Ukraine's Crisis Matters to the World Economy

Ukraine is granted a market economy status by the EU and USA. The sharp economic decline in the 90s resulted in deteriorating living standards for most citizens and widespread poverty. However, during the 21st century, there has been some positive economic growth in Ukraine, as well as Eastern Europe as a whole. Ukraine’s currency, the Hryvnia, was introduced in September 1996 and has remained relatively stable. The unstable political situation in Ukraine hardly influences its economic development. GDP has been growing steadily since 2005 at an average growth rate of 7% and industrial production has been expanding by 12%. The Ukrainian economy was hit by the harsh effects of the global financial crisis but managed to attain a 4.2%

The Russian Economy was falling at a substantial rate, many economist saw the fall as a result of tough sanctions put on the country from many western civilizations due to Russia’s actions in the Ukraine. The global community as a whole cooperated with international leadership from the United States, and enforced these sanctions to try and strong arm Russia out of Ukraine without having to put troops on the ground. There has been a recent bump in the Russian Economy, The prices of oil which makes a large majority of the Russian Economy has been rising steadily as of recent, and the sanctions put on them from the EU will most likely expire in a couple of months which some see as an opening the Russian government could not resist taking.

According to Cnn, Sanctions imposed on Russia because of its support for separatists in Ukraine could shrink the economy by as much as 9% over time. This comes to show that our sanctions have worked in the past and successfully inflicted damage on Russia’s economy. This will allow Russia to realize that we are serious about these hacks that have been occurring and imposing these sanctions will act as a warning to Russia. As seen, it is effective to impose sanctions on russia and if we do pass this bill, it will allow us to become a safer and more secure

Author’s Note: This paper and/or essay has been written perceptive from the past, considering how things were perceived and accomplished in the early part of 2014 and into 2015. It does not take into account anything that the current administration might have done or not done, to alter the present outcome.

As of 2014, Greece -along with other nations of the Eurozone- is facing grave sovereign debt issues, which have helped worsen the economic and political aspects of the nation. Some members, like the case of Ireland, Portugal, Spain and the aforementioned Hellenic nation, have unendurable levels of public debt, and have been receiving aid packages from the European Union and International Monetary Fund to avoid default. However, despite these financial aids, the nation still presents economic complications that threaten to affect the country 's payments to its international commitment. Similarly, such loans and other measures taken in order to control the crisis (budget and job cuts, among others, which will be later explained) have provoked violent riots and strikes, leaving the nation in a constant state of unrest.

As of 2014, Greece -along with other nations of the Eurozone- is facing grave sovereign debt issues, which have helped worsen the economic and political aspects of the nation. Some members, like the case of Ireland, Portugal, Spain and the aforementioned Hellenic nation, have unendurable levels of public debt, and have been receiving aid packages from the European Union and International Monetary Fund to avoid default. However, despite these financial aids, the nation still presents economic complications that threaten to affect the country 's payments to its international commitment. Similarly, such loans and other measures taken in order to control the crisis (budget and job cuts, among others, which will be later explained) have provoked violent riots and strikes, leaving the nation in a constant state of unrest.

Russia’s recent recession was caused by a combination of falling oil prices, international sanctions, and structural limitations. The Russian economy is heavily reliant on its natural resource deposits, and in particular, it is reliant on oil. A significant portion of the oil and energy sector is nationalized, and petroleum (crude, refined, and gas) accounts for 54% of Russia’s exports. Russia’s heavy reliance on oil makes it vulnerable to terms-of-trade shocks, and thus, when oil prices plunged 77% from June 2014 to January 2016, Russia entered a recession. Falling oil prices were further compounded by the imposition of economic sanctions. Beginning in 2014, the United States and its European allies imposed sanctions against Russia for its aggressive activity in Ukraine and subsequent annexation of Crimea. These sanctions, among other things, limit the financing of six of Russia’s largest banks and four energy companies, cut into Russia’s ability to produce oil, and discouraged exports to Russia. In part because of these sanctions and in part because of its entrenched Soviet structures and institutions, Russia’s economy remains relatively closed; its current account balance amounts to a positive 3.5% of its GDP. The double shock of falling oil prices and international sanctions spurred Russia’s 2014 recession, but the Russian economy is expected to recover as oil prices

The financial stability of the EU, US, multinational companies, and its laborers can be drastically impacted. The livelihood, jobs and industries, can impact economies. If these other smaller countries are not taken care of their economies could collapse or they could resort to illegal drug industries, illegal immigration, and even drug trafficking which causes more harm than good.

