By Chris White, a former Daily Mail journalist and Press Officer for the UK Conservatives in the European Parliament in Brussels & Strasbourg
Ukraine has the opportunity to become the key transit state connecting Europe with Asia. Ukraine has, without exaggeration, colossal transit and logistics potential that will be of huge benefit to the economy of the EU, but the technical integration of the Ukrainian railway (which is given a key role in this process) in the EU depends on a whole series of systemic reforms which will require removal of the Russian footprint in railway sector.
The fact is that before the start of the full-scale war, the functioning of the Ukrainian railway strongly depended on Russian standards, rules and regulations for the operation of rolling stock, the organization of production, etc.
The process of Ukraine’s integration into the EU alerted the issue among the professional community, political circles, and business communities like never before. Ukraine began the process of abandoning the old Soviet standards – GOSTs.
For example, there is the certification process: from now on, Ukrainian enterprises will receive a “temporary conditional number” in Kyiv from the Research and Design and Technology Institute of Railway Transport (hereinafter – NDKTI) of Ukrzaliznytsia (www.uz.gov.ua).
However, why is Ukraine in no hurry to establish its own production of railway components? After all, when we talk about the rejection of everything Russian, we are primarily talking about future Ukrainian production of components that were historically produced on the territory of the aggressor state.
«The roots of all these processes go back to the times of the Soviet occupation, when industrial production was organised centrally with all technical development being the responsibility of Russian companies”, the founder and owner of Aurum Group, Alona Lebedieva (picture), comments.
For example, even today, absorbing devices RTR.pdf (oleo.co.uk) for freight rolling stock are imported to Ukraine from the countries of the post-Soviet space, since the only producer in this case is the Russian company “Diprom”.
In order to fill this deficit, Ukrainian railcar repair and railcar-building companies have been forced to resort to grey import schemes, because the production of these devices is possible only if there is a valid license agreement with the developer, which is a mandatory condition for passing inspection control by the regulator.
That is, the only reason for the delay in setting up own production is «the lack of approved technical documentation from Ukrzaliznytsia, despite the fact that such technical documentation has long been developed», Alona Lebedieva explains, adding “and there is the question of “betrayal or negligence?”, arguing that it would be impossible to implement without the participation (or inaction) of Ukrzaliznytsia, or, to be more precise, its branch – NDKTI. After all, the use of Russian components by certain companies in the production of wagons could not escape her attention. At the same time, according to public data of the State Customs Service, despite the ban of the Cabinet of Ministers, the total import of goods from Russia for 7 months of 2023 amounted to $3.5 million, of which the lion’s share, namely $2.67 million, consists precisely of products for the railways.
For example, the enterprises of the multidisciplinary industrial and investment group of companies Aurum Group (www.aurumgroup.ua) have already since the start of the Russian invasion expressed their intention to organise their own Ukrainian production of some components, because for this, they have all necessary capabilities. But, unfortunately, they still have not received permission from the same NDKTI, which has been delaying the certification of Ukrainian enterprises for the production of these products for quite a long time.
“Corruption at all levels”
According to the founder and owner of Aurum Group, Alona Lebedieva, the issue runs much deeper:
“Unfortunately, the structure of Ukrzaliznytsia is still riddled with corruption at all levels, which has been institutionalised for many years and which remains the biggest disease for our state. Imports still continue under grey schemes. There is still no ban, for example, on the installation of new absorbing devices manufactured by the aggressor country, despite the fact that we can master our own production. More than half of the officials of the UZ do not even speak the state language.”
After longrunning efforts (and accompanying bureaucracy,) Ukrainian manufacturers have began to test prototypes and receive certification.
However, in February 2023, Ukrzaliznytsia nevertheless began to take certain steps of de-Russification and published a program aimed at abandoning Russian names, marks or images on any objects of railway transport, that is, the names of regional branches, mileage markings, inscriptions on rolling stock, tickets, etc.
In the biggest shake-up since Russia's invasion of Ukraine, several high-ranking officials were dismissed or have resigned from their posts over corruption allegations, including governors of the Kyiv, Sumy, Dnipropetrovsk, Kherson and Zaporizhzhia regions https://t.co/HoMNxaJpFK pic.twitter.com/ZghkyCi5pv
— Reuters (@Reuters) January 24, 2023
As Alona Lebedieva comments, «of course, these steps are correct and necessary, in the 33rd year of Ukraine’s independence, but they do not come at the right time. Unfortunately, the bulk of rolling stock is currently not suitable for passenger transportation. A large part of the rolling stock needs not just a cosmetic, but a capital repair, with the installation of air conditioning units and bio-toilets».
As for freight transportation, she further notes: “Just like the infrastructure, the wagon and locomotive fleet must be restored.”
She thereby highlights the need for the technical integration of Ukrzaliznytsia into EU standards:
“There are many important issues that require a quick and urgent response, given conditions of war. And in order to move forward, we need to get our own products to the market, and this is a primary necessity, which is connected with more global processes – the processes of the integration of Ukrainian railways into the EU.”
Titanic work ahead
The development of Ukraine’s transit potential will involve titanic work that may take a dozen years or more.
Construction of EU standard tracks and rolling stock, systemic reforms at customs with multimodal logistics centres that allow customs inspection without stopping the movement of freight trains, etc. All this must be done.
However formidable the challenges to Ukraine may be, it has all the necessary production and intellectual capacities to become self-sufficient.
However, when this will happen is a rhetorical question, because it depends not only on the desire of manufacturers and Ukrainian enterprises to move forward, but also on the will of the authorities and managers in the offices of Ukrzaliznytsia, which remains a state monopoly that in one way or another determines the work of the entire industry.