US Sanctions On Russia Are Hurting Ukraine’s Economy

An elderly man crosses a Ukrainian army checkpoint near Kurakhove, Ukraine. (AP Photo/Vadim Ghirda)

An elderly man crosses a Ukrainian army checkpoint near Kurakhove, Ukraine. (AP Photo/Vadim Ghirda)

US sanctions aren’t just hurting everyone including the US, they are accomplishing nothing. The US State Department’s Radio Free Europe/Radio Liberty (RFE/RL) notified readers of a diplomacy campaign by the United States aimed at “urging” Europe to maintain sanctions against Russia. While the US claims the necessity of these sanctions are self-evident and beneficial to the US and Europe, such campaigns would not be needed if that were truly the case.

The article titled, “U.S. Sends Envoy To Urge Europe To Maintain Russian Sanctions,” states:

The United States is dispatching an envoy to Paris and Berlin on June 7 and 8 to try to convince European allies “of the importance of maintaining sanctions pressure on Russia,” the U.S. Treasury said on June 3.

The sanctions, RFE/RL claims, are a result of Russia’s involvement in neighboring Ukraine’s downward spiral, which ironically enough, began not with Russian involvement but with that of America. Between 2013-2014 the United States, with its own senators traveling to Ukraine and taking the stage at US-backed protests in Kiev, quite literally propelled a violent Neo-Nazi putsch into power.

Since then, Ukraine has unraveled. Rather than taking responsibility for yet another failed US intervention, US policymakers have instead decided to shift the blame on Moscow. The ability to hold up US-EU sanctions against Russia as a means of legitimizing this shift of responsibility is key to the continued underpinning of Western support for the current regime in Kiev, and Washington’s continued belligerence toward Moscow.

 

US Sanctions are a Geopolitical Wrecking Ball

Like a geopolitical wrecking ball, US intervention in Ukraine first destabilized and destroyed Ukraine’s economy, before brushing into Russia and now with sanctions ongoing ever since, the effects have swung back to hit Europe and even the United States itself.

Ukraine since Soviet days has enjoyed several notable accomplishments in the field of heavy industry. The legendary Anatov aircraft company is headquartered in Ukraine and produces some of the largest heavy lift aircraft in the world.

The New York Times in 2014 would report in its article, “Aviation Giant Is Nearly Grounded in Ukraine,” that:

The crisis with Russia that erupted in February terminated Antonov’s most promising, albeit already troubled, joint venture: a short-takeoff, heavy-lift plane that the Russian military had sought for years.

Antonov was not alone. With the rupture, Ukraine, among the world’s top 10 arms exporters, lost the market that spurred the development of its military industry.

Economic and military experts said Antonov’s troubles epitomized the twin problems plaguing state-run companies in Ukraine, particularly the military sector, as it tries to slip Russia’s gravitational pull and hitch its fortunes to Europe.

Though the New York Times attempts to place the blame squarely on Russia, the reality is that Ukraine has an inescapable historical, cultural, technological and socioeconomic relationship with neighboring Russia, a relationship being artificially severed by a likewise artificial regime in Kiev.

The primary problem facing this US-European prodded shift is that the defense industry Ukraine was a part of, represented and benefited from mirroring that of the US and Europe. Attempting to integrate itself with the US and Europe is unlikely, and instead what will follow is the liquidation of Ukraine’s economic strength.

The New York Times notes that Ukraine also was a prolific weapons developer and manufacturer, among the top 10 in the world. Nations around the world sought Ukrainian systems, including armored personnel carriers and main battle tanks because of comparable characteristics to Russian and Chinese systems.

Again, however, these systems depended on the many ties that still exist between Ukraine and Russia, not to mention socioeconomic and political stability within Ukraine that now no longer exists. Having severed these ties for political rather than pragmatic reasons, Ukraine has crippled itself yet again. The most poignant example of this was the failure to deliver T-84 Oplot main battle tanks to the Southeast Asian nation of Thailand.

The order was placed before the 2013-2014 putsch in Kiev, along with the acquisition of Ukrainian BTR-3 armored personnel carriers. However, delays in deliver due to instability after 2013-2014 have caused the Thai government to shift to China’s VT-4 main battle tank instead.

