Ukraine was very important to the economy of the Soviet Union and the country has a significant industrial heritage from that time. In addition to industrial production, the extraction of mineral resources and agriculture is important for the country’s economy. The country is highly dependent on steel exports and this makes the country’s economy very vulnerable to international economic activity. Ukraine depends on gas imports from Russia. Much of Russia’s European gas exports go via pipelines in Ukraine. Ukraine still faces significant challenges in the fight against corruption. Ukrainian exports mainly consist of steel, coal, machinery and agricultural products.
Because of the Black Earth belt, Ukraine is a rich agricultural country, self-sufficient with the vast majority of agricultural products. In Soviet times, Ukraine was considered the Soviet Union’s grain chamber. Ukraine had 19% of the population of the Soviet Union, but accounted for a full 23% of agricultural production. The most important agricultural products are cereals, sugar beets, potatoes and other vegetables. The country has significant animal husbandry, especially cattle, pigs and poultry. Agriculture employed 2009 approx. 25% of the population.
The fall of the command economy after 1991 led to a major decline in production in agriculture as well. However, this is not only due to a decline in production. After the fall of the command economy, agricultural production has also been shifted towards products that are more easily marketable. For example, areas that were previously used for meat and milk production, and also barley, have been transferred to sunflower production.
Ukraine is highly dependent on imports of energy products. Ukraine produces some gas itself, but most of it is imported from Russia and to a lesser extent from Turkmenistan. Gas, oil and petroleum products form an important part of the country’s imports. Gas and oil discoveries have been made on the Ukrainian continental shelf in the Black Sea (around Crimea and in the maritime regions towards Romania), and Ukrainian authorities hope that these discoveries will make the country more self-sufficient in fossil fuels in the future.
In 2006, nuclear power accounted for almost half of electricity production. Ukraine also receives electricity from hydropower and thermal power plants.
The heavy industry dominates Ukrainian industrial production. This was the case in the Soviet era, and is reinforced by independence. The most important Ukrainian industrial branches have traditionally been metallurgical, mechanical engineering, chemical and defense industries. It is particularly energy-intensive industry that has performed best after the fall of the command economy, and this has reinforced Ukraine’s dependence on energy imports.
In 2008, Russia, Turkey and Italy were the largest buyers for Ukraine’s exports, while Russia, Germany and China were the countries Ukraine imported the most. Main export products are metal, machinery, electrical products, minerals, chemical products, vehicles and food products. According to Countryaah, Ukraine’s most important import goods are besides oil and gas, minerals, machinery, electrical equipment and chemical products.
Transport and Communications
The road network was 169,400 km in 2008, and the total rail network in 2006 was 22,473 km. The cities of Kiev and Kharkiv have developed subway. The Ukrainian rivers also have a certain transport significance. Ukraine also has a significant seagoing trading fleet. There are eight international airports. The national airline is called Air Ukraine, and the country also has a large number of smaller airlines.
Another Ukrainian-Russian battle issue concerned the division of the Black Sea Fleet, which had its main base in Crimea. Both countries claimed the fleet, and only after a series of crises, summits and solution attempts was the issue finally resolved through an agreement in May 1997, which divided the fleet between them, and where the Russian Navy was granted leasehold rights in Sevastopol.
The battle for the Black Sea fleet was further complicated by the controversy over the status of Crimea. The Crimean Peninsula had been transferred to Ukraine in 1954, and in connection with the dissolution of the Soviet Union had been impacted for upgrading to the status of autonomous republic within the framework of Ukraine. However, strong forces in Crimea wanted full detachment and unification with Russia (the majority of its inhabitants are ethnic Russians).
The Crimean conflict flared up several times, not least in connection with the election of the newly created presidential office in January 1994, when separatists Yuriy Meshkov was elected president. After internal strife in the separatist movement, Meshkov disbanded the regional parliament in September 1994, announcing a referendum to clarify the sovereignty issue, but was even ousted when the Ukrainian parliament in May 1995 abolished Crimean presidential office and constitution.
Ukraine under Kuchma
At the June 1994 presidential election, the same regional pattern followed. The western and central regions voted for incumbent President Leonid Kravchuk, while the eastern regions preferred former Prime Minister Leonid Kuchma, who got 52 percent of the vote in the second round. In economic policy, Kuchma relied on a moderate course of reform. The government implemented a strict budgetary policy that triggered several loans and credits from the International Monetary Fund and the EU.
As a result of this, Kuchma soon came to the edge of the Communist-dominated Verkhovna Rada. A constitutional crisis was triggered in May 1995, but was resolved by the President and the majority in the National Assembly signing a constitutional agreement that outlined the basics of a power distribution. Only in June 1996 did Ukraine, as the last of the former Soviet republics, adopt a new constitution to replace the Soviet.
In 1996, the karbovan was replaced with a new currency, hryvnia. Kuchma’s economic policy led to inflation gradually coming under control (in 1996 it was down 40 percent), but production continued to fall below half of the 1991 level. In the fall of 1999, President Leonid Kuchma won a clear victory with 56 percent of the vote in the second round, against communist Petro Symonenko’s 38 percent.
Kuchma’s second presidential period was marked by economic progress (from 2000, the economy was again growing), but also increasing political turmoil. The regime became increasingly authoritarian, at the same time as various business interests, the so-called oligarchs, gained political influence. In September 2000, journalist Heorhij Gongadze was taken away, and in November of the same year, opposition politician Oleksandr Moroz presented audio tapes that he believed implicated Kuchma in the liquidation. The audio tape scandal led to extensive demonstrations and the formation of the “Ukraine without Kuchma” protest movement as a unifying platform for the opposition.
Kuchma’s departure, which he was prevented from holding for a new term, led to the so-called Orange Revolution in late 2004. In the second round of the presidential election, Kuchma’s candidate, Prime Minister Viktor Yanukovych, won a trickle, but opposition candidate Viktor Yushchenko (also he former prime minister under Kuchma), refused to acknowledge defeat and pointed to extensive electoral fraud.
The opposition set up a tent camp in the center of Kiev, and the massive demonstrations, with opposition leaders Yushchenko and Julija Tymoshenko in the lead, forced Yanukovych to join in a new second round of elections. The re-election came to an end after the country’s Supreme Court on December 3 found that the electoral fraud was so extensive that it was not possible to determine who had won the election, and they canceled the official election result. The new round of elections was held on December 26, where Yushchenko received 52 percent of the vote. Reluctantly, Yanukovych acknowledged the defeat.
In January 2005, Viktor Yushchenko appointed the second front figure of the revolution, Julija Tymoshenko, as prime minister. Several important constitutional amendments were passed, including a great deal of power being transferred from the presidential administration to parliament and purely proportional elections were introduced.
The regime change also had important consequences for the position of the media, while the financial results were less uplifting. Internal divisions in the coalition, not least between Prime Minister Tymoshenko and the head of Ukraine’s Security Council, Petro Poroshenko, caused both Tymoshenko and Poroshenko to be deposed in September 2005.