In June 2014 Russia stopped gas exports to Ukraine. Russian gas covered about half of Ukraine’s gas consumption in previous years and during winter demand is about three times higher than in summer. Consequently, without substantial action Ukraine will not be able to cover its gas demand this winter. To ensure adequate supplies Ukraine seeks to reduce gas demand and increase gas imports from the west (‘reverse flows’).
Gas transit through Ukraine and gas imports by Ukraine are decreasing. The pipeline system is ageing and the current regulatory framework does not meet the European standards. In this context, the current organisation of the Ukrainian gas transmission system is revealing its substantial weaknesses: The high degree of government intervention in determining access conditions and tariffs is scaring off (potential) users and the lack of a sufficient and predictable income stream prevents long-term investments into the infrastructure. One key question when discussing reforming the regulatory framework is how gas transmission tariffs are structured and determined. The tariffs determine the business case for the operator and provide incentives for modernisation and efficient operation.
While EU and US sanctions against Russia over its aggression in Ukraine, and Russia’s countersanctions, are much discussed due to their evident political significance, less attention has been given to Russia’s punitive sanctions against the three Eastern European states – Ukraine, Moldova and Georgia – that have signed with the EU Association Agreements (AA), which include Deep and Comprehensive Free Trade Area (DCFTA) provisions.
Corruption, failure of property rights and excessive business regulation are key problems of Ukrainian business environment. What changes have occurred in this field over the past six months that have passed since the overthrow of the regime of Yanukovych? What does Ukrainian business await primarily from the government to improve the business environment in the country now? Today Ukraine is in a situation where had never been. On the one hand, it is a deep economic crisis and the need to reform and rebuild the key state institutions. In addition, the war in the East - fighting against terrorists, supported by Russia, which require resources and mobilize the forces of the society.
The Ukrainian government is about to decide on the format of the 3G license auction. What are the best international practices for the spectrum auctions?
Ukraine now is in a completely new conditions - military action in the east and the military invasion and aggression of the Russian Federation - have left a significant mark on the processes taking place in the country, including the reform of the business environment.
Comparing the financial situation of the company currently and a year ago 42.3% of surveyed managers reported no change, 8% indicated that they felt better, and 40.7% of respondents indicated that the situation had worsened, 9% - could not answer the question.
Ukraine faces the possibility of major trade disruptions with Russia due to the current political tensions. The machine building sector is most exposed to the Russian market among all Ukrainian sectors, with 32% of output being exported to Russia. For this reason, the focus of the present paper is on this sector.
The Institute for Economic Research and Policy consulting is happy to present the brochure "European Integration: Experience of V4 Countries and Ukrainian Reality". The brochure was prepared as part of the project "V4-Ukraine think tanks networking for public discussion on EU integration and advocacy of reforms" in cooperation with think tanks from the Czech Republic, Hungary and Slovakia.