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Phantom of Ukraine’s new economy and cured fatback from Germany

February 05, 2015, 16:32 UTC+3 Alexandrova Lyudmila
© ITAR-TASS/Vitaly Hrabar

MOSCOW, February 5. /TASS/. Ukraine’s economic benefits from its special relationship with the European Union look doubtful. Demand for Ukrainian goods in Europe is slack and their export has been growing at a turtle’s pace, if at all. As for European imports, everything is OK: even cured fatback — a cult item in Ukraine’s ethnic cuisine — is being brought from Europe.

Despite the EU’s declared preferences for Ukrainian goods their export to the EU countries last year went up by a tiny 2.1% ($350 million), the National Bank of Ukraine said in a report on the condition of the country’s balance of payments in 2014. The daily Izvestia quotes the report as saying the slump in the EU-bound export of high value added products has been compensated for only by greater supplies of grain (by 2.8%) and fats (9.2%).

In the meantime, the export of Ukrainian goods to Russia has suffered a disastrous slump by 34.7% ($5.2 billion).

The European Union has unilaterally opened up its markets to Ukrainian goods in accordance with a preferential trading regimen with Ukraine last April. The measure envisaged cancellation of 98% of customs duties. According to Kiev’s estimates the measure was to push up the annual export of Ukrainian goods by one-third.

In reality, Ukraine’s export showed no significant increase, while import from Europe did. In particular, last December the import of EU fish was up 51%, and of pharmaceutical products, by 31.4%. Supplies of cured fatback from Germany, Poland and Hungary to Ukraine surged by 60%.

Experts are warning things will turn from bad to worse. As of January 1, 2016 Ukraine will make a transition to a free trade regimen with the EU. "Ukrainians must be prepared for tougher competition on the domestic market," the executive director of the international Blazer Foundation, Oleg Ustenko, is quoted by the website as saying. "When Ukraine lowers customs duties, its market will be flooded by European goods."

"In their striving for Ukraine’s association with the European Union the romantically-minded Ukrainian economists were dreaming of a new economy for their country," the deputy dean of the world economy and world politics department at the Higher School of Economics, Andrey Suzdaltsev, told TASS. "In their opinion that economy, old, Soviet and heavily reliant on Russian fuels should be dismantled. As soon as that happens, the good old European Union in a hurry to bring in new technologies and build new industries and a new economy will spring to life virtually in no time."

Ukraine’s former president, Viktor Yanukovych, said at a certain point that Europe would invest $50 billion into Ukraine, the analyst recalled. Its current president, Petro Poroshenko, thinks otherwise. He sees Ukraine’s fertile black soil farmland as the main resource capable of bringing about an economic upturn.

"Relations with Russia have been severed. Russia has closed its market to Ukrainian foods. The European markets have been opened, but there is nothing Ukraine might sell there. The chemical and metallurgical industries are unable to manufacture anything without gas," Suzdaltsev said.

The Ukrainian authorities, he remarked, are certain that Ukraine is the center of the Universe and everybody should hurry to rescue it from crisis. In the meantime, the European Union had hoped all the way that Ukraine would conclude an association agreement with it still enjoying Russian fuels and at Russia’s expense. Nobody will be eager to invest a dime in a country where a war is on. No light is in sight at the end of the tunnel. In reality, Ukraine is unable to survive without Russia, but its authorities refuse to recognize this hard fact."

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