What's Happening in Hungary Part III

Here is a link to the pdf of the newsletter I used as a reference.
http://mtva.hu/hu/hungary-matters/archive-hungary-matters-morning-issues/8196-0520am-hungarian-captive-in-ukraine--martonyi-urges-new-cooperation--banks-qface-high-costsq

1. Briefly summarize the issue.

On Monday, May 19th, a Hungarian man was driving in Ukraine when he was taken captive by a group of armed men. The counter-terrorism force (TEK) is working on investigating the case by contacting Ukraine officials.

2. Relate the issue to one or more of the economic concepts we have discussed in class.

We have been talking about trading among countries almost every day in class. Trade between Hungary and Ukraine may slow down if this issue continues. This may affect Hungary's economy in a negative way. Ukraine shares a border with Hungary making transportation costs relatively low. Since Hungary is a landlocked country it cannot fully take advantage of the big container ships that make transportation costs negligible. This means that Hungary will need to look elsewhere to receive the same goods for about the same price. This means that Hungary will have to look for countries close to its borders or countries on the Mediterranean in order to maintain a low transportation cost.

3 What led to this situation? Can you suggest a resolution to this problem? Are there policies that could improve this situation?

Ukraine is definitely feeling the pressure from Russia at the moment. Russian soldiers are close to the border between Ukraine and Russia. This has Ukraine frustrated. Since they do not want to start a war with Russia, a powerful country, they pester a smaller country, like Hungary, in order to release some of that frustration without starting a war. If this continues, Hungary may very well cut off trade with Ukraine, which will hurt Ukraine in a nail biting time like this. Hungarians may develop a way to safely escort Hungarians to Ukraine to make sure their civilians get to where they need to go safely. This all depends on whether or not Ukraine continues this behavior.