Recently, Russian President Vladimir Putin signed a decree introducing “special economic measures” against Ukraine because of “unfriendly actions” on our part. So far, it is unknown what measures are going to be taken. This issue should be resolved by the Government of the Russian Federation. Opinion found out why the Kremlin suddenly decided to play sanctions, what happened with the “brotherhood” and “good” neighbor, why is it happening right now, how Ukraine should respond and from where Moscow can hit.
Why Russia is on the edge of imposing sanctions against Ukraine and why now?
Oleksii Holobutskyi, political scientist, in his commentary to Opinion, explained that, apparently, Moscow understood that the game of good and “brotherly” Russia and parallel West-dependent Ukraine no longer makes sense. Therefore it was decided to demonstrate to domestic Russian consumer a decisive policy. However, the expert adds: although sanctions cannot be anything worse than the occupation of territories, the Kremlin can trade on them by destabilizing the situation in Ukraine on the eve of the election.
“Russia needs some measures to show some kind of determined policy to the domestic consumer. These four years they didn’t impose sanctions, because, I think, all these beliefs that most people in Ukraine love Russia and it’s only “a group of nationalists” which seized power, have finally changed into reality. I think sociology gives Russia such beliefs, that they simply don’t expect the victory of purely pro-Russian forces in Ukraine. Since Russia is such a kind country, it does not introduce anything, “we are brothers”, but Ukraine is bad, it serves West, acts in accordance with its orders, introduces sanctions. In fact, it has been decided that this game has no sense to be continued. But what sanctions can we expect from the state, which has occupied a part of our territory? What could be worse?
However, there is another thing: with these sanctions, one can “trade on”. For example, they say sanctions will be against some officials or politicians. Therefore, there will be very specific issues in Ukraine itself: why some people have sanctions, but others don’t. All this, of course, is done, for the internal consumer, however, it also makes chaos in the Ukrainian political process on the eve of elections,” assured Oleksii Holobutskyi.
Oleh Belokolos, diplomatic official, the expert on international and security policy of the Maidan of Foreign Affairs, also agreed that the decision of the Kremlin is, first of all, addressed to the domestic consumer in order to punish “unfriendly” Ukraine.
“It is obvious that this step of the Kremlin should be considered primarily in the domestic Russian political context, as a clear indication of the punishment of Ukraine for allegedly unfriendly actions against Russia. It’s not a secret that in the false mirror of Russian propaganda, the Revolution of Dignity is being presented not as a popular uprising against Yanukovych’s criminal regime, but as the conspiracy by the West directed against Russia in order to undermine its economic influence in the post-Soviet space,” the expert commented.
At the same time, thinking about the reason for the delay in the introduction of sanctions, the diplomat suggests that Moscow for a long time hoped for the implementation of the so-called “Minsk agreements” that would spread the virus of “Slavic community”. Now, the Kremlin will try to do everything to prevent Ukraine’s rapprochement with either the EU or NATO and worsen the socio-economic situation on the eve of the elections.
“Obviously, he hoped for the implementation of his scenario of so-called” Minsk agreements “, according to which a weak, even more, or less united Ukrainian organism, would be hit with a dangerous, and possibly deadly, the virus of the” Slavic community “.
Now, Kremlin clearly does not want to allow Ukraine’s rapprochement with either NATO or with the European Union and in reality, seeks to impose on us the de facto status of limited sovereignty that is sometimes wrapped in a “neutral status”.
Undoubtedly, Moscow’s plans have a significant deterioration in the socio-economic situation of our country on the eve of the elections, which, according to the Kremlin’s scenarios, should turn to pro-Russian forces in Ukraine. This is clearly the direction of the above-mentioned decree,” says Oleh Belokolos.
Iliya Kusa, the expert on international politics of the Ukrainian Institute for the Future, is convinced that Moscow’s main interest is to cause trouble between the main political players and shatter the public’s confidence in Ukrainian politicians. And the fact, that sanctions are being introduced right now is explained quite simply: elections are coming soon.
