How Putin Has Already Weakened Ukraine’s Economy

How Putin Has Already Weakened Ukraine’s Economy

Earlier in the week, Irina Gorovaya and other entrepreneurs in Kyiv organized a “Stay In Ukraine” campaign to try to rally people behind local businesses that are being hit by the economic upheaval. Ms. Gorovaya, the chief executive of Mozgi Group, a creative agency, said festivals and other events were losing money rapidly because people are too hesitant to buy tickets.

“People are sitting at home thinking about what will come tomorrow,” she said.

On Ukraine’s southern coastline, the arrival of the Russian Navy to conduct exercises in the Black Sea has been another reminder of Ukraine’s vulnerability, both militarily and economically, since in the event of war the country’s critical ports could face a blockade. So far, Russia has allowed a corridor to remain open for commercial shipping, and there have been no disruptions to operations at Ukrainian ports.

“We don’t have any guarantees, but for now we’re operating normally,” said Aleksandr Mukhin, who works in the development office at the port in Mykolaiv in southern Ukraine.

On a visit to the port this week, the sweet, burned smell of sunflower oil, one of Ukraine’s primary exports, hung in the air. The oil was being pumped through a series of pipes into a bright red Italian vessel, the Saracena. Ukraine exports about 300,000 tons of sunflower oil a year.

During World War II, the port was the scene of fierce fighting; a portion of it has still not been repaired from the heavy bombing that occurred when Soviet forces fought to retake it from the Nazis.

The port of Odessa, the country’s largest oil and gas terminal and a major hub for grain exports, is also considered a possible target, especially given the significant sympathy in the city for pro-Russian separatists in 2014. Some military analysts have warned that Russia might try to take Odessa if the military invades.

But even without an all out blockade or attack, the ports can still be hobbled by fear of risk among international insurers. London’s marine insurance market on Tuesday listed the Russian and Ukrainian waters in the Black Sea and the Sea of Azov as high risk, making it more expensive to ship goods to and from the ports. This will add more economic pressure to Ukraine, which relies on its Black Sea ports to export grain.

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