{"id":1145,"date":"2022-01-26T16:09:09","date_gmt":"2022-01-26T21:09:09","guid":{"rendered":"https:\/\/www.cognitivewarriorproject.com\/?p=1145"},"modified":"2022-01-26T16:09:09","modified_gmt":"2022-01-26T21:09:09","slug":"ukraine-a-country-divided-what-are-the-economic-impacts-if-ukraine-joins-nato","status":"publish","type":"post","link":"https:\/\/www.cognitivewarriorproject.com\/?p=1145","title":{"rendered":"Ukraine, A Country Divided: What are the Economic Impacts if Ukraine Joins NATO"},"content":{"rendered":"
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The crisis and threat of war in Ukraine has dominated the headlines for a couple weeks and this morning was no different with Al Jazeera reporting: Nord Stream 2: Why Russia\u2019s pipeline to Europe divides the West<\/a>. <\/em>The article details another aspect of the conflict. Here are some key excerpts:<\/p>\n

As Western powers attempt to avert a Russian invasion of Ukraine<\/a>, Nord Stream 2, a long-touted energy infrastructure project that has already driven a wedge between Germany and the United States, could become a key bargaining chip.<\/em><\/p>\n

The $11bn gas pipeline across the Baltic Sea, owned by Russia\u2019s state-backed energy giant Gazprom, runs from western Siberia to Germany, doubling the capacity of the already-in-use Nord Stream 1 pipeline.<\/em><\/p>\n

While Germany has maintained it is solely a commercial project, Nord Stream 2 also has geostrategic consequences, bypassing Ukraine and potentially depriving it of the approximately $2bn in transit fees Russia currently pays to send gas through its territory.<\/em><\/p>\n

Overall, the article does a very good job of covering the pipeline problem for Europe, Ukraine and Russia and it got me thinking about a paper I wrote on Ukraine almost 3 years ago while working on my Master’s Degree. So I figured I would share it here. Long story short, I didn\u2019t think Ukraine should join NATO then, and the events of the last few weeks have not changed my position.<\/p>\n

Ukraine, A Country Divided:<\/strong>
\nWhat are the Economic Impacts if Ukraine Joins NATO<\/strong><\/p>\n

Since gaining its independence in 1991, Ukraine, a vital component of the former Soviet Union, has increasingly looked toward the west. Ukraine is an economically diverse country that has a long tradition of trading with Russia and has developed significant ties with NATO countries. (Fisher, 2009) Currently the country is divided along ethnic lines and is facing a presidential election that could determine its future. Two of the main issues are the war that is currently being fought against Russia in its Eastern Regions, and should Ukraine join NATO. The decision to join NATO will have far reaching geopolitical effects including how would such a move effect the Nation\u2019s economy? [Figure 1]<\/p>\n

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Bottom Line Up Front<\/h1>\n

Prior precedent has shown there is no cultural argument for Ukraine not joining NATO. Estonia and Latvia represent a similarly diverse culture located on the Russian border and have been members of NATO since 2004. Estonia and Latvia also demonstrate that imports and exports will likely continue as they are mutually beneficial. NATO was established to provide collective security against the Soviet Union and it currently similarly positions itself against the Russian Federation. A Ukrainian move toward NATO will specifically threaten the transfer fees from the sale of Natural Gas from Russia to the rest of Europe. If the demand for natural gas increases as expected, Russia will attempt to avoid Ukraine as such projects will only aid an officially stated opposition force. Ukraine joining NATO will impact trade relations though probably not significantly. Ultimately, Ukraine\u2019s geographically significant location on the Black Sea and proximity to the disputed Crimea and Donbas regions are key to the economic impact of joining NATO. Prior to joining NATO, border disputes are supposed to be resolved so that Article 5 of the NATO Charter is not triggered. An all-out war would be devastating to the economy and a failed state would be a threat to all nations, NATO and Russia alike.<\/p>\n

Method<\/strong><\/p>\n

To determine the economic impacts of Ukraine joining NATO this paper will consider the geographic location of Ukraine in relation to Russia and compare it two other NATO countries that share a border with Russia. This paper will use the percentage of a shared border, the percentage of imports from Russia and the percentage of exports to Russia for a determination of how economically dependent each country is to the other. To determine the cultural comparison this paper will use the percentage of a shared border, the percentage of Russian speakers and the percentage of ethnic Russians that reside within each country to establish the similarity of the countries. In addition, an analysis of competing hypotheses will be conducted to determine the economic and cultural impact of NATO membership for Ukraine.<\/p>\n

