For Ukraine, blocking its borders by its neighbors has become a real nightmare. Poland, Slovakia, Hungary and Romania are the main transport hubs not only for the transportation of products, but also military equipment, as well as fuels and lubricants for Ukrainian troops. First Poland blocked the border. Since November, the Slovaks have joined it (permanently blocking the Vyshne Nemecke -Uzhgorod checkpoint). And now Hungary has made a similar decision. All that remains is Romania, through which Ukrainian grain and other agricultural products are transported.
As for Slovakia, this country actively helped Ukraine from the first days of the full-scale invasion of the Russian Federation – especially with military supplies. But the situation changed with the advent of a new government there. In particular, last week, Slovak Prime Minister Robert Fico, following a telephone conversation with Prime Minister Shmygal, ruled out the supply of weapons and ammunition to Ukraine from military and government warehouses. And at the end of November, Slovakia extended the ban on the import of agricultural products from Ukraine for an indefinite period, as stated by Minister of Agriculture Richard Takacs: “Slovakia will leave in force a unilateral ban on the import of Ukrainian grain until the European Commission makes a systemic decision to resolve the problem of the lack of competitiveness of European farmers in the face of Ukrainian agribusiness”.
This was confirmed by Prime Minister Fico, emphasizing: “Slovakia will continue to ban the import of Ukrainian agricultural products into its territory, otherwise it will go against its own farmers.”. The corresponding list of goods has also been expanded from 4 to 14 positions.. In addition to wheat, corn, rapeseed and sunflower seeds (the import of which was banned back in September), the new ban applies to honey, sugar, malt, soybeans, wheat flour, cane and beet sugar.. Plus, Bratislava will tighten the rules for the transit of these products. And from December 11, Slovak carriers announced an indefinite continuation of the blockade of the border with Ukraine at the Vyshne Nemecke – Uzhgorod crossing – until their demands are met.
On the resolution of these serious problems, as well as on the state of our investment cooperation, the Ukrainian business climate and further assistance from Slovakia to Ukraine spoke with Ambassador Marek Safin.
About war and investment
– How did the full-scale Russian aggression against Ukraine affect the relations between our countries – in particular, the business sphere?
– Slovakia has supported Ukraine since the first days of the Russian invasion. Let me remind you that it was our country that transferred the first S-300 air defense systems to your state. As well as airplanes, other military equipment and humanitarian aid for Ukrainians.
As for the business sphere, of course, the war did not help business development and did not add enthusiasm to Slovak investors. Moreover, the Slovak Foreign Ministry and the Consular Department advise their citizens not to visit Ukraine due to the unsafe situation in the country. Therefore, many of our entrepreneurs now do not risk coming here. I think that the number of Slovak companies/enterprises decreased by a third with the advent of the war in Ukraine. Although Slovaks are still interested in doing business in Ukraine and investing in promising sectors of the economy.
Despite the war, new Slovak companies are emerging that are showing interest in participating in the restoration of the Ukrainian economy – in particular, in the energy sector, the agricultural sector, and the development of healthcare. Slovakia has already completed several small projects in the Kyiv region (mainly assistance with equipment to several villages), and restoration projects have also been and are planned in Chernigov and the Chernigov region. And of course, we are interested in Transcarpathia – as a region bordering Slovakia. In particular, we want to help there with the provision of housing to internally displaced persons, including employees of enterprises/companies relocated from the occupied regions.
– You mentioned the Slovaks’ interest in investing in our energy industry. Can you tell us more about these projects?
– The Ukrainian energy network is connected to the European one and through Slovakia. There are projects for the construction of a power transmission line between Slovakia and Ukraine (Transcarpathian region). And there are Slovak companies that are interested in their implementation. By the way, this was one of the topics of the recent International Exhibition and Conference ReBuild Ukraine powered by Energy in Warsaw on November 14–15. But everything is still at the stage of discussion and negotiations between our countries, so without specifics.
– What changes have Slovak investments undergone since 02/24/2022?
– If we discuss the impact of military actions on Slovak investments, of course, they had and are having a negative effect. The year 2022 in Ukraine was marked as a war year. As such, there were almost no business investments from Slovakia: they were replaced by our military and humanitarian assistance to your country. Although this year, too, there is no particular surge in investment activity of Slovak businessmen. In general, these data are recorded by the National Bank of Slovakia. In the case of Ukraine, they are confidential and therefore not published.
If we talk about specifics, then, for example, the Minerfin company – one of the largest Slovak investors in recent years – before the war planned to invest several billion dollars in Ukraine. But the mines in the city of Dneprorudnoye, Zaporozhye region, ended up in the territory now occupied by the Russian Federation, and Minerfin has not owned its enterprise for 10 months. I can’t say how things are now at these mines, what the financial losses are, since neither the embassy nor the company itself has any information. But, probably, a manager from the Russian side has already been appointed there.