It should be remembered that large acquisitions of weapon systems like aircraft and ground vehicles often create an entire ecosystem of spare parts, replacements, training, and even closer military cooperation. Ukraine has not only lost out on potentially lucrative weapon deals, but all the additional benefits included with them.

There was also Ukraine’s space industry whose biggest partner was Russia. With the partnership ended by Kiev and the ability of space agencies elsewhere around the world unable to fill the void because of the long-term nature of most space programs, Kiev’s decision has all but laid this industry to rest.

Bloomberg in its article, “Putin Is Knocking Ukraine’s Space Industry Out of Orbit,” implies that Russia has crippled Ukraine’s space industry. However, throughout the article, Bloomberg admits that Ukraine’s space program was mutually beneficial to both Kiev and Moscow, with its “knocking out” benefiting neither nation. The article admits:

The rest of Ukraine’s space industry hasn’t been so fortunate. Russia was its biggest customer, and sales have cratered. That’s partly Ukraine’s doing: In June, President Petro Poroshenko halted all military sales to Russia, including some dual-use missile and rocket technologies made by Ukrainian companies.

Bloomberg also admits:

By 2013, Ukraine’s deputy prime minister told the website Space News, the country was making about $600 million a year from commercial space ventures. But Russia still accounted for about 80 percent of sales at Yuzhmash, Vladimir Tkachenko, the company’s assistant general manager, told the BBC earlier this month.

What is clear is that the US-European installed regime in Kiev has intentionally destroyed several prominent industrial centers of Ukraine’s economy, setting back, not benefiting Russia who had maintained strong ties with and depended on Ukrainian industry. What is also clear is that Ukraine and Russia weren’t the only interdependencies disrupted by Ukraine’s unraveling or the US-led sanctions leveled against Russia in its wake

 

The Wrecking Ball Swings Back

Historically Western Europe and Russia have maintained close economic ties both because of proximity and out of necessity. Interdependencies exist here not only in terms of aerospace technology, with Russia sending the entirety of all American and European astronauts into orbit aboard its Soyuz launch system, but also in terms of trade, defense and energy.

US-led sanctions and geopolitical maneuvers by Washington to breakup EU-Russian cooperation have been costly. Pipeline deals have been repeatedly disrupted, delayed or cancelled. A lucrative French-Russian deal involving the sale of Mistral Class ships to Moscow has cost the French government hundreds of millions of dollars.

Perhaps the most ironic structure to be threatened as this wrecking ball swings back West, is the US dependence on Russian RD-180 rocket engines used to launch, among other things, US Department of Defense satellites into orbit.

Even in the US, special interests are not united behind the notion of continued economic pressure on Russia. While those pushing for the continued sanctions against Russia claim the United States can find replacements, so far those replacements look particularly bleak, if not comical.

RFE/RL would report in its article, “Ukraine Proposes Working With U.S. To Replace Russian Rockets,” that:

Ukraine has proposed that Kyiv and the United States jointly develop and produce a rocket engine to replace Russian rocket engines currently used to launch U.S. military satellites.

The head of Ukraine’s Space Agency, Lyubomyr Sabadosh, said on May 31 that he proposed the plan to replace Russian RD-180 rocket engines, which the U.S. Congress has ordered to be phased out by 2019, on a visit to the United States last month.

However, for Ukraine, who is busy liquidating some of its most important heavy industrial assets on behalf of Washington and Brussels, the prospect of it replacing rocket engines even American industry would be hard-pressed to develop on its own is unlikely.

US-Russian cooperation in space between not only NASA and Roscosmos, but also between American and Russian private industry in regards to the RD-180 rocket engines has been an enduring example of post-Cold War progress. It is ironic that the United States claims, by endangering this achievement, it is some how protecting international order, peace and stability.

In the end, it seems that those in the United States lobbying heavily to keep sanctions in place have more than just Moscow to worry about. They have a growing chorus of leaders in industry who may silently seek domination over Russian industry in the long-term, but failing that, needs cooperation with Russian industry in the short-term. It is clear that those behind the sanctions are unable to deliver on either.


Ulson Gunnar, a New York-based geopolitical analyst and writer especially for the online magazine “New Eastern Outlook”.

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This BBSNews article was syndicated from MintPress News, and written by New Eastern Outlook. Read the original article here.