Keshetadvisors Uncategorized Russia and Ukraine: Yet Another Trade War

Russia and Ukraine: Yet Another Trade War

Russia: Another Ukrainian Trade War

Russia and Ukraine are on the verge of an ‘automotive trade war’ despite Russia’s accession to the World Trade Organisation in August 2012; and Ukraine being an existing W.T.O. member with all the protocols and agreements, both have promised to abide by.

This disagreement follows a long line of disputes since the dissolution of the USSR and Ukrainian independence; the most recent was the so-called ‘Cheese War’ when the Russian diary industry successfully lobbied the Russian Duma for the removal ‘substandard’ Ukrainian diary- products from Russian retail outlets.

The ‘Cheese War’ preceded the more serious and on-going ‘Gas War’s.’ The Gas disputes started in the 1990’s and peaked 2005-2006, 2007-2008 and 2008-2009.

The latest spat between nations follows Russia’s decision to introduce the ‘utilisation-fee’, more colloquially known as the ‘recycling-tax’ or ‘scrappage tax’. On the face of it the new tax is a protectionist measure for the nascent Russian car industry and its major foreign OEM investors (Ford, General Motors, Hyundai, Toyota and Volkswagen et al)

Disputes involving Russia and her neighbours need to be looked at holistically as it is not the ‘obvious’ which is the cause of the belligerence. Politics and business in the former Soviet Union are intrinsically linked, opaque by nature and do not follow quite the same pattern as seen in the west.

In May 2009 President Putin visited Russian war graves in the Ukraine. After a wreath laying ceremony at the grave of Anton Denikin, the famous White Russian General who fought the russia Ukraine war Bolsheviks, he urged the journalists to read Denikin’s diaries.

“He has a discussion there about Big Russia and Little Russia-Ukraine,” he said. “He says that nobody should be permitted to interfere in relations between us; they have always been the business of Russia itself.”

Parts of Ukraine were a region formerly known as “Little Russia,” while Russia was called “Great Russia.” Whilst demeaning to some Ukrainians; the term “Little Russia” exemplifies Putin’s strong nationalistic beliefs and may be seen as a warning to the West not to meddle in Ukraine, a country that Russia would like to bring closer to home and to join the Eurasian Economic Union.

Gas and Gazprom, the ultimate strategic weapon, influences politicians as almost no other; no politician wants to responsible for running the country whilst its’ citizens freeze. In the case of the Ukraine, especially when the ‘Orange Revolution’ is such a recent memory.

Despite the pressures, Viktor Yanukovych, President of Ukraine, has no wish to be subservient to the Kremlin; to the contrary he seems eager to show his independence.


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