Diplomatically Speaking: Ukrainian Ambassador Liubov Nepop, ‘Huge Unused Potential’ in Ukrainian-Hungarian Trade

Interview

Liubov Nepop

Hungary and Ukraine have a long history. Hungary was just the third country to recognize its massive northeastern neighbor’s independence from the former Soviet Union in 1991, and Wikipedia places the 150,000 ethnic Magyars in the country as the seventh biggest Hungarian diaspora in the world. Relations soured in 2017, however, with an education law that Hungary claims is an attack on minority language rights, although some of that tension appears to have eased recently. Liubov Nepop, Ukraine’s Ambassador to Hungary since May 2016, talks to the Budapest Business Journal about the current state of the bilateral relationship.

BBJ: What is the basis of bilateral trade between Hungary and Ukraine and what direction is the trend heading in?

Liubov Nepop: The coronavirus epidemic negatively influenced the general situation in the world and, unfortunately, Ukrainian-Hungarian bilateral trade is not exemption. In 2019 our trade turnover reached USD 2.8 billion. In January-September 2020, it amounted to USD 1.953 bln, which is 13.7% less than in the same period of 2019. Ukrainian exports to Hungary reached USD 1.05 bln (a fall of 19.8%), while Ukrainian imports constituted USD 904 million (down by 5.1%).

But in June 2020, we restarted work of the Joint Intergovernmental Commission on Economic Cooperation and I hope it will give an impetus to our trade. There is a huge room for further interaction in agribusiness, water management, infrastructure, manufacturing, energy, the healthcare and IT sectors, trans border and cross border cooperation.

Ukrainian diplomats are ready to support establishing ties in these and another spheres. The work of the Ministry of Foreign Affairs of Ukraine in boosting business contacts is facilitated by the Council of Exporters and Investors, created last year as an effective instrument to develop business relations with our foreign partners.

Ministers Dmytro Kuleba and Péter Szijjártó agreed on holding an online Ukrainian-Hungarian business forum in April. We are also working on organizing a tourist forum. Traditional destinations like Kyiv, Lviv, Odesa, culinary and wine tours, rural and medical tourism are just a few examples of what Ukraine has to offer. So, there is a huge unused potential in bilateral trade and we encourage businesses from both sides to discover it.

BBJ: What are the main sectors for Ukrainian exports to Hungary and Hungarian exports to Ukraine?

LN: Hungary is among the top nine most important trade partners for Ukraine and ranks fourth among European countries in terms of bilateral trade, having 5.8% of the total amount. Hungary ranks 11th for receiving Ukrainian exports. Hungary mostly exported electrical appliances and supply, natural gas, and medication to Ukraine in 2019. Electrical appliances and supply, natural gas, and electricity were among the top three commodities imported by Hungary from Ukraine. 

BBJ: Who are the largest Ukrainian investors in Hungary. How much FDI are we talking about, and how many jobs have been created?

LN: Ukraine has invested USD 4.4 mln in the Hungarian economy, mainly in industry (processing industry; water supply; sewerage, waste management); transport, warehousing, postal and courier activities; professional, scientific and technical activities.

At the same time Hungary is among the top 20 investors for Ukraine (it actually ranks 14th). A number of Hungarian companies successfully operates in Ukraine, including OTP Bank, Pannonplast, Babolna, WizzAir and Gedeon Richter. In general, Hungary has invested USD 360.1 mln in our economy, which is 1% of total FDI in Ukraine.

Over the past several years, the Ukrainian government undertook key reforms such as carrying out significant fiscal consolidation, moving to a flexible exchange rate, enhancing the transparency of public procurement, simplifying business regulations, stabilizing and restructuring the banking sector and establishing anti-corruption agencies. Thus, the business climate has improved significantly, which has allowed Ukraine to jump up 48 rungs in the “Doing Business” ranking since 2014 and it now occupies 64th place. 

BBJ: Many of our readers will be aware of the dispute between Hungary and Ukraine over the 2017 education law and its minority language restrictions. Hungary’s foreign minister visited Kyiv in late January. What is the latest situation?

LN: After adopting the law on education, Ukraine sent it to the Venice Commission and implemented recommendations received. In January, Ministers Kuleba and Szijjártó agreed on holding a first meeting of a working group on education. The goal of the group is to move the issue of education from the political to expert dimension and to discuss how we can cooperate in the framework of implementing education reform and the legislation adopted. I hope we’ll succeed in this and fully restore the traditionally good relations between our countries.

BBJ: Ukraine’s ambitions to join NATO and the European Union also became tied up in this. What’s the latest here?

LN: Ukraine’s goal to join NATO and the EU is enshrined in our constitution and remains our priority. It was confirmed during the latest visit of the Prime Minister of Ukraine to Brussels in February at his meeting with NATO Secretary General and at the Ukraine-EU Association Council. Last year, on June 12, we became a NATO Enhanced Opportunity Partner and we are looking forward to getting a Membership Action Plan (MAP), a program of advice, assistance and practical support tailored to the individual needs of countries wishing to join the alliance. In relation to the EU, we are implementing the Association Agreement and have agreed to launch a comprehensive review of its achievements to deepen sectoral integration. These practical aspects can enhance our cooperation with all NATO and EU member-states, including Hungary.

BBJ: These issues aside, how are political relations? Are there areas of cooperation?

LN: Hungary supports the sovereignty and territorial integrity of Ukraine in countering Russian aggression against our country, which continues since 2014. We are grateful for Hungarian support of the EU sanctions against Russia, organizing vacations for children and giving medical treatment to our wounded soldiers. Hungary allowed transit for Ukrainian citizens, when the coronavirus pandemic started, and gave humanitarian support to Ukraine to counter the pandemic. It is really important to remember that Ukraine and Hungary have a lot of things connecting us, and it is worth to make efforts to build on them, overcoming our disagreements and basing our relations on mutual respect.

This article was first published in the Budapest Business Journal print issue of February 26, 2021.

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