Kiev is outraged by the rhetoric adopted by Washington and London in recent days about an imminent Russian invasion of Ukraine, while US and British decisions to withdraw much of their diplomatic staff in Kiev have angered the Ukrainian government. which is formed refers to a country on the brink of collapse.
The threat of a Russian invasion, despite Moscow’s denials, has not caused Ukraine the catastrophic consequences that accompanied the 2014 crisis with the annexation of Crimea and the conflict in Donbas. However, it is already having serious consequences for the Ukrainian economy with the freezing of business plans and the flight of some investors.
“Social unrest is the pretext Putin is looking for”
“If we tell everyone to stop working and dig trenches, it can help if the invasion happens tomorrow, but it will have catastrophic consequences for the economy. “And if there is no invasion tomorrow, then again in two months we will feel these terrible consequences for the economy,” said in an interview yesterday the CEO of Naftogaz, the state gas company of Ukraine Yuri Vitrenko.
And this situation will give Putin what he wants to intervene: “When we have financial problems, it increases the risk of social unrest, and social unrest is exactly the pretext that Putin is looking for.”
Ukraine’s central bank cut its growth forecast for 2022 to 3.4% (up from 3.8% previously). It also had to spend more than $ 1 billion in January to keep up with the currency capital flight of anxious investors. The Ukrainian currency, the hryvnia, has been at its lowest level in four years, fueling inflation and undermining purchasing power in one of Europe’s poorest countries.
The situation has led President Volodymyr Zelensky to distance himself from the American alarming tones: “We do not need this panic, because we need to stabilize the economy.”
According to Sofia Donets, an economist at investment company Renaissance Capital, Ukraine is in a stronger position than in 2014 to withstand economic pressures. It has more than doubled its reserves and is receiving Western aid. The European Union has pledged an additional € 1.2 billion, and new aid from the International Monetary Fund is being discussed.
“All of this works to mitigate the effects of prolonged unrest, but not of a large-scale armed conflict,” he said.
The Ukrainian state is currently unable to borrow in international markets, is dependent on its international creditors, and bears the brunt of paying the price of the geopolitical crisis despite the fact that its macroeconomic outlook is solid.
“Since 2014, we have been living in a situation of constant threat from Russia and this is becoming news to the world,” said Finance Minister Sergei Martchenko in an interview with Ekonomitchna Pravda.
“Life goes on without panic”
In the modern offices of his company in the center of Kiev, Dmitry Volosin lists the problems he has to solve, as well as many other Ukrainian businessmen who face the risk of a Russian intervention.
“What will happen in case of escalation? What about foreigners working in our offices in Kiev? What if martial law is enforced? What will it mean for the banking sector? Can we pay the whole world? “What will happen if we have problems with the Internet?”, Says the 30-year-old businessman, pointing to the tables with the various scenarios on his laptop.
The company, founded in 2013 and has the name Preply, appears as one of the main online platforms in the world that brings together language students and teachers. It employs 400 people in Kiev and Barcelona. The company is considered one of the national successes in the field of high tech and operates in the way it operates today and the Ukrainian capital.
Life goes on without any signs of panic, despite warnings from western capitals. But prepare for the worst.
“We have a plan, but we do not implement it because we believe that the situation will remain as it is,” explains Dmitro Volosin. He also reminded that Ukrainian companies, like the population, do not face the first escalation. They have already experienced the annexation of Crimea in 2014 and the ensuing conflict in eastern Ukraine that has never stopped since.
“We are not panicking because this situation has been going on for us for eight years. “There is always some tension here, just today it is more immediate in time,” he said, explaining that the 2014 crisis encouraged his business to grow abroad in order to survive Ukraine’s economic collapse. This has protected her from today’s turmoil.
Businesses like Dmitry Volosin are waiting. According to a poll by the European Business Association, which includes many multinationals based in Ukraine, 40% of members have prepared contingency plans and 40% are preparing to do the same.
But even if it gets worse, “the idea that the risk has grown will linger in the Ukrainian economy for a long time,” warns Litit Gevorgyan, an economist at IHS Markit.
If there is no easing of tension with Russia, the economist believes that “the threat of war will remain.” “This will whet the appetite for strategic investments that the country is desperately in need of.”
See all the news
Follow Skai.gr on Google News
and be the first to know all the news
Skai
