukraine is not amended to protect Russia’s trading, and economic interests in Ukraine. It does not leave much room for compromise between the groups because of the fact that Russia has moved to such an extreme position, that it forces the EU and Ukraine to amend the start date of their trade agreement to 2016.

Another tactic currently being employed by Russia to influence Ukraine’s decision making is the Russian natural gas company Gazprom threatening to cut off gas supplies entering Ukraine. A cut in the gas supply to Ukraine has bigger implications than just Ukraine; it would lead to a gas shortage for many European countries, as their gas supply lines come from the Ukraine. Though both countries would suffer, the loss of revenue and market for Russia and the lack of gas for Ukraine and Europe, both a willing to lose in order to not bend to the others will.

There is growing dissent among some Russians on how these implications will hurt Russia in the long run and how Russia could fall into a deep recession.  Former finance minister Alexei Kudrin is one of the public figures speaking out about Russia’s handling of the crisis with Ukraine.

“There will be stagnation, like now. There could be recession. We will be balancing on the edge of recession all the time… depressed economic growth will be exacerbated by isolation from global markets.”

The inability for either side to cooperate is leading to an ever growing gap between the two parties making it difficult for a long term solution to the aggression both militarily and economically can be solved. Both sides seem far apart on a solution that could lead to a lose- lose situation, and hard time for both countries, and Europe as a whole.

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5 thoughts on “Economic tensions between Ukraine and Russia

  1. The tensions between Russia and the West are growing with each passing day. Russia needs to get its economy moving again, and the desperation will of course make them lash out in aggressive ways in order to try and gain some leverage and growth again. This could very well end in some armed conflicts, but I am not so sure just how far NATO is willing to go against Russia if this trend continues.

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  2. It all depends on if Russia’s aggressive acts move towards a NATO member. If a conflict spills over into another country other than Ukraine, NATO would be obligated to act. Which I believe NATO is better equipped than the Russian military, but it is highly unlikely to ever get that far, there are to many negative effects for both sides if it does.

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  3. I did not previously know about the potential oil cutoff by Russia and i found that really intriguing. It is really interesting to see how far Russia is willing to go with this. A news website/magazine called Vice recently covered the escalating tensions in Ukraine. If you haven’t already, I would highly recommend checking it out- it gives a really good perspective and on-the-ground views of just how tense things are becoming.

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  4. I don’t think the Crimean peninsula is what Putin really wants because the benefits from annexing Crimea is not great enough compare to the economic impact by global isolation.Putin could expect this situation, and he won’t play lose-lose game. As a result, I believe that what he is aiming is the dissolution of EU because it obviously makes the Russian global influence stronger. Therefore, If the Russian economy becomes too bad to keep national finance, he will easily get away from Crimea.

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  5. The annexation of Crimea does benefit Russia a lot by giving Russia access to the Black Sea for its navy. That is considered one of the main reason for Russia moving into the Region. Without Crimea Russia would not have any influence in the region like it wants militarily.

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