Ukraine: Economic Shift from Russia Proves Difficult

The Wall Street Journal published an interesting piece on the hardships facing Ukrainian businesses attempting to compete in the European Union. The headline message of the piece is that it is proving much more difficult for the Ukrainian economy to shift away from its legacy affiliation with Russia and adapt in phases to the competitive European economies. In fact, a significant number of Ukrainian businesses continue to rely on the Russian market for their goods, in spite of the ongoing political hardening that characterizes current Russia-Ukraine relations.

Many of Ukraine’s industries are bound to the Russian economy. The conflict in Ukraine has already caused exports to Russia to drop by 61.3% during the first quarter of 2015 and for GDP as a whole to shrink by 17.6%. While the Russian economy’s own struggles have contributed to the downturn, the rate at which so-called Western support for Ukraine has not matched that at which ties between Ukrainian and Russian businesses are disappearing. Perhaps unsurprisingly, those worst affected are typically found nearest conflict zones, although they are not the only ones that have felt the downturn, as factories typically reliant on Russian clientele have also been shuttered despite being located far from the areas where violence is concentrated.

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News Briefs: 

  • The Afghan Taliban has claimed responsibility for mass abductions in Paktia province in eastern Afghanistan. The majority of the captives have allegedly been released by the Taliban, although a number of them remain in Taliban custody. Afghan police have confirmed that all those in custody are civilians.
  • The Tajik government has closed its eastern border to tourists. The closure comes on the heel of reports of increased violence in the restive Tajik province of Badakhshan. The Tajik government has attempted to mitigate fears of greater violence in the country by insisting that the measure is simply a precautionary one and that the majority of the violence is concentrated in Afghanistan, not within Tajikistan.
  • Iran’s minister of housing and urban development recently held a meeting with members of the Economic Cooperation Organization, a Eurasian intergovernmental organization focused on regional trade and development, and urged the members to speed production of a regional railway. Abbas Akhoundi urged members to increase state spending on development projects and to also encourage the participation of private companies in order to facilitate greater connectivity throughout the region.
  • Turkmenistan announced the release of 1,200 prisoners from Turkmen prisons. Turkmen President Gurbanguly Berdymukhammedov issued a statement to coincide with the release, saying that it was done in line with the country’s policy of releasing “repentant” prisoners. It is unclear how repentance is measured in Turkmen prisons.
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