Markets
Russia and Ukraine: A Business Perspective
Unless you have been held captive with no connection to the outside world, you probably know that Russia has invaded Ukraine. Here is a little recap of why Russia was put in this situation:
 |
http://occupymelbourne.net/category/turkey/
|
Ukraine owed Russia nearly 2 billion dollars “in debts, racked up by the previous cabinet and the previous president,” Prime Minister Arseniy Yatsenyuk stated. Ukraine was unable to pay an amount so substantial. Hence, Ukraine thought of a "genius" plan to stop Russia from wanting to collect from them. Since Russia's major gas pipelines to Western European markets for the most part pass through Ukraine and the energy sector accounts for about two-thirds of Russia's exports, 30 percent of their GDP, and almost half of the Federal Budget revenues, Ukraine decided to threaten Russia[1]. They threatened to shut off the gas lines passing through Ukraine if they were not forgiven the 2 billion dollars that they owed to Russia. Obviously, Russia did not stand for this and now they are invading Ukraine.
Recently, it was reported that the European Union (EU) offered Ukraine 15 billion dollars to recover from their economic problems, but here is a better solution. Germany, the most economically sufficient country in the European Union, should offer to pay Russia for Ukraine's debt. Consequently, Ukraine should be offered a spot in the European Union. Ukraine has a population of almost 46 million people, and having the ability to trade without tariffs to the other members of the EU would help Europe's economic stumble. This could be a way to save the European economy from a projected economic meltdown in the near future, and even though Germany seems to be giving up a lot for this to happen, they would be gaining in trade and gas.
Russia and the United States have almost zero trade between the two, so the only way the Americans can intervene is through warfare, which President Obama made it clear that the US will not enter a war.
[1] Gromov. A., 2011. Russian gas market perspective. PowerPoint Presentation at Energy Delta Institute, 14 December 2011 [PowerPoint presentation]. Available from:www.energystrategy.ru/ab_ins/source/Gromov_14.12.11.ppt
No comments:
Post a Comment