ON THE VERGE

The current situation in Ukraine actively decrease the incomes of the country’s economy. Almost a quarter of a century (all post-Soviet time), its economy relied on three “elephants”: the export of cheap metallurgical prod-ucts; export of industrial products of medium engineering; transit revenues for pumping Russian gas to Europe. As a result of the short-sighted policy of the ruling elites of the country, as well as the US special operation, – “Maidan”, two of them practically do not breathe today.
The conflict in the Donbas deprived Ukraine of its cheap coal, thereby creating problems for its own metallurgy, with over 82.4% of its output ex-ported. First of all, in the EU (32.3% of exports), the Middle East (14.3%) and Turkey (14%). Only in 2017 the volume of steel production in the country fell by 20% and this is the third year of a stable negative trend in the industry.
Even worse is the general structure of export. Formally, Russia’s share in Ukrainian export did not exceed 25% even in the “best periods”. So the decline to 12.1% in 2015 and 7.5% in 2016 looks significant, but not a lethal reduc-tion.
Everything changes, taking into account some details, namely, the fact that, apart from the metal and the sale of army stockpiles of the USSR times, “to other countries,” Ukraine supplied mainly products of different depth of processing, while the Russian market included high-tech products : marine propulsion systems, engines for aircraft and helicopters, space technology, other complex technical products, differing from food significantly, in higher profit rate.
As a result, from the state, first of all, modern and industrial, during the four years of the civil war Ukraine turned into an agricultural country only at an accelerated pace. Today, 41.3%, that is, almost half (!) Of Ukrainian ex-ports, is agricultural products which is not very expensive. And since the world crisis greatly reduces the available markets, the main direction of its sale is the same European Union, which for three years has grown to 39.4% of all shipments. But it is no longer higher there because of the quotas set by Brus-sels. For many kinds of food, Ukraine chooses them literally in the first 3-4 months of the calendar year and the rest of the year rushes around the planet in search of at least some buyer.
In general, the foreign trade turnover is formally growing: in comparison with 2016 in 2017, it increased by 16.2%, but exports only increased by 16%, while imports jumped by 23.3%. As a result, following the results of 2017, the negative balance of the foreign trade of Ukraine grew more than twice, from 2.8 to $ 6.3 billion at once.
Thus, the importance of the $ 3 billion a year that Ukraine received an-nually for the transit of Russian gas to Europe has multiplied. Especially in the light of the decision announced by Gazprom to stop the transit through Ukraine after 2019 and the ongoing process of termination of the current con-tract with it.
For a long time in Kyiv (including from Washington and Warsaw) they were expected to force Moscow to keep loading the Ukrainian “pipe” due to the impossibility of laying the “Nord Stream-2” because of the lack of permits from the governments of the Baltic countries, through whose economic or terri-torial waters the pipeline had to pass. After one and a half years of violent struggle, it turned out that Gazprom had found a way to overcome the obsta-cles.
The last line of defense “against the Russian offensive” passed through the OPAL gas pipeline (a land pipeline from the “Nord Stream”, passing through the territory of Germany), which falls under the norms of the Third Energy Package limiting the loading limit of the pipe to one 50% stakeholder. The first branch of the “Nord Stream” was limited on OPAL and additional volumes would not be pumped through. That means that Gazprom would in-evitably have to go to Kiev to bow. But on October 28, 2016, the European Commission allowed the Russian company to choose almost the entire “second half” of the OPALa’s capacity.
So trying to file a lawsuit to review this decision actually meant a last and decisive battle on the very last frontier of defense. The price issue is not just $ 3 billion, but the drying out of the third and last strategic source of the Ukrainian economy’s own revenues. Moreover, without the “pipe” (and control over the “crane on it”), Ukraine loses all significance for the EU at all. This re-duces its ability to receive from Europe any kind of loans.
And this battle, Kiev lost with a crash. The general court of the EU dis-missed Naftagaz’s claim. There is nothing more to hope for Ukraine. Even if it succeeds in somehow stopping the procedure for breaking the current contract, in 2019 it will in any case expire. And those volumes that Gazprom, as it were, agree to pump through Ukraine later, do not pay back the costs of maintaining the GTS in an efficient condition. Announced by Naftogaz the decision to raise the transit tariff by half, in fact, are unscientific fiction. At such a final price, no one buys pipeline gas in Europe, which means that Gazprom will not pump it.
In a word, it remains only a short time before the gas transportation sys-tem of Ukraine is used to dismantle its rocket, automotive and other industries along the way to the dismantling of its metal. Because to organize through it a reverse from Europe for the needs of the country is possible, but without in-come from Russian transit, it will be too “golden” for Ukrainians. So, the “pipe” is definitely not going to save it. Consequently, the question of the gen-eral bankruptcy of its economy has finally become only a matter of time.

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