Ukraine

Business

Journal

19:42 PM Monday, July 24, 2017
Tech
Israel: Ukraine’s Next Free Trade Partner After EU?
The UBJ
More flights, more tourists, more jobs for Ukraine IT engineers here and for Ukraine construction workers in Israel
image/svg+xml Kyiv Lutsk Rivne Zhytomyr Lviv Ternopil Khmelnytskyi Uzhgorod Chernivtsi Vinnytsia Chernigiv Sumy Kharkiv Poltava Cherkasy Kirovohrad Lugansk Dnipropetrovsk Donetsk Zaporizhzhia Mykolaiv Odesa Kherson Simferopol Sevastopol Ivano- Frankivsk

By Andrew Sweeney

KYIV – About 500,000 Israelis are of Ukrainian origin, largely Jews who emigrated after the fall of the Soviet Union. With 6 percent of Israel’s population linked to Ukraine, ties between the two nations are strong. Ukraine International Airlines has direct flights from seven Ukrainian cities to Tel Aviv.

In mid-May, Volodymyr Groysman, Ukraine’s first openly Jewish Prime Minister paid a three day official visit to Israel. While the visit was largely to patch up relations after Ukraine’s United Nations vote last year on Israeli settlements in the West Bank, the visit also served to advance work on a Israel-Ukraine free trade pact.

Israel’s Ambassador to Ukraine Eli Belotsercovsky spoke to the UBJ at Israel's embassy at 34 Lesi Ukrainky Blvd..

Eli Belotsercovsky, born in Chisinau, arrived here as Israel’s Ambassador to Ukraine and Moldova in 2014. With luck, he will see the signing of a Ukraine-Israel FTA during his time in Kyiv. (UNIAN/Vladimir Gontar)

The Israel Ukraine FTA is still being discussed, how much progress has been made?

Ukraine started negotiations just about two years ago, and we had a number of meetings. But it’s a very lengthy process, there are a lot of items to discuss. It’s mainly technical. So we hope very much to complete negotiations this year

What would be the main advantages for Ukraine and for Israel of the FTA?

There is a think a classic win-win situation. On one hand, we have an actual improvement on the issue of customs. There will be a significant customs reduction, which would make trade between the countries much more efficient. The economies of Israel and Ukraine are more complementary than competitive. Here, they produce a lot of industrial goods, which in Israel we don’t have. There are some issues on agriculture, where there are overlaps, but not a lot. This is mainly because our agriculture is more science intensive, Ukrainian agriculture is more traditional.

What have been the stumbling blocks?

There are still negotiations on agro products. It’s a natural thing as in every country agriculture is usually the most protected [sector]. In this sort of agreement, the concessions you make on agriculture are perceived as greater concessions than on other issues. So, it takes more time, but there’s a very strong dynamism, both sides are very interested in moving forward.

Ukraine is a major destination for Israeli tourists, especially for religious reasons. Are numbers likely to increase?

Since 2011, when the visa regime was abolished, we have seen a tremendous upsurge in tourism. Every year, it’s growing. In 2016, 165,000 Ukrainians visited Israel -- 5th or 6th place in the number of incoming tourists.

There are a lot of reasons. First, there’s no need for visa. In addition, there is hardly a Ukrainian who doesn’t have friends or relatives in Israel. The second thing is the ease of how they manage in Israel, first in foremost because many people in Israel speak Russian.

Ukrainians now are able to travel to EU countries without a visa. Will that cut tourism to Israel?

I don’t think so. We can’t be compared with a Central or Eastern European country. Israel has a uniqueness, which is not only about visas, prices, or any other specific characteristics.

There’s the beaches, the culture, the history, holy places, Israel is a very small country. You can go see where Jesus walked, go to the beach, or go to a nice hotel, whatever. It’s a small place, you can cover it easily, the infrastructure is very good, at the end of the day you can get a lot of what interests you.

Every year, there are more flights from Ukraine to Israel. There are now flights launched from Dnipro, Kharkiv, Kyiv, Lviv, Odesa, Vinnitsa and Zaporizhia.

Every major and medium sized city has flights now, not just because they like Israel, but because it pays off. There is a feasible economic reason for them to fly.

Are more Israeli operators likely to expand into Ukraine?