The Dneprorudny mines contain very high-quality iron ore that does not require additional beneficiation, and our company Minerfin supplied it to various enterprises in Slovakia, the Czech Republic and other EU countries. In general, Minerfin has been working in Ukraine since the early 1990s, in fact, since the declaration of independence of Ukraine and is a co-owner of the Zaporozhye iron ore plant: the company knows your country very well, the features of the local market and business environment. Therefore, we are waiting for the return of Ukrainian territories and the opportunity to continue working at our enterprises and further invest in their development.
– What is the scale of the company’s losses?
– According to FINStat (an online platform for working with data on Slovak companies), its profits decreased by 16% year on year. However, it is difficult to say what part of the losses is related specifically to the war in Ukraine.
– What other Slovak businesses found themselves under Russian protectorate?
– In general, there are quite a lot of Slovak companies whose businesses remained on Russian-occupied Ukrainian lands. It is clear that they are suffering numerous financial losses: exact figures have not yet appeared, and they are not provided by the owners of the affected businesses. Nevertheless, they want to return to their enterprises after the liberation of Ukraine and continue their previous work (although we believe that many enterprises in the occupied lands have already been looted).
Mainly, we are talking about Slovak companies that worked in Ukraine in the mining and agricultural production industries (for example, honey – the Mila Med company with facilities in Berdyansk, now occupied by the Russians). And also in the healthcare sector – the Slovak holding Pro Partners had an extensive network of diagnostic and radiological centers throughout Ukraine, and now there are only two of them left in the territory controlled by the Ukrainian authorities.
Also, the property of the owners of a number of Slovak businesses, which are located on territory now controlled by Ukraine, was damaged to one degree or another during the initial phase of the Russian-Ukrainian war in 2022. But we have no data on the scale of losses, since many companies turn to the embassy only when they themselves are unable to resolve the problem.
– Are the possibilities of reparations or compensation for the affected Slovak businesses being considered?
– As for the question regarding the payment of any compensation or reparations to the affected company owners, it is too early to talk about this. At the moment, our Ministry of Finance is working on the possibility of paying reparations, as well as on the issue of variability in the use of frozen Russian assets in Slovakia, in cooperation with European partners.
– Before the full-scale invasion of the Russian Federation, one of the largest investments in Ukraine was from the Slovak company NAFTA. How did the war affect her investments?
– The Slovak largest oil and gas operator NAFTA relocated from the occupied eastern Ukrainian regions with the outbreak of hostilities, but continues to engage in geological exploration of the territories and is now working to search for oil and gas near Uzhgorod and Poltava. The company does not disclose the size of its new investments.
About the “nuances” of the Ukrainian business climate
– Two years ago, in an interview with me, you told me that Slovak investors are not confident in the safety of their investments in Ukraine – that their enterprise will not be taken away from them or, with the help of “black” notaries, will not be re-registered to other persons. Has the situation changed over the past two years?
– Alas, the problem in Ukraine with raiding and “black” notaries has not disappeared anywhere. There are also problems with the rule of law, the protection of investor rights and the overall comfort of the business environment.. And unfortunately, our entrepreneurs have encountered such manifestations of the “specifics” of the local investment climate – and I would not be surprised if this happens tomorrow.
Let me give you an example: the unpleasant story with Ukrainian “black” notaries and our development company VIGROUP UA, owned by the brothers Richard and Juraj Duszka – which I told you about in an interview more than two years ago, is still not completed. Although even then, Slovak investors had two positive decisions from the Ministry of Justice (they filed a complaint with the Anti-Raider Commission, and it was satisfied). However, today our investors cannot freely use their property. And I want to emphasize that if our embassy had not intervened in this story, Slovak investors would have lost their assets altogether.
– In the previous interview, you also emphasized that VAT is not refunded to Slovak businessmen. In particular, we were talking about SES Tlmače, which was engaged in the design, production and assembly of energy equipment (the company worked in the Lugansk and Donetsk regions, and it was not returned 8,271,000 UAH for May 2009 ). Has this issue been resolved?
– As far as I know, the VAT debt of SES Tlmače (Slovenské energetické strojárne) has not yet been repaid. In 2019, owners took appropriate legal steps to protect their legal right to a tax refund. A complaint was filed through a Ukrainian lawyer, and there is a decision of the Pechersky District Court of the city. Kyiv dated November 2020, according to which the case was included in the Unified Register of Pre-trial Investigations. But, as far as I know, there is no further progress on this issue…
On the reasons for the ban on the import of Ukrainian agricultural products
– Slovakia (together with Hungary, Romania and Poland) extended the embargo on the import of Ukrainian agricultural products – on the supply of Ukrainian grain until the end of 2023. Will this ban be extended/cancelled from January 1, 2024? And what were the prerequisites for its implementation : the scale of losses of Slovak farmers due to the flow of cheap Ukrainian grain (grain prices in Slovakia)?
– Indeed, now in the agricultural sector we have a problem with Ukrainian grain – or rather, with its import. After all, it was agreed that Slovakia would exclusively provide a corridor for the transit of Ukrainian grain – and there are no problems with this. Our country fully supports the transit of agricultural products from Ukraine to third countries through “solidarity corridors”. But no one talked about imports!