For over 40 years, Europe has been relying on Russia for the importation of energy, such as oil.5 One of Russia’s major gas company, Gazprom, is one of the world’s largest gas distributing companies, causing many countries to become dependent on the Russian company for gas. In 2015 alone, Gazprom exported around 158 billion cubic meters of gas to Europe, and of those European countries to have received gas, Germany was the highest, with an import of 45.31 billion cubic meters of Gazprom gas. Countries in the Baltic region and countries in south eastern Europe are usually very dependent on Russian gas. The European Union is Russia’s most involved trading partner, especially when it comes in terms of oil. About 41% of Russia’s exports are sent to EU countries.7 According to Gazprom’s statistics, Western European countries make up 82% of Gazprom’s exports, and Central European countries make up 18% of their exports.3 These numbers are significant because it displays Europe’s major dependence on Russian oil, which is a major problem, because of Russia’s ability to deprive Europe of energy at any given time, as shown from 2006 to 2009, when Russia cut off Ukraine 's gas line due to disputes regarding gas prices.23 If Russia decides to shut off gas to a region, it can lead to people being without ways to heat their homes or cook their food, leaving a big liability on the people. Europe’s vulnerability to these gas shortages gives Russian leverage over many EU countries who heavily

In 2007, the Helsinki Commission held a congressional hearing focusing on energy security in Post-Soviet Eastern Europe. The hearing took place in the wake of the first major Ukrainian-Russian gas dispute in 2006 that not only demonstrated the Kremlin’s motives to use its energy resources, natural gas in particular, as a weapon to meddle in its immediate neighbors’ domestic affairs, but also show the rest of Europe’s, especially Central and Southeastern Europe’s, extreme dependency on Russia’s energy supplies. Back then, experts and policy-makers focused and made recommendations primarily on the enhancement of security of supply through the construction of new energy infrastructure, namely pipelines, which would allow the diversification

The geographical issues that faced Russia, made it difficult to overcome economic and social barriers. Russia had a huge landmass, covering almost 1/6th of the total land surface of the world, expanding over vast and climatically diverse regions. The shear diversity of these regions and variety of climate, caused several problems and limitations for Russia’s development and growth. For all of Russia’s great size, very little of it was hospitable to people and farming. The Tundra region in the north, proved to be too cold to support plant and crop growth and the semi-desert regions of Central Asia are unable to support large numbers of people. Russia had an extreme continental climate,

The conflict between the Ukraine and Russia is the Ukraine's most long-standing and deadly crisis; since its post-Soviet independence began as a protest against the government dropping plans to forge closer trade ties with the European Union. The conflict between Russia and the Ukraine stems from more than twenty years of weak governance, the government’s inability to promote a coherent executive branch policy, an economy dominated by oligarchs and rife with corruption, heavy reliance on Russia, and distinct differences between Ukraine's population from both Eastern and Western regions in terms of linguistics, religion and ethnicity (Lucas 2009).

Russia was one of the countries that promptly reacted to the global financial crisis. The main effect of the crisis in Russia came in the beginning of 2009, and the Government started the realization of an unprecedented Anti-crisis program. Despite the fact that Russia had the largest fiscal stimulus in G20 countries, the outcome of the anti-crisis program was one of the least efficient. One of the reasons why the economic policy did not bring expected results was that the government bailed out corporations and banks basing the choice on political influence rather than on the efficiency considerations. The bailout strategy in Russia during the crisis will be compared to the government support of troubled companies in the United States in

Furthermore, the current crisis between Russia and Ukraine have led President Obama to issue several executive orders imposing sanctions to certain individuals and companies with regard to those “contributing to the situation in Ukraine” (Executive).

In a recent government statement, Prime Minister Volodymyr Groysman stated that Ukraine is aiming to finalise a reviewed energy strategy by the end of 2016 with the key objective of achieving energy independence and a creation of an ‘Energy Efficiency Fund.’ The Prime Minister stressed that, given its resources, Ukraine, ‘’should not be an importer, but an exporter of energy resources.’’ However, Ukraine needs to examine the realities of its energy supply and demand and how this will shape and affect the governments foreign policy towards the EU and Russia going forward. Currently, Russia’s gas supplies amount to over 69% of Ukraine’s energy demand. Since its independence, much of the country’s foreign policy has generally been driven by a need to strike a balance in her relationships with the East and West, but due to history and geography, swell as various political forces, Ukraine