East European countries outside Russia Economic Geography I. International Business bachelor study programme (BA) Spring term 2014/2015. CUB Department of Economic Geography and Futures Studies dr. Jeney László Senior lecturer

222 State of economic development of Ukraine among the post-Soviet countries 2

Strong economic ties to Russia SU times: countries were tied closely together After transition: UA and BY prefer greater independence Old connections hard to break – –Eastern UA: most important iron and steelmaking region  industries depend on: import oil and natural gas (mainly from Russia)  85% energy needs – –BY: heavy industry  50% of trade with Russia New connections difficult to form – –SU: developed heavy industry  equipment was not kept up to date 3

444 Economy of Ukraine Till 1970’s: belonged to the growth poles of the SU – –Main supplier of food and heavy industrial centre – –Share in the SU: 18,5% of population, 26% of coal production, 36% of iron industry – –Heavy industry: 80% of industrial employment, 90% of investments, 70% of production Conservation of bad economic structure after transition – –Role of heavy industry, agriculture remained – –Critical dependency of oil and natural gas supply (from Russia, Kazakhstan and Turkmenistan) – –Soviet connections are hard to break, out-of-date firms are not competitive Economic lagging – –Per capita GDP, 1990: 4700$ (94% of the SU average of the former SU)  mid-position in the rank – –Living conditions (living area, salaries of employees, savings): also under the post-Soviet average 4

555 Ukrainian Employment Ukrainian employment – –Manpower: 22.3 mn But: unemployment rate: 2.7% – –Rate of skilled workers: 50% But: lack of management – –Sectoral composition: Employment: A: 25%, I: 20%, S: 55% GDP: A: 17% I: 43% S: 40% But: rising global prices for steel – –2005: important changes 5

666 Economic Geography of Ukraine 6 Ukrainian employment – –Manpower: 22.3 mn (unemployment rate: 2.7%) – –Rate of skilled workers: 50% – –Empl: A: 25%, I: 20%, S: 55% – –GDP: A: 17% I: 43% S: 40% – –2005: important changes Regional differences – –East: Russian minority, heavy industry  more developed – –West: Ukrainian majority, Hungarian, Polish, Romanian minority Regional development inequalities 2000

Better state of Belorussian economy Russian: main trading partner 1991: Russian – Belarusian Federation Cheap Russian oil and natural gas  vulnerable 7

888 Southern Caucasus (Transcaucasus) Georgia, Armenia – –Mountainous (peaks above 5000 m) – –Georgia: East Orthodoxy, Armenia: autocephaly Christianity Azerbaijan – –More flat (Caspian Sea coast: areas below sea level) – –Muslim  stronger linkages towards Asia Historical states – –BC 100: historic Armenia: also East part of contemporary Turkey (mount Ararat) – –From the AD 1000 to 1200: Georgia – –Turkish occupancy – –Russian rulers till

999 Economy of Southern Caucasus In SU times (till 1991) – –Georgia: 90% of SU’s tea and citrus fruits – –Armenia: fruits (mainly grapes) 2000s: steadily improved Economies suffered greatly from the ethnic conflicts Increasing industrial and service sectors – –Black Sea: SE part of ex-’Soviet Riviera’ (Batumi, Suchumi) Developing trading relationship with US, EU and Iran – –Georgia: reduction dependency on Russia 9

Ethnic based conflicts and their economic impacts 10

Area of Russian influences Periods of Russification 1) 1)Early 1800s 2) 2)Soviet times Permanent movements within the SU – –Out-migration of Russians to Belarus and Ukraine till 1989  to industrial concentrations Share of ethnic Russians – –Belarus: 13% (63% speaks regularly Russian) – –Ukraine: 22%  Crimean Peninsula, industrial areas of Eastern Ukraine, cities – –Russia: 82% (re-migration) 11

Russia: mixture of political units 52 % of the minorities: autonomous territorial units: – –15 national autonomous republics – –2 autonomous districts (okrug) Homelands in European Russia – –North Europe, Urals and Middle Volga: relative higher share of Russians – –North Caucasus: Russian minority 90 numerically significant recognized nationalities – –55 nationalities without republic status (homeland) 12

Official constitutional position of republics 1990s: the Kremlin gave up much of its power – –Also other official language besides Russian – –1350 newspapers, 300 TV and 250 radio channels in 50 minority languages and also in the federal TV and radio broadcasting – –75 minority languages taught in 10 thousand schools – –Minority organisations (2000) 2000s: the Kremlin took it back – –European Council: discrimination in legislation – –Public actions are hampered – –Lots of minorities are out of minority education – –Lack of minority teachers, books – –Maintenance of minority culture is insufficient 13

Ethnic conflicts in Caucasus Region Economic and cultural similarities: mountaineer identity Ethnically and linguistically one of the most complex area of the World: Christians and Muslims Russian control from mid 1800s Soviets divided minorities – –Karbardians (have more in common with Cherkessians), but grouped together with Balkars – –Division of Ossethians – –Armenians in Azerbaijan (Nagorno-Karabakh)  War between 2 member states (Armenia and Azerbaijan) during the SU regime – –Azeri Exclave: Nakhichevan 14

Resistance against Russian rule North Caucasus: remained part of Russia – –1991: Chechnya also attempted its independence  2 bloody wars in Russia (1994–1996 and after 1999  more 100 thousand victims) South Caucasus: independent states: Georgia, Armenia and Azerbaijan Ethnic based tensions in the successor states – –Georgia: Abkhazia (Abkhasians), South Ossetia (Ossetians) – –Azerbaijan: Nagorno-Karabakh (Armenians) – –Moldova: Transdnistria (Russians) – –Ukraine: East Ukraine, Crimean Peninsula (Russians) 15

Conflicts and closed borders Georgia: conflict with Russia – –Abkhazia: occupied by Russia (entrance from Georgia) – –South Ossetia – –Closed Georgian Russian border – –Good relationship to the West (EU and NATO) Armenia: conflict with Turkey and Azerbaijan – –Armenian genocide by Turkey (not declared by Turk.) – –Lost territories (Mt. Ararat) in Turkey – –Karabakh question: Armenians in Azerbaijan – –Closed Arm–Turk and Arm–Azeri borders – –Good relationship with Russia 16