Kiev points finger at Moscow over Ukraine GDP contraction

Ukrainian President Petro Poroshenko © Mikhail Markiv
After blaming Russia for inflation skyrocketing to 80 percent over the last three years and losing $100 billion in trade, Kiev says Moscow is now responsible for Ukraine's 20 percent GDP drop.

"Ukraine has lost more than 20 percent of its GDP as a result of Russian aggression. This comes along with the effective economic war that Russia initiated against us, blocking our exports and transit to Central Asia and China," said Ukrainian Deputy Foreign Minister Vadym Pristayko at a UN Security Council meeting.

Pristayko was implying that Russia is violating the Budapest agreements of 1994, where the “signatories pledged not to exert economic pressure on Ukraine."

However, Moscow considers its new trade relations as a response to unfriendly economic measures from Kiev.

Russia suspended the free trade treaty with Ukraine from the beginning of 2016, saying Kiev’s move to open its borders to the EU compromises Russian interests and economic security.

The Kremlin is concerned that without such a barrier, Ukraine could illegally supply embargoed European goods to Russia.

The Kremlin banned food imports from Ukraine in response to the country joining anti-Russian sanctions, as well.

Moscow also changed transport rules for Ukrainian goods exported to Kazakhstan through Russia. Before sending goods through Russia, Ukraine is now obliged transit via Belarus in sealed containers.

The freight must have the GLONASS navigation system installed when the goods enter Russia. The tracking system is removed once the cargo leaves Russian territory.

First Deputy Prime Minister Igor Shuvalov says such restrictions were introduced so that Ukrainian goods marked for transit, didn’t appear on the shelves of Russian supermarkets.

Ukraine is now developing an alternative transit route to China through Georgia, Azerbaijan, Kazakhstan, using two ferries in the Black and Caspian Seas.