“In my opinion, Russia’s sanctions are more about politics, not the economy. Kremlin has decided to impose sanctions now, as the elections are coming. The main purpose of sanctions is to make a difference in Ukrainian society. Somebody will enter the sanction list, and somebody will not. And it will provoke heated debate about why some are on the list and others are not. This is the interest of Moscow, causing trouble between the main political players and shattering the public’s confidence in Ukrainian politicians, which is still low. In addition, the probable economic sanctions together with a blockade of the Azov Sea can hurt Ukraine in the run-up to the heating season and winter. But it is unlikely, that the Russian Federation will impose sanctions on those sectors of mutual trade that are key to it (uranium, coal, petroleum products),” is said in the commentary to Opinion.
Russia decided on an ideological and political rather than an economic step. Such a belief was expressed by political expert Vasyl Mokan, agreeing that the reaction of Moscow is somehow belated. However, according to the specialist, it is important, that Kremlin first talked about personal, not sectoral sanctions. It makes sense, that this list will include representatives of the government, the presidential environment, and others like that. At the same time, oppositional politicians may appear on the list.
“From the point of view of the policy of ‘mirroring steps’ Russia’s response to the sanctions of Ukraine is clearly belated – Kremlin kept silence for more than 4 months. However, the subject of counter-sanctions was actualized by the environment of Putin not accidentally. First of all, such a step clearly lies in the ideological manipulation of Russian citizens for hysteria over the processes taking place in Ukraine (Tomos, the upcoming election, a coalition with the West). That is, it is another aspect of Russian propaganda and the creation of an image of Ukraine together with the West as a “collective enemy”.
Secondly, the subject of sanctions has a political goal – for the first time in Kremlin, this is not about sectoral but rather personal sanctions, directed against specific individuals. Logic suggests that representatives of the Ukrainian authorities (the president’s circle, representatives of the government, people’s deputies, individuals and legal entities directly or indirectly linked to authorities) could potentially fall into the sanction list of the Russian Federation.
From an electoral point of view, it is honorable for Ukrainian politicians to be in the sanctions list of the Kremlin, so it is possible that separate oppositional politics may appear there”, Mokan stressed.
Instead, an expert on constitutional law, Bohdan Bondarenko, sees the possible goal of sanctions as a way to stabilize the rating of the Russian president, which has lately been falling down. Taking this into account, according to the speaker, it is about continuing creation of external enemy.
“Foreign policy is always a continuation of the internal one, even if causality is not immediately understood, or it is multilevel. In this case, it’s easy – Putin’s rating has fallen in the last six months, there are certain problems at the regional level and level of federations, so we have the further development of external enemy. The statement of the Duma on terrorist Ukraine is put into this logic “, shared Bondarenko.
What should one expect from Kremlin’s sanctions?
Natalia Belitser, an expert of the Pylyp Orlyk Democracy Institute, believes that one of the key questions is where Russia’s sanctions will hit. After all, they can focus only on Ukrainian exports, or they will also affect Russian exports to Ukraine. That is why the economic impact of sanctions should be considered separately in these two areas.
“In anticipation of Russian sanctions, the very important question is whether they will hit mainly or exclusively Ukrainian exports. To what extent and whether they will also deal with Russian imports to Ukraine (according to Medvedev, several versions of the RF Government’s regulations on the imposition of sanctions have already been prepared). Although the trade turnover between Ukraine and Russia has significantly reduced in comparison with 2013, it was increasing over the last two years. In particular, in January-August 2018, Ukraine exported goods to Russia at 2.448 billion dollars, while importing 5.094 billion.
Therefore, the negative impact on the economy as a whole and the financial situation of certain companies and business structures should be considered separately in these two directions. In this regard, I believe that Ukrainian exporters should begin to make enormous efforts in 2014 to search for other markets for their products, then their losses would be much smaller. If now there is no other way out than a reorientation on other trading partners, then, generally speaking, in the long run, it will only benefit both: them and Ukraine as a whole.
Another matter is the dependence of Ukraine on the import of certain materials which are indispensable. First of all, it concerns the supply of fuel for nuclear power plants (in the long run it will be replaced by supplies from the USA), as well as the completion of the import of coal, gasoline (which is still goes through Belarus), and so on. But the main issue for Ukraine is the issue of transit of Russian gas to Europe, which is the source of a very substantial replenishment of the state budget and which was endangered in connection with the construction of the North Stream-2 and the Turkish Stream “, Natalia Belitser commented for Opinion.
