May 20th: NUCC statement concerning the ongoing war in Ukraine

Summary

• Successful Ukrainian counterattacks limit Russian territorial gains
• Refugees returning as the situation is stabilizing in parts of Ukraine
• Ukraine attempting to speed up the membership process with the European Union
• On import/export restrictions and foreign currency transactions
• Challenging Ukrainian logistics and agricultural exports
• NUCC initiatives for Ukraine now and post-war

According to ISW and British Intelligence, Russia continues what is described as ineffectual offensive operations in the Donbas region. In the southern region, Russian occupation forces are attempting to consolidate their positions in Kherson Oblast, while Ukrainian officials have successfully pushed back Russian forces in a series of counterattacks, leading to Russian withdrawal from Ukraine´s second-biggest city, Kharkiv. The general situation in Kyiv, western and central parts of Ukraine can be somewhat considered relatively more stable than before the Russian withdrawal but are still prone to indiscriminated shelling.

Refugees returning to Ukraine

According to both the UNHCR and Norwegian UDI, the waves of refugees to Europe and Norway have declined. According to several sources, two out of three Kyivians have returned to the capital, even if it cannot be considered all safe at this point. Kyiv Mayor Vitalij Klitsjko has advised against returning due to indiscriminate rocket attacks. According to Ukrainian news outlet Pravda, up to 2000 people are returning to Kharkiv every day. Local NUCC sources in Kharkiv, however, claims that many of the refugees are returning only to collect their valuables and check on their homes, and do not intend to stay in the city until the security situation is more stable.

Ukraine to join the European Union?

President Zelenskyy has officially applied for membership in the European Union on behalf of Ukraine. According to Pernille Rieker at NUPI, they are able to obtain status as a candidate at this point, but further discussions and negotiations between Ukraine and the EU are needed in order for a full membership to be considered. Furthermore, according to Rieker, this process cannot start until the war with Russia is ended.

Update on restrictions on foreign currency transactions, imports and exports

The National Bank (NBU) has loosened and clarified a number of restrictions on foreign currency transactions. NBU expands its list of cross-border transfers for volunteers and reduces settlement deadlines for export-import transactions.

Individuals are allowed to transfer foreign currency to purchase a number of goods from abroad up to a monthly limit of UAH 400,000.

The Cabinet of Ministers of Ukraine has expanded the list of critical imports, covering up to 90% of all commodities and goods, which allows importers to buy currency from the National Bank of Ukraine. Contact NUCC for the updated list of commodities (In Ukrainian).

Ukrainian grain export is limited to 500.000 tons per month, which according to the Ministry of Agriculture, Mykola Solsky is a decrease from pre-war levels at 5 million tons and a loss of 1.5 billion dollars.

Update on Ukrainian logistics and exports

Ukrainian imports increased for April compared to March but reportedly amounted to only 20% of pre-war levels. EBA (European Business Association) recently conducted a seminar on Ukrainian logistics, where it was described that naturally, Ukrainian logistics are affected in several ways, such as; lack of customers, loss of orders, difficult long term planning, lack of drivers, fuel limits, destroyed infrastructure and access to ports. Additionally, many transport companies now use their trucks for humanitarian aid.

Shipping directly from Ukraine is not possible due to the Russian blockade of seaports. According to a local NUCC source in Ukraine, the port in Odesa is not officially blocked but is not in use due to the lack of validity of insurance coverage on foreign ships. According to the same source, this also attributes to many of the logistical problems with truck freight in and out of Ukraine. The Ukrainian port of Izmail is in theory possible to use, but is temporarily closed down due to attacks on the main bridge that links the port to the mainland by railway. This severely affects Ukrainian grain export.

Ukrainian enterprizes utilize Romanian, Turkish and Polish ports, which reportedly works well, but costs are increasing. Before the war, 98% of all Ukrainian grain exports were conducted through their own seaports. In western Ukraine, destroyed infrastructure has led to warehouse shortages, and rental rates have risen significantly as a result of the high demand. Congested border crossings and increased fuel prices have further increased transport costs.

Ukrainian farmers also in general lack petrol and fertilizers. Destroyed and stolen machinery makes it even more challenging, especially in the east- and southern regions of Ukraine.

Miscellaneous NUCC initiatives for Ukraine now - and post-war.

NUCC is working towards changing the current free trade agreement on agriculture between Norway and Ukraine. In its current state, the treaty greatly restricts Ukraine's access to the Norwegian market and, in some cases, even favors Russia and Belarus over Ukraine. NUCC argues that this is both paradoxical to current Norwegian foreign policy and will not help Ukraine in rebuilding their country following the war.

The Chamber is advocating for Norway to utilize its full financial toolbox to ensure economic activity, protect employment and secure food safety in Ukraine. Specifically, Export Finance Norway needs specially adapted directives to ensure export credits, political risk and war insurance for companies that wish to begin or continue operations in Ukraine.

10th of May, The Norwegian Parliament approved the credit program by Eksfin in collaboration with banks to aid businesses that are severely exposed to the Russian, Belarusian and Ukrainian markets. Read more about it here (in Norwegian).

Additionally, NUCC seeks that Norfund, a Norwegian state fund for investing in developing countries, will open up for Ukraine as a part of their portfolio countries, as is not the case today.

NUCC would like to extend our gratitude to all donors in our fundraising initiative. With your help and our trusted partners in Ukraine, the donations enable direct aid to the people of Ukraine in these difficult times. For more information, see here.

Statement from the Norwegian-Ukrainian Chamber of Commerce, on May 20th, 2022.

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