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Why Ukraine matters

By Peter Shmigel - posted Monday, 9 December 2013


There's especially a good fit between some of Australia's specialist industries and Ukraine's growing demands in the areas of:

  • mining services - as Ukraine's abundant but extraordinarily archaic resources sector moves out of the 19th no less than the 20th century;
  • international education – as the children of Ukraine's growing middle class look to study abroad, and;
  • financial services – as Ukraine's economic oligarchs seek to legitimise themselves (not to mention increasingly disaffiliate themselves from the current regime).

All up, Australia / Ukraine trade has grown by 50% (from $117 million to $176 million) between 2009 to 2012 despite tough global conditions and a Ukrainian regime that's been accused of focussing on enriching itself rather than the managing the nation's economy. This suggests that opportunities would grow with better governance and better economic management on the Ukrainian end.

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In pursuing more opportunities in Ukraine, would there be some downside risk from, say, decreased trade opportunities for Australia with Russia? From a risk management perspective, the answer is: low probability and low consequence. In the same way that Russia can't turn the economic tap off with others who have been critical of its extreme political pressure on Ukraine (such as the US), it can't turn off the (comparatively small) economic tap when it comes to Australia.

Second, Ukraine should matter to Australia because it matters to our allies in Europe who very publicly say they need Ukraine. In addition to global terrorism, if there is a key regional security issue for contemporary Europe, it is the rise of President Vladimir Putin's authoritarian vision for Russia.

Bringing Ukraine further into the European sphere of influence, and further away from Putin's aspirations, is a strong hedge for the Europe Union. Indeed, Ukraine's opportunity and misery over many centuries has been effectively similar to today's: being the fulcrum in the balance between western Europe and Russia.

Australia's interests clearly lie in backing the EU's. The EU (at some $80 billion per annum) remains Australia's second-largest trading partner after China, and Australia's most significant trading partner in services. The EU is also the largest source of foreign direct investment (FDI) in Australia, and the largest destination for Australian FDI overseas.

So, if Australia cares about the interest that is 13% of its total current trade, not to mention specific Ukrainian opportunities, it should care about a democratized and Euro-integrated Ukraine.

And, yes, Australia and other Western democracies should also care when kids stand in the cold, stand up to physical violence, and stand up for values that we Australians can almost take for granted.

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About the Author

Pete Shmigel is a consultant with Crosby|Textor, an international research and strategic communications firm. He was formerly Chief of Staff to three serving NSW Cabinet Ministers, including the NSW Minister for Aboriginal Affairs, as well as CEO of industry associations in the sustainability sector.

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