Foreign Trade: What This Tells Us About Ukraine’s Options

If you want to understand some of the deep issues involved in Ukraine’s “choice” between the EU and Russia … and I’m sure that most Ukrainians as well as the Ukrainian government would rather not choose… check out foreign trade statistics.  The takeaway: Russia is Ukraine’s dominant trading partner and dwarfs EU countries in this regard.

These numbers are for 2011, from MIT’s Observatory of Economic Complexity ( http://atlas.media.mit.edu/profile/country/ukr/ )

Ukrainian Exports

  1. Russia      27 %
  2. Turkey       5.2 %
  3. Italy             4.8 %
  4. Poland         3.8 %
  5. India            3.5 %
  6. China           3.1 %
  7. Egypt           3.0 %
  8. Germany    2.8 %
  9. Belarus        2.6 %
  10. Kazakhst.   2.5 %
  11. Lebanon     1.9 %
  12. Hungary     1.9 %
  13. USA             1.7 %

Total to EU … approx. 20.3 %

Ukrainian Imports

  1. Russia  …     36 %
  2. Belarus …      6.1 %
  3. Poland …       4.6 %
  4. Germany …   4.3 %
  5. Italy …            4.0 %
  6. Turkey …       3.7 %
  7. China …           3.0 %
  8. Kazakhstan    2.9 %
  9. Romania         1.8 %
  10. Hungary         1.7 %
  11. Netherlands  1.6 %
  12. Egypt                1.4 %
  13. Azerbaidjan   1.4 %

Total EU 16.4 %

So what does this tell us — Russia is by far Ukraine’s biggest trading partner, accounting for over one quarter of her exports and over one third of her imports.  Individual EU powerhouses, such as Germany, are engaged in far less trade with Ukraine than Russia, and trade with Russia also exceeds that with all EU countries combined.  Simply put, Ukraine cannot dispense with trade with Russia, particularly with the natural gas and oil Russia sells her at bargain basement prices.  Note that Russian authorities have decided to end the sweetheart pricing deal on fossil fuels, as punishment for the new regime in Kiev.

In short, Russian trade is necessary to the Ukrainian economy.  If Russia forces a choice between herself and the EU ( as she did when she forced former president Yanukovych to back off from entry into the EU), Ukraine’s choice is inevitable, whatever the protesters on Maidan Square or the new government might say.

Once again, Putin holds all the cards.

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