Russia launched a military action on Ukraine on February 24, after years of tensions over Ukraine’s plans to enter the North Atlantic Treaty Organization (NATO). The war in Ukraine is continuing into its second week with no sign of de-escalation despite ceasefire talks between representatives of both countries in the Blarusian border. The Sunday Observer last week interviewed Sri Lanka’s former Ambassador to Ukraine and Russia Udayanga Weeratunga on the short and long term impact the war in East Europe will have on Sri Lanka.
Excerpts of the interview
Q:Sri Lanka was relieved that its devastated tourism sector started to show signs of revival after two years with your direct intervention. Russians and Ukrainians accounted for the most number of arrivals in February, which recorded 100,000. With the outbreak of the war in that region, will the sector suffer another major setback?
A: Due to this situation, tourist arrivals from Ukraine will stop. But I think a small number will arrive, who look for homestays or long-term stays. But it will not help our economy. When the war began, there were about 4,100 Ukrainian tourists in Sri Lanka. Of them, 3,000 were on long periods of stay from one month to six months.
The Sri Lankan hosts will continue to benefit from those tourists, for some time. Over 1,200 of those tourists came on short-term visits, for one week to three weeks. They were staying in star class hotels. This group has left home for a short time and is facing financial issues and issues with their home fronts for which the Government will have to intervene and assist.
The plan is to send them to neighbouring states where they perhaps can go home via land routes. Some of them are ready to remain in Sri Lanka until a ceasefire between Russia and Ukraine is in effect. But the village economy profited by the Ukrainian tourists staying in villas or homestays. Due to the unfortunate situation in Ukraine, the rural economy will suffer.
As of today, there are no cancellations of pre-booked tours by Russian tourists after the outbreak of the war in the region. But new reservations are not scheduled this week. We believe it is not due to the war but due to the depreciation of the Russian Ruble. Tour packages have gone up by 40 percent. People must get used to these new rates, then it will be stabilised.
Q:Russia and Ukraine were our big tea buyers. What will be the impact of this war on our tea exports given that the Government is looking for more exports to overcome the current economic crisis?
A: As far as tea exports are concerned, there was an issue from late last year. It was not due to the recent war, but was due to an increase in freight charges, triggered by the Covid-19 pandemic. In some cases, freight charges have risen by three fold. Different countries imposed lockdowns. Quarantine laws became the order of the day. Ship crews were on mandatory quarantine periods. Due to such strict laws, ship companies stopped normal operations and freight services were drastically reduced. China did not go for a long term lockdown, since they knew their economy would suffer an irreparable loss. Their production chain was uninterrupted and their exports continued. The ships leaving Chinese ports were full when they reached our ports.
Since we lowered our imports, and due to the reduction in vessel operations there was a shortage in containers for Sri Lankan exports. On top of that, freight services became costly due to quarantine laws. As a result, our tea exports suffered. This setback is not related to the war.
A decline is anticipated again due to the Russian-Ukrainian war. One reason is due to forex issues faced by Russia. The other problem is exporting tea to Ukraine - certain parts of Ukraine have declared independence. These areas are best buyers of Ceylon tea. We need to take a step back and review our export routes. But for us time is running out fast.
Ukraine is a significant market for our tea exports although not as big as Russia. The size of the population is 44 million in Ukraine and in Russia 150 million. Russians drink more tea. In Ukraine, people close to Russia prefer tea, but those close to the Polish border like coffee.
Earlier as a single country 25 percent of our tea exports went to Russia. It was the number one buyer, but now it has fallen behind Iraq which is the leading buyer followed by Turkey.
The tea exports to Russia suffered due to the price increase in the Covid-19 aftermath and also due to a lot of self imposed regulations. To reduce costs, big brands started blending Lankan tea with tea from other countries in Dubai and Russia.
Due to this situation, the exporters will have to grapple with a depreciating Russian Ruble and money transferring issues. The Rubel has depreciated by almost 40 percent. Hence the price of exported goods in that country will be expensive. Therefore, tea from Kenya will pick up the market due to their low price. That will be a major concern.
Q:Is this situation a creation of the West imposed sanctions on Russia?
A: Not due to sanctions alone. Due to the uncertainty, people panic and tend to exchange Ruble into dollars, and they try to withdraw dollars in the bank. It is similar to a crisis buying when there is an oil shortage.
Q:Do you think that Sri Lanka’s tourism sector will face a serious issue if there is a protracted war in Ukraine?
A: Egypt, Turkey, Dubai are the most favored countries among Russian tourists. The tourism facilities and rates of these countries cannot be matched. However, Sri Lanka is also among the favoured destinations by Russians. The conflict has brought us a new opening.
Russian tourists are banned from 36 European countries. A lot of Russians go to Europe after Summer to relax. There is an opening for us now due to these restrictions. The developments linked to this situation will have to be studied so as to alter our strategies accordingly.
Due to the Turkey’s stance to side with Ukraine, in the Russo Ukraine conflict earlier, Russia imposed a tourism ban on Turkey. This ban was lifted in July last year. If a similar ban is clamped down preventing Russians from trevelling to Turkey, Sri Lanka can seize that opportunity to salvage our economy. Dubai is not a summer time destination for Russians, due to its hot climate during that time of the year.
