Russia’s occupation of Crimea and the construction of the bridge over the Kerch Strait had a significant impact on the economy of the Azov Sea area. Moscow has got exit from the Azov Sea under its sole control following the occupation of Crimea. The key problem is the way it has built the bridge to Kerch. Russia’s intention was to build it in a way that would hit Ukrainian seaports the most. Its height was lowered down so vessels that are over 33 meters above the water surface will no longer be able to get into the Sea of Azov. As a result, Azov ports will lose much of their cargo flow and revenues.
The construction of the Kerch bridge was a topic of heated debate from day one. When Russia announced that it was going to link Krasnodarski Krai with the Crimean peninsula after the annexation of Crimea, a number of experts in Ukraine claimed that this was impossible. They were wrong. Russia is close to finishing the bridge and pledges to open for car traffic in May. This is earlier than scheduled initially.
Obviously, this project was crucial to the Kremlin. It was right to expect that Moscow would make sure it is completed, however expensive it would be. The Kerch bridge is less of an infrastructural project, and more of a political one. Ukrainian experts based their skepticism on the experience of a similar bridge construction from the 1940s when the project failed. Yet, technologies have evolved significantly since, and Russia would spare no efforts or money to complete the construction.
The first Kerch bridge had been ruined by storms and ice. In February 1945, a huge mass of floating ice shattered its 30 pillars. This was followed by a decision to not restore it and the bridge was demolished completely. But the Soviet Union did not need it so badly: anyone could get into Crimea through Ukraine.
RELATED ARTICLE: How commoditized is Ukraine’s economy?
Today, the question of building the bridge is crucial, and Russia’s leaders take it seriously. However much Ukrainians would like the new construction to follow the fate of the first one, chances are slim that this will actually happen. The first bridge was built hastily in a war-affected environment. That’s why it did not last long. Ice will hardly ruin the new bridge. Therefore, Ukrainian ports in the Sea of Azov will have to adjust to the new reality, learn to survive in the new environment and find a way to compensate for the losses caused by Russia.
The construction of the Kerch bridge has hit Berdiansk and Mariupol — especially the latter one as the Mariupol seaport is the deepest of all in the Sea of Azov and can harbor large vessels, unlike its neighbors. It is Ukraine’s third largest seaport and a large enterprise that provides jobs to many in the city. In the past, it was the export point for a huge variety of produce from the Donbas industry, from coal and steel to equipment and industrial machinery. Now, the port is facing huge losses. On the days when the Russian builders were installing arcs on the bridge, traffic almost stopped in the Kerch Strait. This halted traffic in Ukrainian seaports as well.
“144 vessels we used to work with will no longer be able to go through the Kerch-Yenikalsky channel to the Mariupol port,” Oleksandr Oliynyk, Director of the Mariupol Trade Seaport said in an interview for Radio Free Liberty. “This is because the Russian Federation has issued an official document saying that vessels of over 33 meters above the water surface cannot pass under the Kerch bridge.”
According to him, large vessels like Panamax will no longer enter Mariupol because of the bridge as they are at least 5-10 meters above the height of the Kerch bridge in the place where they would normally cross the Kerch Strait. Mariupol has already lost a contract to supply 1mn t of pig iron to the US — that shipment has gone to Odesa seaport. The total losses faced by the Mariupol port from 1mn t of pig iron and 300-500,000 t of steel produce amount to nearly UAH 250mn of net income. The economy of sea freight is pretty simple: the larger the shipment, the lower the freight rate and the cheaper the shipment. From now on, it is impossible to ship larger cargos from the Sea of Azov. The managers of the Mariupol seaport are looking for solutions of this difficult situation. Mariupol is building a grain terminal to expand the range of goods it can ship and thus compensate for the losses incurred.
RELATED ARTICLE: The Kremlin's gas pipelines bypassing Ukraine are a threat to the country's energy security. What can it do to protect itself from upcoming risks
“The grain is shipped to the Middle East, Africa and Italy through the port in Mariupol. This sort of shipments does not require a vessel like Panamax. The most popular shipments are 10-20,000 t. So there is no problem with that. The vessels that are taking cargoes to the open waters transfer them through the ports in Mykolayiv and Odesa. While we are mostly oriented at the Mediterranean markets,” Oleksandr Oliynyk shares.
There is little doubt that Russia has built its bridge so low in order to undermine economic interest of Ukrainian ports. According to experts, bridges that restrict ship traffic are no longer built in the world. Quite on the contrary, the goal today is to reconstruct old bridges so that they offer more transit capacity.
Apart from the height of the bridge, another problem looms. The unrecognized status of Crimea pushes many to quit working with seaports in the Sea of Azov in order to avoid santions. Since 2014, ships have been forced to pay fees to the occupying power for crossing the Kerch Strait. The fee for a vessel ranges from US $2,500 to 9,000 based on the size, and international companies don’t know how such payments will be interpreted.
Ukraine never gave its consent for this bridge to be built. In February, all materials on the bridge were collected and sent to the International Tribunal for the Law of the Sea. The consideration of it is likely to take years. This means that Ukrainian seaports in Mariupol and Berdiansk will incur losses. The budgets of these cities will lose revenues while residents will lose jobs.
Quite paradoxically, Russia’s leaders speak a lot of the interests of Russian-speakers in South-Eastern Ukraine and claims to defend the Donbas. Meanwhile, the construction of the Kerch bridge hits the economic interests of that same Donbas. The Mariupol seaport is in Donetsk Oblast. It is through Mariupol that the goods and commodities produced in the Donbas used to be exported. From now on, Mariupol’s steelworkers will be forced to ship and receive 20,000t+ cargo through Odesa and Mykolayiv. This will significantly increase their transportation costs as they will also have to use the railway to deliver the goods to and fro.
Because of Russia, the Mariupol seaport and the city will lose hundreds of millions of hryvnia on a yearly basis while the residents of the Russian-speaking Mariupol will be hit the hardest even though many of them joined the “Russian spring” in 2014 and took it to the streets with the Russian flags. Now Russia is paying them back for the loyalty.
In fact, a long-time tendency is for the regions which Russia rushes to “protect” to suffer most from it. Transnistria, Abkhazia, Ossetia and the occupied parts of Donetsk and Luhansk oblasts have all turned into grey areas with the poorest life quality in the post-soviet terrain. The Russians failed to “liberate” Mariupol back in 2014. So they hit it in a more sophisticated way, by designing a bridge to be too low to allow traffic to the Mariupol seaport. Hopefully, the locals in Mariupol will learn their lesson from this expression of Russia’s “brotherly friendship”.
Translated by Jonathan Reilly
Follow us at @OfficeWeek on Twitter and The Ukrainian Week on Facebook
