Publication: Monitor Volume: 3 Issue: 157

Although most of the other CIS economies are growing, Russia’s is stagnating (GDP is down 0.2 percent for the first 7 months of 1997 over the same period in 1996. See yesterday’s Monitor) while Ukraine’s GDP continues to fall sharply (down 6.9 percent for the same period). A whopping 17.8 percent decline in bilateral Russian-Ukrainian trade (measured in dollar terms) recorded at mid-year by Ukrainian officials is almost certainly a major factor in this development, as both countries are the other’s largest trading partner. A 27.5 percent drop in Ukrainian exports to Russia accounted for the lion’s share of the decline in trade, while Ukrainian imports from Russia fell by 8.5 percent. Ukraine’s deficit in trade with Russia thereby rose to $1,037 million, up from $176.6 million in mid-1996. (Russian and Ukrainian agencies, August 18, 20, 21)

While these preliminary figures are far from precise, the do show that the downward trend in Russian-Ukrainian trade that began last year shows no sign of bottoming out. Fortunately, much of this lost trade is offset by increases with other countries. For example, Ukrainian exports to Belarus and Moldova increased by 45 and 20 percent, respectively, while Russia’s trade with non-CIS countries also continues to grow. Still, despite this increased trade with other partners, overall trade volumes for both countries were down at mid-year. Russian data report a 3.9 percent decline in Russia’s foreign trade (in dollar terms) at mid-year (relative to mid-1996), and the decline in Ukraine’s trade is by all accounts steeper.

Neither the Russian nor Ukrainian government seems particularly concerned about improving prospects for bilateral trade, however. This is particularly apparent on the Russian side, which in September 1996 began assessing value added taxes on imports from Ukraine, and which on May 15 introduced a 25 percent tariff on refined sugar imports from Ukraine. Ukrainian trade officials are now threatening to retaliate against Russian imports. As is often the case with such arrangements between CIS countries, both sides seem to have forgotten about the free trade agreement they concluded in 1993.

Kazakhstan Foresees Oil Export Route Via Iran.