Trade Finance in Ukraine
- An increasing number of sanctions since March 2014 against certain Ukrainian and Russian individuals and companies
- The Malaysian Airlines flight crash has increased unrest
- Economic sanctions were imposed by the EU against Russia in July 2014. This included Russian Government controlled banks being affected by not being able to borrow money in EU financial markets
- The EU imposed an arms embargo on Russia
- The EU prevented the export of technology for the extraction of oil from deep sea, Arctic and shale deposits
- There was a widespread campaign of sanctions from the US
- Sanctions were increased in September and November 2014 and January 2015
- There were calls for arming the Ukranian government at the start of 2015 that the US and EU did not ‘take off the table’
- Some see that the sanctions will further discredit those who criticise the nationalistic policies in Russia
Ukraine: A guide for Importers and Exporters
It is important to understand the background of the situation. The Ukrainian President Viktor Yanukovych decided not to sign an agreement with the EU at the end of 2013 and wanted Ukraine to become closer to Russia and the Commonwealth of Independent States. As a result of this stance, almost 500,000 Ukrainians protested. An agreement with Russia to include $15 billion in loans and gas subsidies sparked further riots which were suppressed by the Ukrainian government. Suppression was harsh as rioters were taken from the streets and tortured. The events came to a fore in February, when the Ukrainian parliament voted to impeach President Yanukovych.
The night when the vote was cast was the time that the President moved to Russia. However, his actions have had a ripple effect as Russian supported Ukrainian provincial-level officials in Crimea have taken many measures that violate both the Ukrainian constitution and international law. The Ukrainian province of Crimea has been taken control of, with Russian soldiers effectively controlling airports in Crimea and buildings belonging to the government. Phone lines within the Crimea have been cut and roadblocks enforced on Crimean roads. Trenches have even been built to separate the Crimean peninsula from the mainland of Ukraine.
As the Crimean provincial legislature was under Russian control, the Speaker announced that legislators had passed a vote of non-confidence in the provincial government of Crimea, and appointed Serhiy Aksyonov as the new prime minister of Crimea. The Speaker declared himself in charge of all parts of governing rule, such as the military, police, navy, air forces and border guards in Crimea. He also brought forward the referendum to March (by two months) on whether the Crimea should separate from Ukraine.
Since the elements brought about by the above, Turchynov, Ukraine’s acting president, has ordered that the appointment of Aksyonov as the head of the Crimean government was unconstitutional, and a Ukrainian court has ordered the arrest of Aksyonov and Konstantynov for “actions aimed at the violent overthrow, change of constitutional order, or the seizure of state power.”
In March 2014, the Governor in Council made the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (the “FACFOA Regulations”), following the Freezing Assets of Corrupt Foreign Officials Act. These regulations put into effect the requests that were received from Ukraine to freeze assets of former leaders and senior officials or those closely linked to them. This is in the event that they are suspected of wrongly appropriated state funds, or property which was obtained inappropriately as a result of their personal or business connections.
Tensions are said to have hit a height when the Crimean Parliament accepted the results of a resolution that announced the unanimous decision to become part of Russia. The Ukrainian Ministry of Justice declared the referendum illegal, and they have clearly stated that on national referendums are allowed according to the Ukrainian constitution.
In March 2014, the Special Economic Measures (Ukraine) Regulations (“the Regulations”) came into force. These Regulations included a list of those people that the Governor in Council considered were engaged in activities that directly or indirectly helped support or fund the deployment of armed forces in Russia to Crimea or to the seizing of control of Ukrainian government and military entities inside Crimea.
Ukraine: How Trade Finance works
1. Customer places order
The customer, or end client will place an order with your business.
2. Your business seeks a supplier
The importer (your business or company) would find a supplier to fulfil the order.
3. Get in touch with Trade Finance Global
The importer speaks to Trade Finance Global and finds the right funding solution for the goods at a competitive rate, to pay the supplier.
4. We find the most suitable funder
The most suitable stock finance funder for the transaction either pays the supplier direct, provides a loan to the Importer, or provides guarantees such as an LC.
5. Dispatching the product to your business
The supplier ships the product to your company, (the Importer).
6. Fulfilling the customer order
The Importer provides the product under the customer order and the end customer pays for the product.
7. We find the most suitable funder
The Importer settles the stock finance facility or the guarantee ends and the remainder is kept by the Importer.