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Russian naval exercises stoke fears of Black Sea blockade

ELISSA NADWORNY, HOST:

While world leaders are focused on escalating violence in eastern Ukraine, Ukrainian businesses and the government also have their eyes on the Black Sea. That's where Russian naval exercises are trying to squeeze shipping lanes, which some fear could be a prelude to a blockade. NPR's Frank Langfitt reports from Kyiv.

FRANK LANGFITT, BYLINE: Andrey Stavinster runs Ukraine's largest port in the southern city of Odessa, but right now he's in Dubai, trying to calm his investors.

ANDREY STAVINSTER: We're talking about hundreds of millions of dollars, so I'm basically coming from a meeting to a meeting explaining. Hopefully it's not going to be that bad.

LANGFITT: But Stavinster says honestly, it could be. Russian naval drills are scheduled to end in the Black Sea tomorrow. Some businesses worry the ships could stay and try to block Ukrainian ports, which is how the country exports 60% of its products, which pass through the Bosporus and into the Mediterranean.

STAVINSTER: Largest industries in the country will stop like steel mills, mining excavation, you know, grain traders, grain production, sunflower crush mills, soy flour crushed mills. It's a disaster. We're talking about millions of people out of job.

LANGFITT: Andri Klymenko is editor-in-chief of Black Sea News, a shipping website. He says the Russian Navy is trying to reduce the shipping channel to Odessa from a width of 20 miles down to one.

ANDRI KLYMENKO: (Through interpreter) I believe it's an instrument of economic war, and the main goal is to intimidate and raise panic among ship owners and the port business. This is an economic sabotage.

LANGFITT: But marine tracking data shows freighters have managed to keep sailing through by ignoring the Russians. Government officials here are wary of raising alarm. When Taras Kachka, Ukraine's minister of the economy, was asked about a potential blockade on a recent podcast, he said he didn't want to spread fear through interviews with reporters and play into Russia's hands.

(SOUNDBITE OF ARCHIVED RECORDING)

TARAS KACHKA: (Through interpreter) If you say to Reuters that everything is under threat, you're shooting yourself in the foot because foreign companies will stop buying from us or will ask us for a discount due to security concerns. I don't really want to do that.

LANGFITT: Hlib Vyshlinsky runs the Centre for Economic Strategy, a think tank. He says Russian military action on the Black Sea could boomerang, raising insurance premiums for both Ukrainian and Russian ships. And Vyshlinsky says it would be hard to justify.

HLIB VYSHLINSKY: Any aggressive behavior over Russia in Black Sea has also very significant impact on Russian exports with our ports.

LANGFITT: Are you concerned about the potential for a blockade?

VYSHLINSKY: Technically, it's certainly possible. But it is rather hard to find a pretext for it.

LANGFITT: Meanwhile, other businesses here are preparing. Some IT firms have set up satellite connections in case of a massive cyberattack. Other companies are paying workers up to three months of salary in advance in case there are problems accessing banks. And Andy Hunter, head of the American Chamber of Commerce, says some firms near the Russian border are relocating workers.

ANDY HUNTER: For example, we've seen some ask, you know, a group of, like, 40 programmers to relocate them from Kharkiv to elsewhere.

LANGFITT: Kharkiv is how close to the Russian border?

HUNTER: Kharkiv is close. I think it's about 30 kilometers.

LANGFITT: Or about 19 miles. As for Andrey Stavinster, who co-owns the country's largest port, he's hoping for the best. But he says if there's a full-scale invasion, he'll destroy his operation to make sure the Russians can't use it.

Frank Langfitt, NPR News, Kyiv. Transcript provided by NPR, Copyright NPR.