Since the Czech Republic granted political asylum to a former Ukrainian economy minister in January, relations between the two countries have spiraled downward.
In May, Kyiv expelled two Czech diplomats accused by the SBU state security service of spying and attempting to acquire military secrets.
Prague dismissed the accusations as retaliation for its decision to grant political asylum to Bohdan Danylyshyn, an ally of opposition leader
Yulia Tymoshenko and former economy minister in her previous government.
Maryna Ostapenko, spokesperson for Ukraine’s SBU state security service, shows journalists on May 13 a computer screen (above) with the photograph of Czech military attache Major Petra Novotna who was expelled from Ukraine. (Reuters)
Danylyshyn was facing an investigation into abuse of office which he claims, like many probes into Tymoshenko and her allies, is politically motivated by the administration of President Viktor Yanukovych.
After Ukraine expelled the two Czech diplomats, Prague responded by expelling a Ukrainian diplomat.
On June 30, the visa section of the Czech consulate in Donetsk, which processed visas for Ukrainian citizens in the east and south of the country, was forced to close because of delays in providing diplomatic accreditation.
The Czech Foreign Ministry said that this was a technical step as the Ukrainian government was yet to agree to the appointment of a new general consul in Donetsk, though documents had been submitted in February.
According to a Czech Foreign Ministry statement, this will mean that from July 1, inhabitants of Donetsk, Kharkiv, Luhansk, Dnipropetrovsk, Zaporizhia, Kherson Oblasts, as well as Crimea, will have to apply for visas in Kyiv.
Clearly, the diplomatic spats have tested bilateral relations.
But despite the increasing political tensions, business leaders say ties economic between the countries – while relatively small compared to Ukraine’s trade turnover with Russia and the European Union at large – are unlikely to be affected.
Cumulative foreign direct investment from the Czech Republic into Ukraine as of 2011 accounted for just 0.2 percent of the nearly $46 billion of inflows since independence in 1991.
Figures suggest that Czech investments into Ukraine continue to tick along at $70 million-$80 million per year.
Volodymyr Pograichniy, manager
of a Czech stone-crushing plant.
(Courtesy)
“There is no effect of the Danylyshyn story for Czech-Ukrainian economic relationship,” said Oksana Antonenko from the Kyiv office of CzechTrade, the national trade promotion agency of the Czech Ministry for Industry and Trade.
She says there are 200 mostly small-to-medium investors and companies working in Ukraine.
The lure of Ukraine’s relatively undeveloped market of 46 million people brings some Czechs here, as well as the opportunity to get a foothold doing business where Russian is commonly spoken.
But getting started can be tough, Antonenko said.
Czech FDI jumped to nearly $80 million in 2007 and remained steady at that level since.
“If you have no personal relationships here, you can’t do anything,” she said. “I tried to build up a company several years ago and I was really frustrated by the bureaucratic hurdles. In the long run Ukraine will embed European standards, also for foreign investment, but it will take some time,” Antonenko added.
Czech companies are active in engineering, the communication industry, pharmacy and agriculture.
One of them is a stone-crushing plant that employs 15 people, mostly Ukrainians.
Located about 60 kilometers from Kyiv, it was built by the Czech company ALTA, which specializes in mechanical engineering, mining, metallurgy and the energy sector.
The stone comes from a quarry nearby and will crush up to one million tons of granite stone each year.
“It’s really convenient that everything is so close,” manager Volodymyr Pograichniy said. Business is slowly improving for the crushed stone, partly because of new highways being built for the Euro 2012 soccer championship.
ALTA, which has about 100 mostly Ukrainian employees in the nation, also dgdset up a brick factory in Kuzmintsky, 120 kilometers from Kyiv.
Pograichniy also said that politics and business don’t mix at his level.
“The one has nothing to do with the other,” he said.
Key facts about the Czech Republic:
Population (estimated in 2011): 10.5 million
Government: Parliamentary republic
President: Vaclav Klaus
Prime Minister: Petr Necas
Gross domestic product (estimated nominal in 2010): $192 billion
Gross domestic product per capital in 2010: $25,600
Currency: Czech koruna (CZK)
Education: The Program for International Student Assessment, coordinated by the Organization for Economic Cooperation and Development, ranks the Czech education system as the 15th best in the world.
Important events:
Jan. 1, 1993 – Czech Republic become independent, parting with Slovakia, when Czechoslovakia split up into two separate countries
March 12, 1999 – joined the NATO military alliance
May 1, 2004 – joined the European Union
2009 (first half) – held the rotating presidency of the European Union
