This article is a translation of "Kiev en Moskou weer in gesprek—maar heeft de NAVO daar belang bij?"
Russia had refused to talk to the coup government in Kiev, but now that there is an elected president, Moscow wants a quick resumption of talks; he is also a close acquaintance. The most important topic for the (brief) conversation between the two leaders was the continuing fighting in the east of Ukraine. That struggle according to reports from both sides has become more intense and more professional, but on Sunday, 8 June, negotiations on a ceasefire have begun between Poroshenko and an emissary from Putin in Kiev
Poroshenko wants to steer Ukraine in the direction of NATO and the EU. This would first of all appear to be an attempt to secure the capitalist development in the country and obtain a stronger negotiation position with Moscow. Ukraine after all is an economic fiasco compared to the other former state socialist countries—in 1991 it still had an income per head identical to Poland and Russia; in the meantime that figure in these two countries is three times as high as in Ukraine. Generous subsidies on energy (according to Ukraine specialist Hans van Zon, 7.5 percent of Gross National Product) ensure that there is excessive waste and in spite of the rebates (meanwhile rescinded after the Crimea rejoined Russia, and replaced by market prices), Ukraine’s bill for gas has risen to around $4 billion. Yet Gazprom continues to postpone the date of closing the tap (this time to 10 June again), because if they do, transit to Europe will be shut off by Ukraine too. That of course is not in Russia’s interest, as the country has already suffered serious economic damage.
Of course the West would prefer to see the negotiations lead to a situation in which Moscow, after payment of outstanding bills, will resume supplying cheap gas to Ukraine. Thus the taxpayer in Russia would start subsidising the adherence of Ukraine to the Western alliance.
Economic relations between Russia and Ukraine are not confined to supply and transit of gas, however. Russia imports from Ukraine rolling stock for the railways, machinery, pipes and all kinds of metals; and also an entire range of agricultural produce. The dependence on the Russian market is highly uneven, though. More than a quarter of Ukraine’s foreign trade is with Russia, whereas for Russia, the Ukrainian market is only 5.5 percent of total foreign trade. Dependence also varies per sector. Almost the integral meat export and three-quarters of milk exports of Ukraine go to Russia, whilst machinery and electrical machinery for around half of their output rely on the Russian market. Here quality matters, and since the EU would not buy much of either, the association agreement with Europe would have meant the demise of Ukrainian agriculture and a heavy blow to machinery production—which is why Yanukovych in the end did not sign the agreement.
However, if for the EU the economic motive to link up with Ukraine may be most important, for the US and NATO the military position relative to Russia predominates. And here a different economic relationship between Ukraine and Russia comes into play—the arms industry. According to Gregory Moore in Asia Times online of 27 May last, the military-industrial complex of Ukraine is indispensable for Russia. This is therefore one of the reasons for Moscow to try with all their might to keep the region close to itself and keep economic relations intact (just as it is important for the US and NATO to disrupt them).
Poroshenko wants to steer Ukraine in the direction of NATO and the EU. This would first of all appear to be an attempt to secure the capitalist development in the country and obtain a stronger negotiation position with Moscow. Ukraine after all is an economic fiasco compared to the other former state socialist countries—in 1991 it still had an income per head identical to Poland and Russia; in the meantime that figure in these two countries is three times as high as in Ukraine. Generous subsidies on energy (according to Ukraine specialist Hans van Zon, 7.5 percent of Gross National Product) ensure that there is excessive waste and in spite of the rebates (meanwhile rescinded after the Crimea rejoined Russia, and replaced by market prices), Ukraine’s bill for gas has risen to around $4 billion. Yet Gazprom continues to postpone the date of closing the tap (this time to 10 June again), because if they do, transit to Europe will be shut off by Ukraine too. That of course is not in Russia’s interest, as the country has already suffered serious economic damage.
Of course the West would prefer to see the negotiations lead to a situation in which Moscow, after payment of outstanding bills, will resume supplying cheap gas to Ukraine. Thus the taxpayer in Russia would start subsidising the adherence of Ukraine to the Western alliance.
