Catherine Noone (Fine Gael) | Oireachtas source

I welcome the Minister of State and thank him for his endeavours in this regard. I also welcome the debate on this important and serious issue. The situation in Ukraine poses many issues in the short and long term, on which the Minister touched. In the aftermath of the internal unrest which occurred following the then government's decision to ally itself with Russia as opposed to the European Union on economic matters, Russia has exerted itself strongly, to say the least. As Senator Paschal Mooney said, bully tactics were used in the invasion of Crimea, changing the geopolitical map and increasing tensions in the region to a level that had not been seen in many years, which is very frightening. The situation continues to unfold and last night Ukrainian forces are reported to have killed three pro-Russian militants in the east of the country ahead of international crisis talks in Geneva. Senator Paschal Mooney is correct that the situation is current, in flux and evolving each hour, and of very serious concern. Nobody is more aware of this than the Minister.
According to today's reports, Ukraine's national guard responded to an attack on its base in the city of Mariupol by approximately 300 people. Civil unrest is reaching unsustainable levels backed by many local Russian speakers. As we all know, some of them are demanding a referendum on transferring many powers from Kiev to the regions or even joining Russia. Ukraine's new pro-West government claims Russian agents are behind unrest that the Kremlin states could spark civil war and rejects demands for federalisation that would give Moscow greater influence in areas where Russian is spoken. Needless to say, Russia has refuted this, claiming it is an internal protest by Ukrainians who are rebelling against the government.
The European Union and the United States have imposed sanctions on Russian political and business figures with ties to the Kremlin and pledge to go further if Russia continues its alleged interference in Ukraine. The West states some 40,000 of Moscow's troops are massed near Ukraine's eastern border and could invade within hours, if ordered. This is deeply concerning and adds to the tension. While this confrontation between Russia and the West over Ukraine imperils the Russian economy which is to the forefront of their minds, the problem runs both ways. Russia’s pre-existing economic malaise also explains why the country is vulnerable to an international crisis. The Ukrainian crisis has occurred just at the moment when economic growth in Russia has come to depend more heavily than ever on capital-intensive investment, much of which comes from the European Union.
As the Financial Timesreported this week, Russia’s economic problems are structural, even if some cyclical factors such as recession and stagnation in the eurozone – by far Russia’s largest trading partner – have added to the gloom. The slowdown of European growth has dealt a much more serious blow to Ukraine’s economy than to Russia’s and must be reckoned among the underlying causes of the events that have contributed to the crisis. Political confrontation with the West following the annexation of Crimea has significantly undermined this external investment in Russia, with capital leaking out of Russia as domestic business owners do not see enough investment projects inside it with a sufficiently attractive risk-reward balance. Although that is how things stood six months ago, the political confrontation with the West following Russia’s annexation of Crimea undermines this investment case. Returns will be impaired by slower growth and western sanctions will create new risks, even assuming that the economic option of forbidding Russian trade and finance is never exercised, and it is unforeseeable that the situation will ever go that far. However, Russia’s dependence on external sources of long-term finance explains why its economy slumped far more after the financial crisis than any other major oil exporter. This is the position, as it stands, and the threat of military intervention in Ukraine and the intervention in Crimea have undermined Russia’s economy.
Although the situation in Ukraine is unstable, if agreement is reached in the talks, which it can be, we can continue to work towards restoring stability in Ukraine. Following this conflict, either the European Union or Russia will need to work with Ukraine to assist its economy in the long term and I am comforted that the Union has taken such a joined-up approach. Although I thought it would be a major challenge, considering how many member states are involved in the process, I was very pleased to hear that the European Union was having a very positive influence. This does not take away from the fact that the situation is very serious on a day-to-day basis and evolving. The Minister is obviously very much in touch with it and I thank him for his work and the update on the Government's position.