Sri Lanka is a winter time destination, but due to new developments, it can be made a summer time destination also. If summer time destinations are closed for Russians, we must step in to seize that opportunity to salvage our economy from the current situation.
But the sector must start afresh. We must offer attractive packages to divert these tourists who are looking at alternative places. Main thing is to match facilities offered elsewhere. We cannot lower the quality and standard of our services and products due to Covid-19 pressures. Although they will bring in short term gains, long term damage is irreparable.
However, Thailand has fully opened its borders for tourists. It has removed mandatory quarantine for tourists. Thailand received 39.9 million tourists in 2019 which is about 300,000 travellers a month. Reopening of Thailand is a big blow to our industry. Thailand can be visited around the year, it has better facilities and tourism is a huge industry there.
An advantage would be the increase in flight services by Aeroflot in the coming Summer. It will have two additional charter flights to Colombo. But restrictions have been imposed on Aeroflot to safeguard SriLankan Airline›s business prospects. This will hinder our main objective. The strategy should have been a reduced air ticket price instead of getting Aeroflot to increase the fare, to attract more Russian tourists. Personal gains must not supersede the common goal. In the first two months of this year, Russian tourists accounted for the most number of tourist arrivals. In January, Ukraine was in the third place. It dropped to 5th or 4th place in February. During March, we don’t expect Ukraininan tourists. But Russian tourists are expected to arrive.
We are grateful to Ukrainian tourists who dared to visit Sri Lanka first amid a raging pandemic. Then Bulgarian, Kazakhstan and Uzbekistan tourists also poured in.
Q:Will the blocking of airspace for Russian flights by EU countries, have a bearing on Sri Lanka tourism?
A: The blocking of airspace for Russian flights by the European countries will not affect us adversely. We expect that in addition to SriLankan and Aeroflot, the UAE airlines - Air Arabia, Fly dubai and Emirates will ferry passengers from Russia to Colombo. These airlines might increase flights to Moscow and other destinations.
Q:There is a significant number of Sri Lankan students in Belarus and Russia. What is your advice to these students?
A: The international students go to east European countries to do medicine. Others go as students to cross over to Europe. Most Medical students are in Russia and Belarus.
The Rostov State Medical University offers scholarships to Sri Lankan students to do medicine in the Russian language. Among higher education institutes accommodating Sri Lankan students in Belarus, it is the closest to Ukraine. If there are students in Rostov, it can be a limited number. In general, I don’t see a major threat to our students in universities in Belrus up to now. The students will be under stress knowing the fact that two close neighbours of Belarus are at war. Gomel is the other closest to city to Ukrainian border.
Ukraine did not attack Belarus or Russian targets. They have been defending themselves on the streets. I don’t think these students need to be evacuated. It is a good thing to have a plan in place in consultation with university administration to have online classes if the situation turns grim and they eventually have to return for some time.
I don’t see such a need for students in the cities of Minsk and Vtebsk, which are far away from the Ukrainian border. Students will not get affected by the appreciation of the dollar against the Ruble. It is actually a gain for international students.
Q:The war has continued for over eight days now. In your opinion, will it escalate into a full blown world war or will the peace talks between Ukraine and Russia succeed?
A: I don’t anticipate that this will escalate into a world war. The current escalation is not a new development. Ukraine and Russia had been at war for a long time. It is a result of NATO’s meddling with Ukraine, much to the distress of Russia and not honouring agreed upon terms after the World War II, on the limits of NATO and its military bases.
To stop this war, the West has a greater role to play. Russia will not stop until it is reassured that NATO will not expand into Ukraine. NATO membership has been enlarged from 12 to 30 countries, which include Poland and Czech Republic.
From 1994 to 2011, Russia wanted NATO to assure that they will not build military bases close to its border. They did not talk about expansion of NATO membership. But this was not forthcoming. More than any other nation, Ukraine joining NATO is seen by Russia as a serious threat, since it shared a bigger border with Ukraine, and the country is the second largest in Europe after Russia. It’s capability of military hardware production is another concern for Russian President Vladimir Putin.
President Petro Poroshenko who was elected to office after 2014 signed a constitutional amendment committing the country’s accession to NATO. It was the beginning of Russia’s military action against Ukraine.
Crimea annexation in 2014 and subsequent recognition of the Independence of Ukraine’s rebel held Donbas region were the consequences of this action. France and Germany brokered a ceasefire agreement - the Minsk protocol II to end the hostilities in the Donbas region in 2015 but the agreement still remains unimplemented.
I believe this war will end when Putin replaces the current Ukrainian President with a pro Russian or a military leader. This could have ended soon if the West did not provide military aid to Ukraine. America wanted this war to drag on. Ukraine is assisted by the EU and America. Russia is not supported by anyone so far, but China has indicated that it will be an ally. Russia needs no support to fight Ukraine.
I believe fanning nationalism and provoking civilians to join the fighting is a bad decision by the Ukrainian President. The civilians who wanted to fight should have been deployed under a military leader. The current action by the Ukrainian President will encourage criminalisation of society. As a result, gang robberies on the street will continue, long after the war ceases.