Russia and Ukraine embark on a new tariff war

The last week of January, during which Ukraine hoped to resolve with Russia fare policy issues in the sphere of international rail freight transportation, is over.

It will be recalled that recently both sides marked up tariffs for international freight transportation. By decision of the Federal Energy Commission in the Russian government, as of January 1 fares for international rail freight transport were raised by 12% on average. Moreover, fares for the transport of oil products and coke, which are critical items for Ukraine, have been increased by 22-48%.

Thus, Russia was the first to start the fare dispute. According to Victor Chorny, chief of the Central Commercial Department at the State Administration of Ukrzaliznytsia Ukrainian Rail Service, Ukraine views fare increases as discrimination and will demand their cancellation. Chorny hesitated to forecast the possible impact of the new fares on Ukraine’s economy in the future. Simultaneously, he stressed that these changes have affected no so much volumes as the structure of transit from Russia.

In retaliation, as of January 12 Ukraine increased by 15% on average the fares for the transport of transit rail freight heading to or from Russia. Yet Ukraine’s rail transit fares still average 2-2.5 times lower than Russian ones.

How and when will this strange rail war end? Will it be the last one within the Single Economic Space? One thing is certain: the creation of the SES should be accompanied by eliminating artificial barriers and not by reinforcing them. Otherwise, the expediency of such a union will and should be questioned time and again.