Why is the Ukrainian economy so important? Investment Monitor

As of this writing, Russian tanks are storming into Ukraine from multiple directions while cruise missiles bombard cities and military installations across the country. This all-out invasion, which began on the morning of February 24, took a long time to prepare.

Its orchestrator, Russian President Vladimir Putin, began building up to this moment, rhetorically and politically speaking, years before assembling 100,000 troops along the Ukrainian border in early 2022.

Putin’s historical romanticism for Ukraine, one of the founding nations of the Soviet Union, has been well known for decades, but it is his 5,000 word essay (which reads more like a blog post) which will be remembered as his last and most important casus belli. Released in mid-2021, it is both a masterclass on disinformation and a love letter to the “unity” of the Russian and Ukrainian peoples.

As an indication, Putin’s blog relied little on the wealth of the Ukrainian economy. While the leader no doubt romanticizes the common culture and heritage of the two countries, as glorified (for him) during the Soviet Union, he is strategically taciturn about the obvious economic appeal of Europe. Ukraine – and there is one, as the rankings below show.

Ukraine’s attractiveness for foreign investors is obvious

Like Putin, foreign investors also saw the opportunity that is Ukraine’s economy, which is why even in 2020, six years after a simmering conflict since the Russian incursion into Ukraine in 2014, there were still almost 50 billion dollars accumulated foreign direct investment in the country.

Over the past three decades, hundreds of foreign companies have opened stores across Ukraine (mainly in its western regions that border the EU), with the biggest investors being German automakers. Ukraine is an important part of the EU automotive components supply chain. Meanwhile, in Kyiv and Lviv, more than 100,000 people are employed in business process outsourcing for major global technology companies, such as Facebook.

“Ukraine offers a large consumer market, a highly skilled and competitive labor force, and abundant natural resources,” says the 2021 Investment Climate Statement of the US State Department.

The country’s considerable potential is one of the reasons why it has become a top destination for the European Investment Bank (EIB), which invested €554m ($620.1 million) of vital infrastructure across the country in 2021. Ukraine is the largest beneficiary of EIB investment in the Eastern Neighbourhood, accounting for over 60% of the bank’s lending in the region.

The value of Ukraine’s economy, as well as the urgency of the ongoing crisis, is reflected in the stock market’s reaction to the February 24 invasion of the country. Wall Street plunged that day, with the Dow Jones Industrial Average falling more than 800 points, while, much to Putin’s benefit, the price of oil jumped to a seven-year high of nearly $105 a barrel ( which is no windfall for oil). rich Russia).

To better understand the riches of the Ukrainian economy, the next section of this article will list the world ranking of major resources and exports of Ukraine.

Ranking of natural resources of Ukraines

First in Europe in proven recoverable reserves of uranium ore

Second place in Europe and tenth place in the world in terms of titanium ore reserves

The second place in the world in terms of explored manganese ore reserves (2.3 billion tonnes, i.e. 12% of world reserves)

Second biggest iron ore reserves in the world (30 billion tons)

The second place in Europe in terms of mercury ore reserves

Third place in Europe (13th place worldwide) in shale gas reserves (22,000 billion cubic meters)

Eighth place in the world in coal reserves (33.9 billion tons)

Ranking of Ukrainian agriculture

First in Europe in terms of arable land area

First place worldwide in sunflower and sunflower oil exports

Third place in the world by the surface of black soil (25% of the world volume)

Third largest potato producer in the world

Fourth place in the world for barley production and fourth place for barley exports

The fourth largest rye producer in the world

fifth largest maize producer and fourth exporter in the world

fifth place worldwide in honey production (75,000 tons)

fifth place worldwide in wheat exports

Ranking of Ukrainian industry

Second biggest in Europe and seventh in the world in terms of installed capacity of nuclear power plants

Third largest gas production and the fourth largest gas market in Europe (with the the fourth largest network of gas pipelines in the world, providing 142.5 billion cubic meters of gas throughput capacity in the EU)

Third largest iron exporter in the world

Fourth place in Europe and 13th in the world in terms of the length of the rail network (21,700 km)

Third place worldwide in clay exports

fifth place worldwide in titanium exports

Ninth place in the world for exports of “ore, slag and ash”

12th largest world steel producer

One of the biggest in the world rocket launcher manufacturers

With such assets, it is easy to see why Russia’s ongoing invasion of Ukraine is not only a matter of irredentism, but also of long-term economic interests which he hopes , will offset what will certainly be a very costly military campaign, complemented by Western sanctions against Russia.

More coverage of the invasion of Ukraine from Investment Monitor:

Christi C. Elwood