We have El Al’s Up. We have another company, Sun D’or, who is considering flying to Odesa. [Flights are to start June 26] Frankly, I think it’s more difficult to compete with Ukrainian carriers.

Why is that?

Basically, when you look at Boryspil’s list of flights, you will see most are UIA. That’s the biggest airline here.

UIA has been accused of blocking companies from entering Ukraine…

I haven’t met any complaints like that. Our airlines have their own sets of priorities. They fly here. We would like to see more. But, in the meantime, there are still many tourists coming.

The Uman, Ukraine pilgrimage will be the biggest ever this year. Is Uman airport going to be developed on time?

This is a private initiative that we welcome very much and hope it will success. But we’re not part of it.

Is the airport likely to be built by September/October?

It’s difficult to say as I don’t know 100% what stage it is at. We hope it will be, but if it won’t be then I’m sure there’ll be other options for people who want to come. Also, there are very many thousands coming from Israel to Uman throughout the year. Even if it’s going to be completed now or later, we’ll still be very happy.

What has impressed you most about Ukraine since you arrived here?

When I came here for the first time, one of the things I was really impressed by was the level of the people. Firstly, the very high number of people with higher education, the trend of going to university, studying is part of the culture here. It shows people value education.

Second is their attitude towards work. The level of work disciple is outstanding, compared to Israel.

The main resource that makes the country rich or poorer is the human resource. If you have that, the rest is less important. The problem here is over the years there has been an overinvestment in the exploitation of natural resources, a lack of investment in utilization of human resources.

There is a lot of potential here, this is one of the most prospective areas of cooperation between Israel and Ukraine and of course, IT, is one of the major spheres because of the main tasks of any country is to create the framework for the people to fulfill themselves.

In which fields are Israeli companies working in Ukraine?

We have a number of companies. First the agriculture companies that work there, they have been here for a while; their rate of expansion is good, but it can’t be fast as its land. From what I hear they’re quite happy here. The number of companies in this segment is growing.

The second is IT, a very rapidly growing area. We have many companies in Israel that come here for outsourcing. Some companies that started to appreciate the potential here are even considering opening branches. It’s a very positive environment. There are a lot of beginnings in sort of organizing startups, like co-working, incubators this sort of thing.

The next step perhaps is to create a system that will provide some institutional support for the development of scientific intensive industries. From our point of view, we are ready to share our experience, when we work here in Ukraine our position is always very clear. We don’t tell the Ukrainians what to do, and we don’t give advice.

We share our experience; we show how it is done in Israel. What from this can be applied to Ukraine is up to Ukrainians to decide.

Despite the UN vote [on condemning the construction of Israeli settlements in the West Bank]?

The vote at the UN was an incident, which is closed. That chapter is closed. It was a bit of a dramatic issue, but nevertheless it was one issue.

A lot of Israeli weapons are being made under license in Ukraine. Can you comment?

Unfortunately, I cannot discuss this with you.

Regarding business investment, what is the total amount of Israeli investment in Ukraine?

It’s very difficult to know. A lot of Israeli companies invest through different subsidiaries and not directly from Israel.

Then what about how many Israeli companies operate here?

Between a few hundred to very few thousands. But it’s a guess.

They’re mostly SMEs?

Yes. Usually you hear about the bigger companies. But from time to time I hear about small companies, mainly in real estate, including some in Kyiv. You have Teva, they have a big operation [in Ukraine]. We were trying to bring Mobili [a manufacturer of high tech driver assistance systems], a very interesting company. They’re the hottest name on the Israeli high-tech market.

What should we look for in the second half of 2017?

One of our main tasks is finalize the FTA. The other interesting issue is the fact that in Israel, there’s a shortage of labor for construction. We have signed an agreement of temporarily employment of Ukrainians in Israel. The first item is construction workers. We are in the last stages of agreeing a protocol.


Slider Photo: Israeli Prime Minister Benjamin Netanyahu greets Ukrainian Prime Minister Volodomyr Groysman in Jerusalem on May 15. (UNIAN/Vladislav Muisenko)

Posted June 8, 2017

All Comments (0)
No Comments
We recommend
Biggest hacking offensive starts minutes after dea...
Mark Satter Jun 27, 2017
Ag, IT and Coal deals done prior to Aug. 1 start o...
James Brooke Jun 22, 2017
More flights, more tourists, more jobs for Ukraine...
The UBJ Jun 08, 2017