Page 70 - bneMag Dec22

70 I Eastern Europe bne December 2022
terms will actually be up this year on the 2021 result, largely thanks to soaring prices of energy, which constitutes most of Russia exports to the rest of Europe.
Russia’s bilateral trade with the EU amounted to €257bn in 2021, with €158bn of it being Russian exports
to the bloc. According to Eurostat, Russia-EU trade was worth €171.4bn
in the first seven months of this year, which suggests the full-year result
will be around €293.8bn – an increase €36.8bn on 2021 levels. While Europe has tried to cut Russia off, it remains very dependent on many of Russia’s raw material and fuel inputs and there have been multiple and major calve-outs in the sanctions regime to keep
the European economies going.
BCS GM forecast that this recovery
in imports will continue and that the overall level in dollar terms will be only 5% below the 2021 level by the end of 2024, largely thanks to the “Pivot to the East” going on in Russia’s trade regime.
“Over the last six months, Russian economy recovered c.75% of its initial
losses caused by economic sanctions. Thus Russian imports showed only c.10% y/y contraction in September versus 40% y/y in mid-2Q22, according to our estimates,” Lavrova said. “This recovery was accompanied by a significant rearrangement of trade flows, and Russia’s pivot to the East.”
China has become the main contributor to the Russian imports recovery, increasing its deliveries by 21% y/y as of September. By using the parallel import scheme, the EAEU partners put in a record 70% y/y growth over the first seven months of this year, reports BCS GM.
“This shift to the Chinese and the EAEU deliveries nevertheless did not fully offset import losses from the Western countries, which remained c.50% lower than in the previous year,” Lavrova added. “As these countries used to deliver technologies, which are unlikely to be replaced in short term, imports are likely to remain under pressure.”
Imports recovery is viewed as one of the key triggers for the ruble weakening
during this summer, when it lost 9% of its value against the dollar. However,
a September moderation in imports' monthly growth might be a sign that the potential for further recovery is close to its end: subdued household consumption and global trade constraints are likely to remain the main factors, which will impede the full rehabilitation of imports, according to BCS GM.
The big unknown for Russia’s trade results is the total Russian oil embargo that is due to start on December 5, with a ban on crude, and be completed on February 5 with a ban on imports of the more widely distributed Russian refined products.
“The imposition of the EU embargo may result in reduced exports and thus will narrow the current account surplus ($158bn in 2023 and $100bn in 2024).
In line with these estimates, we forecast the ruble to depreciate to RUB64.5/$
by YE2022, with its further weakening to RUB70/$ in 2023 and RUB73.5/$ in 2024,” Lavrova said.”
Kherson's liberated villages start to revive
after horrors of occupation
Neil Hauer in Velika Oleksandrivka
The past few weeks have been good ones for Ukraine. On November 9, Ukrainians were stunned to watch the remarks of Russian General Sergei Surovikin, the head commander of Russia’s war effort in Ukraine, as
he recommended to Russian Defence Minister Sergei Shoigu that Russian troops pull back from the right bank of the Dnipro river entirely.
There was no ruse or trap at play, and two days later, the scenes of jubilant Ukrainian citizens greeting liberating troops in Kherson city filled social media. It marked a major victory
for Ukraine, winning back the only
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provincial capital captured by Russian troops since the February 24 invasion.
A few weeks earlier, with Russia’s
grip on right-bank Kherson still tight, Ukrainian troops had fought through stiff defences to capture a dozen villages in the province’s northeast. The situation there offers a glimpse of what the world is likely to learn about the realities of occupation in the rest of Kherson oblast – and of the challenges still ahead.
In the town of Vysokopillya, the scars of battle are everywhere. Roads are strewn with debris, while the city’s administration building – its coat of arms stripped off the
monument in front when Russian soldiers captured it in March – lies in ruins, having been heavily shelled during its time as
a Russian command post.
The town sits at the northern edge
of what was once the line of Russian control in northeast Kherson, making its recapture by Ukrainian forces a necessity once the battle for Kherson began in earnest in late August.
Amidst the wreckage, several soldiers from Ukraine’s 96th Brigade stand guard, overseeing the nascent reconstruction operations. They survived the weeks- long battles for the town.