In general, grain production in Slovakia is twice as high as its domestic consumption. But the reality is that a significant part of cheap Ukrainian grain products remains on the Slovak market – thus representing price competition for the Slovak agricultural industry and local farmers exporting their grain to the EU. Therefore, Slovakia, together with Poland, Hungary and Romania, simply took measures to ensure the security of the domestic market and their national interests.
We will soon find out whether the embargo on Ukrainian grain will be extended or lifted (interview recorded on November 21 , 2023. – ). But my opinion is that as neighbors, we need to find a way out of this serious situation together with the Ukrainian side. We must be able to negotiate and come to an agreement. Alas, no one has yet come up with an alternative to negotiations.
Another important nuance of the preconditions for introducing the embargo is that foreign impurities (mineral oils, pesticides) were found in Ukrainian grain, which should not be there. That is, partially Ukrainian grain did not meet the quality markers of Slovak grain products.
About Russian money in Slovakia and losses from anti-Russian sanctions
– The topic of restoring the state after the war is now very relevant in Ukraine.. According to the European Commission, the assets of Russian individuals and companies frozen in EU member states amount to 24.1 billion euros as of mid-2023. In particular, in Italy Russian assets worth 2.3 billion euros were frozen, in Germany – 2.2 billion, in Austria – almost 1.8 billion euros of Russian and partially Belarusian assets, in Hungary – 870 million, in Bulgaria – 11.3 million, Czech Republic – 10.8 million, and in Slovakia – over 4.9 million euros. In what specific areas of the Slovak economy are these assets located and is Slovakia going to transfer them to restore the Ukrainian economy?
– As for the announced amount of frozen Russian assets in the EU and, in particular, in Slovakia, I’m not sure of its accuracy. This figure may actually be higher.. But the Ministry of Finance of Slovakia has not yet provided data, so it is impossible to name the amount.
Most of all, as far as I know, private Russian assets are concentrated in the Slovak tourism and mechanical engineering sectors.
As for the possibility and methods of transferring Russian assets to Ukraine, the new Slovak government is now engaged in this – in particular, the Ministry of Finance and the Ministry of Economy. Also, the solution to this complex issue will depend on the European Commission.
– It’s no secret that the EU has suffered significantly from anti-Russian sanctions. And how significant were the sanctions for Slovakia, in particular for 2022-2023 : is there a general assessment of the economic damage / lost profit of the country (for example, the Russian gas transit Eustream has already declared losses of almost 12.6 million euros this year – after refusal Should the EU import Russian energy ?
– There are no such official calculations yet.
As for private business, many Slovak entrepreneurs, of course, complain about the deterioration of trade relations and the reduction in their profits.
If we talk about Eustream (where the state owns 51% of the shares), then before the sanctions period Slovakia received about 300 million euros for gas transit. And if the company registered almost 12.6 million euros in losses this year alone, this is very noticeable. But, I believe, the problem for Eustream is that Ukraine no longer wants to transport Russian gas through its territory. If I'm not mistaken, transportation will only last until the end of 2024.
Of course, Eustream has other options for transporting gas – for example, from Germany. In this regard, I would like to remind you that Slovakia has always helped Ukraine free of charge in difficult times. In particular, gas reversal helped Ukraine a lot in 2014. In those days, and until now, it was possible to supply 200% of Ukraine's annual gas imports in reverse.
On further assistance from the Slovaks
– Since the beginning of the full-scale invasion, Slovakia has actively helped Ukraine with military supplies. The situation changed dramatically at the end of October – with the advent of a new government led by Robert Fico, who announced that the country would no longer send military aid to Ukraine. What will assistance to Slovakia look like now during this war – will it be limited to humanitarian aid?
– This is a distorted interpretation by journalists of the words of our prime minister. It was meant that military equipment would no longer be supplied free of charge from Slovak army military warehouses.
Slovakia gave a lot to Ukraine: air defense, fighters, and much more.
As for further Slovak assistance: no one will interfere with the initiative of private and commercial enterprises cooperating with Ukraine (and there are also Ukrainian companies that work in cooperation with our business on the territory of Slovakia). That is, all joint projects for the supply of weapons, repair of equipment, etc.. d. remain valid.
If we talk about further military assistance, today at the government level there are negotiations on the assembly and supply to Ukraine of remote-controlled mine clearance vehicles of the Božena-4 and Božena-5 type, which are among the best in the world and are supplied to 86 countries. There is also interest in producing them on Ukrainian territory, and this is now being discussed with the Ministry of Defense of Ukraine (https://news.liga.net/politics/news/v-ukraina-hotyat-nachat-proizvodit-mashiny-razminirovaniya-mv-10- bozena-4-i-bozena-5). Therefore, there is no need to say that a pro-Russian government has come to power in Slovakia. It is not pro-Russian, but pro-Slovak – first and foremost.