Economic relations between Russia and Ukraine are not confined to supply and transit of gas, however. Russia imports from Ukraine rolling stock for the railways, machinery, pipes and all kinds of metals; and also an entire range of agricultural produce. The dependence on the Russian market is highly uneven, though. More than a quarter of Ukraine’s foreign trade is with Russia, whereas for Russia, the Ukrainian market is only 5.5 percent of total foreign trade. Dependence also varies per sector. Almost the integral meat export and three-quarters of milk exports of Ukraine go to Russia, whilst machinery and electrical machinery for around half of their output rely on the Russian market. Here quality matters, and since the EU would not buy much of either, the association agreement with Europe would have meant the demise of Ukrainian agriculture and a heavy blow to machinery production—which is why Yanukovych in the end did not sign the agreement.
However, if for the EU the economic motive to link up with Ukraine may be most important, for the US and NATO the military position relative to Russia predominates. And here a different economic relationship between Ukraine and Russia comes into play—the arms industry. According to Gregory Moore in Asia Times online of 27 May last, the military-industrial complex of Ukraine is indispensable for Russia. This is therefore one of the reasons for Moscow to try with all their might to keep the region close to itself and keep economic relations intact (just as it is important for the US and NATO to disrupt them).
The AN225, the largest transport plane in the world and the pride of the Russian air force, is being produced in the Antonov factories near Kiev, along with a series of other plane types, including the two presidential planes of Putin. Antonov also manufactures jet engines that are exported to Russia.
In addition, engines for planes such as the Russian fighter jet YAK 160 and helicopters are made at Motor-Sich in Zaporozhe in eastern Ukraine. Without these engines it will be practically impossible to realise the Russian intent to add 1000 attack helicopters to its arsenal.
Ukraine is also the producer of the rockets that once made the space exploration programme of the Soviet Union possible. It is still today one of the few countries in the world with a highly developed missile industry. That industry is concentrated in the south eastern city of Dnepropetrovsk, the most important industrial centre of the country next to Donetsk. Russia’s most important intercontinental ballistic missile, the SS-18, has been manufactured there and its maintenance is still taken care of from Dnepropetrovsk.
In addition, the navy is dependent on Ukraine. Of the 54 planned new Russian warships, 32 will have an engine manufactured in Ukraine. Finally there are the tank factories in Kharkov, where once the T34, T54, and T64 were being built and now the T80 and T84, and this is not the end of it.
In addition, engines for planes such as the Russian fighter jet YAK 160 and helicopters are made at Motor-Sich in Zaporozhe in eastern Ukraine. Without these engines it will be practically impossible to realise the Russian intent to add 1000 attack helicopters to its arsenal.
Ukraine is also the producer of the rockets that once made the space exploration programme of the Soviet Union possible. It is still today one of the few countries in the world with a highly developed missile industry. That industry is concentrated in the south eastern city of Dnepropetrovsk, the most important industrial centre of the country next to Donetsk. Russia’s most important intercontinental ballistic missile, the SS-18, has been manufactured there and its maintenance is still taken care of from Dnepropetrovsk.
In addition, the navy is dependent on Ukraine. Of the 54 planned new Russian warships, 32 will have an engine manufactured in Ukraine. Finally there are the tank factories in Kharkov, where once the T34, T54, and T64 were being built and now the T80 and T84, and this is not the end of it.
If Russia would lose this supply line, according to Moore, it will have to find, at short notice, replacement production for this and a series of other military requirements. If on the other hand NATO gets access, a lot will become known about the strengths and weaknesses of Russia’s existing military capabilities.
The coup government in Kiev earlier this year suspended defence exports to Russia in reprisal over the Crimea joining Russia, but negotiations will in part be aiming at restoring these exports—in exchange for cheap gas?
The coup government in Kiev earlier this year suspended defence exports to Russia in reprisal over the Crimea joining Russia, but negotiations will in part be aiming at restoring these exports—in exchange for cheap gas?
There is still another side of the matter and that is that Russia and Ukraine are also competitors in arms exports to third countries. The Donbass in east Ukraine was the Ruhr area of the former USSR and it inherited an overblown defence industry that forced it to look for markets in third countries. With cheap tanks and other military equipment Ukraine found markets in Asia, the Middle East and Africa, where it competes with Russian arms exporters. These producers will however not generally be the same as the ones supplying advanced engines for the Russian armed forces.
We can only hope that first of all there will be an end to the fighting in the east of Ukraine and that normal life will return for the population—if not we must fear for a much worse bloodbath. It is easy to imagine who will profit from such a turn of events.
Kees van der Pijl
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