Grounding<\/strong><\/p>\n

Situated on the Black Sea, Ukraine is geographically significant from both a strategic and an economic perspective. [Figure 2] According to F. Stephen Larrabee, a Distinguished Chair in European Security at the RAND Institute, “The emergence of a democratic independent Ukraine transforms the geo-strategic landscape in Central Europe. Without Ukraine Russia ceases to be a Eurasian empire. However, if Russia were to regain control over Ukraine with its 46 million people, major resources and access to the Black Sea, Russia would automatically regain the wherewithal to become a powerful imperial state.\u201d (Taylor, 2014) In addition, Ukraine has a well-developed military industrial complex and if the unrest in Ukraine leads to it becoming a failed state, it could become a “giant bazaar for customers seeking ICBM [intercontinental ballistic missiles] and other deadly technologies.\u201c(Taylor, 2014) These two points highlight the geo-significance of Ukraine and that its decision to join NATO should not be taken lightly. In fact, Ukraine\u2019s strategic importance has also been demonstrated by Russian action in the current low-intensity conflict in the Donbas and in 2014 when Russia seized and occupied Crimea. Crimea is a \u201cstrategically important base for the Russian navy. The Black Sea Fleet has been based on the peninsula since it was founded\u2026 in 1783. The fleet\u2019s strategic position helped Russia defeat Georgia in the South Ossetia war in 2008, and remains crucial to Russian security interests in the region.\u201d (Mortimer, 2014) When asking the question or deciding if one should support a Ukrainian move to NATO, one must also consider not only the interests of the Ukrainians but the Russians as well.<\/p>\n

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Ukraine is economically strategic due to its access to ports and natural gas pipelines. \u201cA number of key gas pipelines from Russia to Western Europe run through Ukraine. [Figure 3] In pure economic terms, a shift to Russia would likely change the dynamics of how Western Europe is powered.\u201d (Cohen, 2018) According to Ariel Cohen with Forbes, \u201cUkraine is Russia\u2019s gateway into European gas markets. Of the 193 billion cubic meters (bcm) Russia\u2019s state-owned Gazprom pumped westward in 2017 \u2013 nearly 40 percent of Europe\u2019s total supply \u2013 93 billion cubic meters (bcm) transited via Ukraine.\u201d \u2026 these \u201ctransit revenues contribute some 2-3 billion dollars annually to the Ukrainian economy or roughly 3 percent of Ukrainian GDP. \u201cThe vast network of pipelines crisscrossing Ukraine affords Kyiv some geopolitical leverage in its ongoing conflict with Russia, as Moscow needs the uninterrupted revenue stream provided by gas sales to Europe.\u201d (Cohen, 2018)<\/p>\n

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Historically, \u201cAfter Russia, the Ukrainian Republic was the most important economic component of the former Soviet Union, producing about four times [as that of] the next-ranking republic. Its fertile black soil accounted for more than one-fourth of Soviet agricultural output, and its farms provided substantial quantities of meat, milk, grain, and vegetables to other republics. [In addition], its diversified heavy industry supplied unique equipment\u2026and raw materials to industrial and mining sites in other regions of the former USSR.\u201d (CIA Fact Book, 2019) According to 2017 data obtained from the CIA Fact Book, the Annual GDP of Ukraine in $369.6 Billion with Industry producing 28.6 % of GDP and Agriculture comprising 12.2 % of GDP. While Russia is the largest single trading partner of Ukraine, NATO countries comprise at least 21% of their exports and 23.3% of their imports.<\/p>\n

In addition to being economically diverse, Ukraine is a Culturally diverse country. [Figure 4] Although 77% identify as Ukrainian 17.2% identify and as Russian which make up the largest minority group. (Obershev, 2016) These groups are not evenly distributed and are concentrated in the Crimean and far western Donbas regions thereby concentrating tensions on whether Ukraine should become a member of NATO or not in these regions. In 2013, a poll determined \u201c45 percent said they wanted [to join] the EU, 14 percent said they wanted to join with the Russian-led trade union, and 41 percent said they were undecided or wanted neither. In other words, joining the EU is about as popular as not joining the EU. (Fisher, 2013) <\/p>\n

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NATO: \u201cThe North Atlantic Treaty Organization was created in 1949 by the United States, Canada, and several Western European nations to provide collective security against the Soviet Union.\u201d (NATO, 2019) \u201cSince 1949, NATO\u2019s membership has increased from 12 to 29 countries through seven rounds of enlargement. Currently, four partner countries have declared their aspirations to NATO membership: Bosnia and Herzegovina, Georgia, the Republic of North Macedonia and Ukraine.\u201d (NATO, 2019) A 1995 study on how to enlarge NATO required potential aspirants for membership to resolve border disputes prior to joining NATO. (Pifer, 2017) (Brown, 2017) [Figure 5]<\/p>\n

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Latvia and Estonia, like Ukraine are former Soviet States that share a border with Russia. [Figure 6] All three countries have a significant portion of their population that speak Russian and identify as ethnic Russians. In addition, all three countries actively trade with Russia and have natural gas pipelines that run from Russia to Europe through their countries. It should be noted that the Russian speakers are concentrated near the borders of Russia in both Estonia and Latvia similar to that which is demonstrated in Ukraine. [Figures 7 and 8]<\/p>\n

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Assumptions<\/strong><\/p>\n

The following is a list of assumptions the we believe will remain true regardless of NATO membership:<\/p>\n