Featured Galleries CLICK HERE to View the Video Presentation of the Opening of the "Holodomor Through the Eyes of Ukrainian Artists" Exhibition in Wash, D.C. Nov-Dec 2021 USUBC COLLECTION OF OVER 160 UKRAINE HISTORIC NEWS PHOTOGRAPHS 1918-1997 "HOLODOMOR 1932-33: THROUGH THE EYES OF UKRAINIAN ARTISTS" - COLLECTION OF POSTERS AND PAINTINGS USUBC COLLECTION OF HISTORIC PHOTOGRAPHS ABOUT LIFE AND CAREER OF IGOR SIKORSKY PHOTOGRAPHS - INVENTOR OF THE HELICOPTER Ten USUBC Historic Full Page Ads in the Kyiv Post
UKRAINE - IMPACT OF BREXIT
Analysis & Commentary by Timothy Ash
London, UK, Friday, June 24, 2016
LONDON - I am getting lots of questions as to what Brexit means for Ukraine, so herein is my attempt to put it all in a Ukrainian perspective.
Well, the positive is that it likely means that Russia will remain on the side-lines in terms of direct intervention in Ukraine, waiting for further fall-out across the EU, to ultimately weaken the EU’s hand with respect to negotiations over the future of Ukraine.
I think this was also inevitable anyway as Putin await the outcome of the US elections – with the assumption that he will be able to negotiate “spheres of influence” with a future president Trump, whereby Ukraine will be clearly delineated as Russia’s “turf”.
I actually think that is a Russian miscalculation, as I think any future US president will have to work with a Congress which is pretty anti-Russian at this stage, and unlikely to agree to a reset with Russia.
But for Ukraine, this does mean that Russia will avoid re-escalation likely until the middle of 2017 that is unless Hilary wins in November.
I would add here that with the collapse of trade, transit, energy and banking/debt ties to Russia, its economic levers over Ukraine are much reduced, and the only card is the military/security angle to play out in Donbas. The latter comes with very big risks for Putin, especially heading into Duma elections in September this year, and presidential elections in March 2018.
So the above suggests that Moscow will give Ukraine a break for a period, time at which Ukraine can continue to rebuild the economy and it’s military.
But Brexit does mean the end of the whole EU enlargement process, at least in my view. The question is how damaging will this be to Ukraine – is/has this been a key anchor for reform thus far, i.e. the desire for eventual EU membership. And, if there is now zero chance of EU membership will that EU accession drive weaken?
On this account I would tend to argue not. I don’t really think Ukrainians have ever been that naïve to think that the EU will ever let them in that easily/soon – not after the disappointments after the Orange Revolution when the EU failed to give them a membership anchor (with hindsight that was a huge mistake, as Ukraine might be a different place today).
And the Euromaydan was not really about EU membership, it was about reforming Ukraine towards European values of democracy, respect for human rights, rule of law, free press, etc,.
Ukrainian’s want(ed) to live in a country which respected European values – so it is possible to reform towards these without assuming EU membership, and hopefully, even out of the EU, the UK will still respect these same European, or indeed Western, values.
And therein, I think Ukraine’s course is set, as opinion polls still clearly support (55-60%) the drive towards Europe, and not towards an eastern/Putin style of government (single digit support now for CIS CU/Eurasian Union membership).
And while Brexit may well have a significant negative hit to European markets, the EU + UK out, still presents a huge market for Ukraine, multiples of times that of Russia and the CIS CU space.
Hence Ukraine should still look to reform and focus on improving trade ties with the EU, and European economic space.
So the combination of Russia stepping back from the brink in Ukraine, solid progress made on the reform programme already in Ukraine, and continued focus on that reform agenda, should help Ukraine build durability for potential challenges ahead, e.g. another future Russian intervention.
This information has been issued by the Sales/Trading departments of Nomura International plc ("NIplc") and is made available to you by NIplc and/or its affiliates (collectively, "Nomura"), in order to promote investment services and is provided without compensation. This is not investment research within the meaning of applicable regulatory rules in the European Economic Area, nor is it research under the rules of the U.S. Self Regulatory Organizations of which Nomura is a member or under applicable rules in Hong Kong. Information contained herein is provided for informational purposes only, is intended solely for your use and may not be quoted, circulated or otherwise referred to without our express consent.
** The views expressed above do not necessarily represent the house views of NIplc. **
See http://www.nomura.com/europe/bb.htm for important information. This email is confidential & intended for the named recipient(s) only. If you are not an intended recipient of this email you must not copy, distribute or take any further action in reliance on it & you should
delete it & notify the sender immediately. Email is not a secure method of communication and Nomura International plc cannot accept responsibility for the accuracy or completeness of this message or any attachment(s). If verification of this email is sought then please request a hard copy. Unless otherwise stated any views or opinions presented are solely those of the author and do not represent those of Nomura International plc.