The Ukrainian Economy: Stuck in the Middle

On March 1st, the Ukrainian Parliament called on the U.N. security council for an emergency meeting regarding the military actions of Russian troops in Ukraine. President Obama has threatened to place trade sanctions on Russia if the militia are not removed and Putin insists that this force is a response to provocations from Ukraine. Secretary of State John Kerry has promised a billion dollar aid loan to the Ukrainian government. Details are pouring out daily as the event unfolds and all eyes are on Ukraine and Russia. (For those of you who may be confused, check out this link.)

Ukraine may have a relatively small economy, but the role they play is huge. If trade in Ukraine is hindered the economic impact will be felt around the world. 25% of Europe’s gas demand is met by Russia, half of which is pumped through Ukraine. As one of the world’s largest exporters of grain, Ukrainian exports could have an impact on world food prices.

The costs for Ukraine itself are high, too. Exports from Ukraine are evenly split between the West and Russia, and maintaining these export revenues will be important as Ukraine own $13 billion in debt this year. Check out this interactive map of Export destinations of Ukraine, 2011 from the Observatory of Economic Complexity.

Still not convinced we should be concerned? Here’s all the economic reasons why we should be paying attention: The Wall Street Journal. Crisis in Ukraine: Why You Should Care

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