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Industrial Policy

Ukraine’s businesses want EU cash and Turkish battleships to keep economy alive

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Ukraine’s businesses have an urgent message for European Union leaders: Send money now. 

With traditional trade routes cut off, companies need direct financial help from the EU to prevent Ukraine’s economy from collapsing as a result of Russia’s invasion, according to Dmytro Los, the head of the Ukrainian Business and Trade Association’s board. 

In an exclusive interview with POLITICO, Los made an urgent appeal for assistance from Ukraine’s western allies including cash or long-term loans with minimal interest rates to help struggling firms. He called on the EU to relax checks on food exports and speed up customs processes, and urged Turkey to deploy battleships to escort Ukrainian shipping in the Black Sea. 

Without action, millions more people facing starvation will flee to the EU and beyond as refugees, he said.  

“People [in the EU are] still more thinking about how to help their [own] company in Ukraine than how to help Ukraine and Ukrainian companies,” Los said. “They need money right now.”

The invasion by Russian forces has caused a wave of disruption to markets and trade around the world. As the fighting continues, companies inside Ukraine are struggling to remain viable and face huge financial losses. Ukraine’s export-focused agricultural sector is now giving away food to the Ukrainian population, while supply chains have seized up and export trade has been severely damaged. 

The immediate priority for Ukraine’s food companies is to prevent famine. Los is himself also an adviser to the CEO of Ukraine’s largest agri-food company, Myronivsky Hliboproduct, known as MHP. Ukraine’s food businesses are now giving away what they produce to feed the country’s army and the wider population, he said.

“It’s simply trucks, for example from MHP going to Kyiv, opening the doors, people taking food from there, and then going back,” he said. “It’s a danger even for drivers.” 

Los revealed that a group of 40 of Ukraine’s largest agri-food companies — representing 70 percent of the country’s food production — is asking the EU for direct financial support in the form of grants or low-interest loans to continue being able to give away produce. Providing cash or loans would be more efficient than sending humanitarian aid, he said. If people starve, perhaps 20 million refugees “will run to the European Union,” he added.

Trade stalled

Before the war, trade was booming for Ukraine. Last year, the country nearly doubled its exports to China, and signed a free-trade deal with Turkey in February amid a push by President Volodymyr Zelenskyy to strike more agreements across the globe. 

But now, exporters are stuck because major logistics hubs are under siege and it takes two or three days to cross Ukraine’s land borders, according to Los. “You don’t have ports and you don’t have airports in Ukraine because they’re bombed all the time, so you have only roads and railway,” he said. “All the chains of normal buying are broken.”

There is just a “thin corridor” for trade with the EU, while Russia’s navy is blockading Ukraine’s Black Sea ports, he said, adding that the Turkish government would be well placed to help secure shipping lanes for trade. 

“Turkey has the number-one fleet on the Black Sea, so if their battleships will go with Ukrainian transport or international transports, I don’t think Russia will attack Turkish battleships. It will unblock trading, it will unblock supplies.” 

Despite the pre-war boom in exports to China, trade is now cut off. That’s partly because China is “supporting Russia,” Los said, but also because shipping goods to China would be logistically “impossible.”  

This year marks the fifth anniversary of the 2017 free-trade deal between Ukraine and the EU and Los now wants the bloc to take further steps to “buy Ukrainian.” 

He called on Brussels to create “green corridors” across the border between Ukraine and the EU — routes with streamlined customs procedures to keep checks to a minimum. And he proposed a temporary halt to the EU’s sanitary and phytosanitary checks on Ukrainian agri-food exports, and fast-tracking a conformity agreement for industrial goods.

In response to Los’ requests, an EU spokesperson said the Commission was “closely monitoring the situation but cannot anticipate at this stage potential measures.” The spokesperson added that “the Commission has mobilized the largest ever response of the EU Civil Protection Mechanism to support the Ukrainian people, providing medical aid as well as food items.”

But Ukrainian businesses are anxious and want more urgency from the EU. “I know how your procedures [are] working,” Los said. “Guys, now, there is no time.”

Eddy Wax contributed reporting.

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