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Tuesday, January 31, 2006

Trade War or Is There More?

A justified move by Russia to shield its market against doubtful quality imports from Ukraine, as it might have appeared initially, may escalate into a trade war between the two countries. Kyiv asserts it has done its homework, having acted rapidly to right the wrongs cited by Moscow. Yet appeals to lift the ban have had limited success. So far, sea food remains the only item Moscow has agreed to pardon. Despite claims by Moscow that officials responsible for the negotiations are out on business trips or sick leaves, a team of Ukrainian negotiators has left for that city.

With the Russian market sealed, Ukrainian farmers are losing millions of dollars on a daily basis, analysts believe. Agriculture Minister Baranivsky made it clear that Kyiv may retaliate if Moscow keeps the ban. Trade wars can hardly be won. They leave deep scars on both sides. It makes little sense to assume that the lesson of the Great Depression eludes Kremlin economists. This leads some analysts to believe that the Kremlin is up to something more than a trade war.

Caper after caper, gremlins from the Kremlin have been exploring Ukraine's political playground quite enthusiastically. Playing with gas is one. Fooling the farmers may be another one. What needs to be done? Shut them off and frame the orange administration for it. Call it "failure to keep friendly ties with 'beloved neighbor' Russia." Alas, a few extra farmer votes are yours for the taking. Siphon them to a tried and trusted candidate who will pay you off handsomely. Unless the Kremlin changes its behavioral patterns, this interpretation will not go away.

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