In his turn, Kostyantyn Denysov, a candidate of economic sciences and the member of All-Ukrainian Union “Svoboda” believes, that the chemical industry, metallurgy and machine building may fall under the sanction of Russia. With regard to services, here, according to the expert, first of all, we are talking about transport services, in particular, transit pipelines.
“The decision of the Russian Federation on the introduction of “special economic measures” is now explained by the desire to put pressure on Ukraine before and during the 2019 elections. The solution is purely political and is put into the general logic of the hybrid war. Over the past 10 years, Russia has been conducting a series of trade wars against Ukraine – meat, dairy, confectionery, pipe, fertilizer, against railway cars, blocking cargo trains, etc. We should give special attention to the permanent “gas” wars.
Actually, the chemical industry, metallurgy and machine building today can fall under the sanctions of the Russian Federation. In 2017, they accounted for 77.7% of domestic commodity exports to Russia; for 8 months in 2018, this figure was 77.8%. With regard to services, 92-94% of them are transition services, first of all – transit pipelines.
Trade restrictions against them will immediately affect the economic situation in Ukraine, especially in regions whose entrepreneurs are very dependent on the Russian market. It’s enough to mention the “demonstrations” in some factories in the Zaporizhia region under the slogan “to renew trade with Russia”, led by separate people’s deputies,” said Konstyantyn Denysov.
What steps should Ukraine take?
According to Oleh Byelokos, first of all, Ukraine should ensure that it won’t be possible for Russia to influence the upcoming elections, and finally to stop the trade with the aggressor state, reorienting to other countries of the world.
“First of all, we must firmly limit Russian influence in our country and prevent Kremlin’s intervention in future elections. At the same time, trade with Russia should be closed and economic ties should be re-orientated to other regions of the world and accelerated as much as possible. In general, serious Ukrainian business should have long understood, that Putin’s Russia is an extremely unpredictable partner and the business with is bad today”, said the diplomatic official.
The main thing is not to be subjected to the blackmail of Russia. Natalia Belitser emphasized this, adding that Ukraine should instead consider a bill on the simultaneous introduction of appropriate restrictions with the United States and Great Britain as well as a package of sanctions against construction companies of the so-called “Crimean Bridge”.
“There is no doubt that we should not surrender to intimidation – this time, in the form of the presidential decree and future sanctions. In fact, they are not something particularly new or unexpected; let’s recall, in particular, the numerous “trade wars” under the presidency of Viktor Yanukovych that was long before the Revolution of Dignity, which became a turning point in Ukraine-Russia relations. Considering specific practical answers from Ukraine, let’s note the possibility of a quick review and approval of a bill already registered in the Verkhovna Rada, which obliges to impose appropriate restrictions together with the United States and Great Britain, as well as a package of sanctions against those Russian companies, that took part in the construction of the “Crimean “(Kerch Strait) bridge,” the expert from Pylyp Orlyk Democracy Institute emphasizes.
Mykola Melnyk, a political expert, and the executive general manager of the “Leviathan” Analytical Group, instead, believes that Ukraine’s response must at the same time reflect the Kremlin’s actions (i.e. the imposition of similar sanctions) and, at the same time, reorient the economy and export to other markets.
“The answer should be both – symmetrical (the introduction of mirror sanctions) and asymmetrical (stimulating Ukrainian enterprises to reorient export to non-Russian markets), it is also vital to develop the oil and gas industry. Indeed, energy dependence on Russia is still the weakest place in the Ukrainian economy”, the commentary says.
However, the political strategist Oleksii Holobutskyi doesn’t see much benefit from the “mirror sanctions”, because our state, unlike the Russian Federation, will not be able to trade on domestic Russian interests.
“This is a hybrid war. Our domestic consumer does not depend on actions such as Russian. There will be few benefits, as what can we do? Forbid 20-30 people to have business in Ukraine? They actually do not have it. To throw out the last Russians from Ukraine, who still have something else here? Honestly, I do not see much of it either. The Ukrainian state doesn’t need such a propaganda step as Russia. We won’t succeed in trading on Russian domestic interests too, it’s them who can do it,” the expert noted.