Wishful thinking?

Kyiv Post. Independence. Community. Trust - Ukraine - Medvedev: Russia, Ukraine need annual trade volume of $100 billion: "Medvedev: Russia, Ukraine need annual trade volume of $100 billion"

Here is the figure of actual bilateral trade in 2001-2009, plus projection for 2010 of 40 bln US$ that both presidents expressed as realistical target, plus what Medvedev called as a long term goal of 100 bln US$ for the future (I defined the future as 2020 at my own discretion).

If one believes that both economies will come back to the trend they had before 2009, the 100 bln US$ in 2020 looks feasible. However, I do believe that Russia and Ukraine are on another long term equilibrium path now, and I bet that the level of bilateral trade of 2008 (35 bln US$ ) will not be reached neither this year nor in 2011. Speaking about the long run goal, 100 bln US$ is possible, but meaningless goal. If, as some economist warn us, we entering a phase with high inflation, value of 100 bln US$ can be reached pretty quickly but the volume of trade will not grow 5 times in foreseeable future. 

Natural gas deal

Presidents Yanukovich and Medveded signed a deal that lowers the price of gas for Ukraine in exchange for prolongation of stay of the Russian Black see fleet. A market reaction? Negative.

I do not want to live on the bridge

Yanukovych in WSJ:

Let me say here, a Yanukovych presidency is committed to the integration of European values in Ukraine. Ukraine should make use of its geopolitical advantages and become a bridge between Russia and the West. Developing a good relationship with the West and bridging the gap to Russia will help Ukraine. We should not be forced to make the false choice between the benefits of the East and those of the West. As president I will endeavor to build a bridge between both, not a one-way street in either direction. We are a nation with a European identity, but we have historic cultural and economic ties to Russia as well. The re-establishment of relations with the Russian Federation is consistent with our European ambitions. We will rebuild relations with Moscow as a strategic economic partner. There is no reason that good relations with all of our neighbors cannot be achieved.

He did not say anything new, the main message is Ukraine should be a bridge between EU and Russia, and his main agenda to restore economic growth by: 1) creating jobs, 2) stabilizing prices, and 3) increasing social transfers.
My argument against the main message is that nobody wants to live on the bridge, people like to build on a solid rock. There is a clear trade-off that can not be avoided: either integrate with EU or integrate with Russia, in both cases there is something to lose and something to gain. Staying in between is a shaky and non-stable equilibrium.

V. Surkov speaking

Now infamous interview with V. Surkov:
Kremlin says tight control key to modernising economy, KyivPost "We have a school that teaches that political modernisation -- by which is meant political debauchery, 'anything goes' -- is the key to economic modernization," Surkov told the Vedomosti business daily.
"There is a different concept, to which I hold, which considers the consolidated state as a transitional instrument, a tool for modernization," he said. "Some call it authoritarian modernization. I do not care what it is called."


Full version in Russian