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November 30, 2018 www.intellinews.com I Page 4
opened up since the completion of the Kerch bridge earlier this year.
Ukraine is very dependent on the Sea of Azov to get its raw material exports – mainly steel – to market, but the bridge has been a Russian tool to limit or control the flow of goods through the sea to international markets. The low clearance of the bridge means that the biggest Ukrainian ships can no longer access their berths at Ukraine’s main ports and that has impacted Ukrainian trade.
In addition, there is a tendency for headline- catching military conflagrations to flare up ahead of big international events. This week world leaders will meet in Buenos Aries in Argentina for the G20 summit, which has already displaced the G7 meetings in 2008 as the most important global forum.
On November 29 US President Donald Trump abruptly cancelled his own planned G20 meeting with Russia’s Vladimir Putin slated for this weekend, blaming Russia’s failure to return the three ships from the weekend incident that have been seized by Russia including their crews.
The naval showdown in the Sea of Azov is a boon to Poroshenko as it clearly defines the Russo- Ukrainian issue in the eyes of the international community.
“This is bad. Going into to the G20 this clearly casts Russia as an aggressor but it leaves the international diplomatic community no option but to condemn Russia at the G20. This comes at a time when it was clear that Europe was clearly trying to find a way to make some sort of deal with Putin as they realise they need Russia’s help in Syria, Turkey and the Middle East. That can’t happen now,” a European diplomatic source told bne IntelliNews.
Economic impact
The Ukrainian authorities have assured local
and international business that the imposition of martial law in Ukraine from November 28 does not mean limits on economic operations all over the country, however the country's transport and energy authorities have endorsed special regimes of operations.
"Economic entities and citizens can carry out economic transactions as usual," the nation's Economic Development and Trade Ministry said in a statement on November 27, adding that it will quickly report on any changes in the mode of conducting economic and foreign economic operations.
Meanwhile, despite the diplomatic crisis, Russia placed €1bn worth of seven-year bonds under close subscription yielding 3%, with foreign investors accounting for 75% of the placement, Reuters said on November 28 citing the deputy head of VTB Bank Yury Solovyev.
The issue tested the strength of investor appetite amid the military crisis in the Azov Sea that
saw the ruble tumble in value to the dollar and federal OFZ treasury bonds rates fall the next day. "Despite high market volatility and complicated political situation, the placement was in high demand among foreign investors," according to Solovyev. Most of the investors participating in the first Russian euro placement in five years were from UK (55%), followed by Russia (24%), the EU (18%), and the US (3%).
UralSib Capital suggested on November 28
that the bonds were sold to investors already subscribed before the Azov Sea crisis broke
out, which would explain the issue defying market pressure. The bank compares the yield to Gazprom's euro-denominated issues and estimates that the finance ministry proposed a premium of about 20bp to the secondary market, seen as moderate.