Kerch bridge to hurt Ukraine’s trade

Kerch bridge to hurt Ukraine’s trade
Kerch bridge to hurt Ukraine’s trade
By Ben Aris in Berlin September 4, 2017

The controversial bridge connecting Russia directly to the annexed peninsular of Crimea is nearly ready and will badly hurt Ukraine’s trade, a study has found.

Russian annexed the Crimea in May 2014, bringing down international opprobrium on the Kremlin as well as sanctions. However, there is no land route between Russia and Crimea that does not cross over Ukrainian territory so the Kremlin commissioned a bridge to connect its new territory, which would other wise be cut off economically, to the mainland.

A key section, a 6,000 tonne railway arch that is high enough to allow shipping to pass through the bridge, was completed in August. The 19km bridge is due to open to road traffic next year and to rail traffic in 2019. The estimated cost of the bridge is in the order of $4bn and it is being built by oligarchs close to President Vladimir Putin.

Once open, the Kerch Bridge will significantly harm Ukrainian trade, according to a study by the Center for Army, Conversion and Disarmament Studies in Kyiv.

The new bridge will restrict ship traffic in the Black and Azov seas, which will reduce trade and so economically damage the Ukrainian ports of Mariupol and Berdiansk that lie on the upstream side of the bridge – both major Ukrainian ports.

The bridge will also cause the risk of stagnation for Ukraine’s Azov region, which includes the disputed Donetsk, Zaporizhia and Kherson regions, according to the study, as reported by the news site on September 3. Donetsk in particular is the industrial heartland of Ukraine and home to much of the country's heavy industry and metallurgy.

Part of the problem is the new railway bridge section is too low to allow big ships through and so will significantly constrain access to the Azov sea for many Ukrainian ships, potentially causing a loss of up to 43% of traffic for the Mariupol Sea Port, the study found. That could trap up to 1mn tonnes of Ukrainian-produced cast iron exports that are supposed to be delivered to American clients, as well as hurting Ukraine’s metallurgical industry as a whole.

Already the construction work has disrupted trade, at a cost of $20,000 per day and affecting 70 and 90 ships per day, the study said. The Russian government began blocking traffic through the strait completely on August 9, and plans to reopen only one-way traffic during construction. The Ukrainian government alleges the bridge is illegal and is preparing a complaint ahead of international litigation.

“Russia is fighting its war with Ukraine on all levels: military, political, cultural, information, and in this case, economic. A lawsuit is a logical step, but it will achieve little in practical terms. The more the Azov region suffers economically, which is promised with the bridge’s completion, the more its residents – already Russian-oriented culturally and politically – will be convinced of the need to realign themselves with Russia,” Concorde Capital’s Zenon Zawada said in a note.

“It’s the Kremlin’s strategy for the 2019 elections to regain the support of southeast Ukraine, whose voters work in industries that had Russian enterprises as their biggest clients. The Russian-oriented Opposition Bloc will be ready to gather those votes with the hopes of forming a parliamentary majority, if not a strong Russian-oriented opposition with other Russian-oriented parties," the analyst added.