Moscow has provided a tough response to Kiev's April expansion of the embargoed Russian goods list. On April 18, Russian Prime Minister Dmitry Medvedev signed a document on protective measures in trade and economic relations with Ukraine. The resolution prohibits the export of oil, petrochemicals and coal to Ukraine (the document supplemented the governmental order of the Russian Federation No. 1716-83 of December 29, 2018 stipulating a ban on the import into Russia of goods originating from Ukraine or transported through the territory of Ukraine, as well as approving a list of such goods).
As the head of the cabinet said at a session of the Russian government, the restrictive measure will also affect Ukrainian engineering products, the consumer goods industry and metalworking, the cost of which amounted to almost 250 million dollars last year.
However, the document specifies a list of goods that can be exported to Ukraine only upon special permits from June 1 this year. This category includes fuel and energy products, particularly oil, petrochemicals and coal. The application processing procedure and issuing permits is assigned to the Ministry of Economic Development of the Russian Federation.
"I have signed a government decree on that. We are expanding the ban on imports of certain types of goods to Russia, which will be applied to Ukrainian engineering products, consumer goods, metal products, the cost of which totaled almost 250 million dollars last year."
Secondly, a ban is established on the export of Russian oil and petrochemicals to Ukraine.
Thirdly, the list of goods is determined that can be exported to Ukraine only on the basis of separate permits from June 1 this year. This category includes fuel and energy products, including coal and oil products.
Thus, there is no lag at all – only after about a month and a half Russian suppliers will become able to start setting up logistics by means of special permits.
However, the risk of a spike in fuel prices in the domestic Ukrainian market due to its inevitable redesigning has become extremely high – seasonal demand, including the sowing season, is only adding to the excitement. This is a telling blow to the republican economy. It is no mere chance that Ukrtatnafta started to panic – the company has already warned about the threat of collapse not only in the fuel market, but also in the entire economy of Ukraine because of the ban on the Russian oil and petrochemicals supplies. A relevant press release has been published on its official website.
For the time being, Ukrtatnafta is the largest republican producer of petrochemicals which processes over 18 million tons of raw materials per year.
Although Ukrtatnafta is making a mountain out of a molehill, Russia still does not have a monopoly in the fuel market of Ukraine. Therefore, the fatal collapse of its economy due to the "energy embargo" is highly unlikely, since logistics will be gradually adapted to the new mode of operation. But in any case Ukraine will have to massively overpay other suppliers of oil and petrochemicals.
The Russian authorities' decision to limit the energy resources supply to Ukraine can be consistently linked with the desire to steer clear from the frontrunner in the second round of the country's presidential elections, Vladimir Zelensky, who eventually smoked the competition. The idea is simple – he is not Moscow's candidate if the latter imposes a ban on the eve of Zelensky's expected victory in the election. While President Petro Poroshenko sought to cast Zelensky in the role of a pro-Kremlin candidate.
The level of voter dissatisfaction with Poroshenko is so high that even Zelensky has become a certain hope for the Ukrainians.
It is important to bear in mind that if Russia seriously decided to limit the supply of petrochemicals to Ukraine, it would not have introduced any special permits.
Still, the change of Ukraine's leader and the subsequent formation of a new Cabinet may affect the foreign policy – the moves of Kiev towards stopping the sanction war with Moscow are highly likely either. Even though this is not the baseline scenario – Zelensky's rise to power does not guarantee warmer relations between Russia and Ukraine, but holds out a hope of improvement. In his public speeches an anti-Russian bias was sometimes noticeable. Although now, after his victory in the presidential race, Zelensky's rhetoric has become more reasonable – he seems sort of ready to resume a full-fledged diplomatic dialogue with Russia.