Ukraine Bans Russian Reinsurance
An order from the Ukrainian state commission on financial market regulation (Gosfinuslug) came into force last Friday, the day Ukraine entered the World Trade Organization, banning the reinsurance of risks in companies from WTO non-member states. As a result, Russian insurers have lost a $60-million market. Insurers and Russian WTO negotiators are unaware of any WTO requirements behind the decision, and Russian authorities promise retaliatory measures.
According to Gosfinuslug, 796.5 million hryvnias were spent abroad on reinsurance in 2007. The share of Russian companies in that sum is unknown, but, in 2006, Russian companies accounted for 36 percent of the 560 million hryvnias sent out of the country that year. Thus, Russian insurers received about $40 million on that market. If Russian companies’ share of the market remained unchanged in 2007, they would have made $57 million. Ukrainian authorities say other sectors of the financial industry will not be subjected to new rules, since they do not have transnational operations. Gosfinuslug does not control banking, so Russian-Ukrainian ties in that industry are not threatened.
Observers point out that Ukraine has long been dissatisfied with the Russian-Ukrainian free trade agreement, and that Russian business already controls a significant portion of Ukrainian business. Russia cannot use WTO mechanisms to protest Ukraine’s decision on reinsurance, since Russia is not a WTO member. Government sources say that Russia will, however, succeed in making its displeasure known.
www.kommersant.com
All the Article in Russian as of May 19, 2008
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