You're reading: Ukraine keeps doing business with Russia

Despite the undeclared war between two countries, Ukraine and Russia are still carrying on several notable business projects.

Ukraine and Russia had previously approved plans to jointly produce 150 An-148 planes worth $4.5 billion. Ukraine’s state-owned aircraft producer Antonov, headquartered in Kyiv, represents the Ukrainian side in this deal and is going to continue selling its production to the Russian Federation.

The same with Zaporizhya-based private company Motor Sich that sells half of its production to Russia, earning some $1 billion yearly on this deal alone, according to data provided by company’s press service. Aircraft engines are a key part of its exports to Russia.

Moreover, Ukrainian companies are reportedly continuing to sell weaponry to Russia, although such deliveries were banned by the government in late March.

Interim Ukrainian Foreign Minister Andriy Deshchytsia said the country will continue its trade relations with Russia since they are mutually beneficial.

The almost business-as-usual attitude by Ukraine, which expects the international community to isolate and sanction Russia, looks hypocritical.

However, it is easier for the West to cut ties with Russia than it is for Ukraine, said Vasyl Yurchyshyn, leading economic analyst for Razumkov Center. Lessening Ukraine’s dependence on Russia will take time, he said.

“Ukrainian goods can’t win the competition on the global markets today,” Yurchyshyn said. “It is necessary to improve their quality to get access to markets other than Russian.”

Last year, Ukraine sold goods worth $15 billion to Russia, down by 14.6 percent from the previous year. These were mostly machinery and metals, but also agriculture-related products and others. Russian goods imports to Ukraine were at $23 billion, energy supplies are the biggest part of it.

A number of Russian banks, including the state-owned Sberbank, VEB and VTB, are still present on the Ukrainian financial market. Russian businessman Mikhail Fridman runs Alfa-Bank and also Kyivstar, one of Ukraine’s leading telecommunication providers.

His compatriot Vagit Alekhperov owns Karpatnaftokhim chemical plant, while Zaporizhya Aluminium Plant belongs to Russian metal mogul Oleg Deripaska.

Billionaire Roman Abramovich has a stake in Southern Ore Enrichment Plant and Andrey Klyamko – in metallurgy giant Metinvest.

None of these Russian businessmen face any sanctions from the Ukrainian side.
Analysts emphasize that substituting Russia’s significant demand for Ukrainian goods will not be an easy task.

However, lessening dependence on Russia is a long-term Ukrainian government policy, which includes energy diversification and reducing Ukraine’s heavy reliance on Russian natural gas imports.

Moscow of late has not been a reliable trade partner for Ukraine. It has slapped on numerous trade restrictions that are a constant headache for Ukrainian exporters.

Besides, the price that Russia charges Ukraine for natural gas has as much or more to do with the state of bilateral.

Kyiv Post associate business editor Ivan Verstyuk can be reached at [email protected]