Tue, Apr 01, 2014 - Page 9 News List

Stuck between a rock and a hard place: Ukraine faces tough choice

By Luke Harding  /  The Guardian, DONETSK, Ukraine

Economists say Kiev’s move toward the EU will have positive and negative consequences. The 27-member bloc recently abolished import tariffs for Ukrainian goods that previously stood at 14 percent. Economists suggest that this will help Ukraine’s agricultural sector, principally businesses that export milk, cheese and sunflower oil, while the EU says the deal will help trade between Moscow and Kiev.

Yet the news is less good for eastern Ukraine’s traditional heavy industries and a potential disaster for its machine-building and metallurgy businesses. Many of these type of exports traditionally go to Russia and other post-Soviet countries, such as Kazakhstan. Moreover, steel-making factories are heavily dependent on Russian gas supplies. Moscow has signaled that it plans to raise the price Kiev pays from US$268.50 per 1,000m3 — the figure Yanukovych agreed with Putin late last year — to about US$400.

Alexander Seliverstov, the director of Donetsk’s steel plant, said he worried what would happen if Russia shut its border to Ukrainian goods.

“This would be deeply unwelcome,” Seliverstov told Ukraiian news agency UNIAN. “Traditionally, 20 to 25 percent of our production goes to Russia. Finding an alternative market at a time of continuing economic crisis would be difficult.”

Donetsk Steel is undergoing modernization and at the moment only produces pig iron.

Since February, pro-Russian protesters have regularly gathered in the city’s Lenin Square. Their key demand is federalization — greater autonomy for the east — and another is that the new government abandon its plan for European integration.

“The EU doesn’t want Ukraine and we don’t want the EU. We regard the signing of the association agreement as capitulation,” computer programmer Roman Protsenko said.

Only friendly relations with “brotherly” Russia could bring prosperity, he said, adding that Russia, Belarus and Ukraine shared history and the Orthodox religion.

Others said that two decades after Ukraine became independent following the collapse of the Soviet Union, living standards have scarcely improved, with many surviving on pathetically low wages.

Sergey — a 51-year-old anti-Maidan protester — said he was unemployed and that he and his wife, Irina, survived on her salary of US$200 a month.

The anti-Maidan movement refers to pro-government counterprotests against the revolution in Kiev, the hub of which was the Maidan Nezalezhnosti, or Independence Square.

“We’ve put up with these conditions for 23 years,” Sergey said, adding: “Russia is like a magnet. It draws weaker states towards it.”

International relations professor Igor Todorov said the anti-EU mood among those struggling to get by was understandable.

“The main factor here is emotion, but it’s certainly true a part of Ukraine’s economy is closely connected with Russia,” Todorov said.

He added that the Kremlin had numerous economic levers it could pull to sabotage the economy and undermine Kiev, for example by banning Ukrainian goods by arguing that they do not meet Russian standards.

Todorov said Ukraine’s oligarchs were primarily concerned with hanging on to their assets in uncertain times. The country’s richest man, billionaire Rinat Akhmetov, is from Donetsk, but is currently keeping a low profile.

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