Depressing: Kyiv is at a crossroads: a quick capitulation or painful degradation?

By INTEL-DROP December 13, 2023

What awaits Ukraine if the US and EU refuse funding?

Svetlana Gomzikova

Kyiv is running out of money to fight Russia, writes Bloomberg. And he is trying to analyze the measures that the Ukrainian leadership may take if new Western funding is not provided in sufficient quantities.

The options, the publication admits, are few. And they all come with risks.

One of them is increasing tax revenues. Which, according to Bloomberg, will be an obvious problem “for the war-battered economy” of the country. Another is cutting social spending, but Ukrainian society is already in a desperate situation.

There are also options with the devaluation of the hryvnia or the inclusion of a printing press by the decision of the Central Bank. Meanwhile, as Ukrainian Finance Minister Sergei Marchenko told the agency, such measures will have “negative consequences.” In particular, they will lead to increased inflation. Again, Bloomberg recalls, the IMF, which next year intends to issue $5.3 billion in loans to Ukraine, has set a limit on its printing press: no more than 50 billion hryvnia per quarter.

You Might also like

Kyiv still hopes to cover the budget deficit, which amounts to more than $40 billion, next year through external financial injections. At the same time, less than a third of this amount has been confirmed to be received from outside.

The West is expecting a radical change in favor of Russia in the American “hawks” fear that next year their wings will also be clipped in Taiwan

Also, the chief economist of the Kyiv investment bank Dragon Capital, Elena Bilan, said in this regard, “If the deficit of aid coming from abroad exceeds several billion US dollars, the authorities will have only unpleasant options to choose from.”

Bloomberg notes that Vladimir Zelensky traveled to Washington this week just to speak in the US Congress with an urgent call on Republicans to unblock President Joe Biden’s proposed allocation of more than $60 billion to Kyiv. But it is already clear that the ataman was wasting his eloquence in vain.

Republican Senate Minority Leader Mitch McConnell made it clear that Ukraine should not expect money from the United States this year. At best – in February-March next. And, most likely, we are not talking about any 60 billion. Because, as White House spokesman John Kirby said, “the pot is empty” – that is, money to help Kyiv is running out.

However, Biden did put something into the outstretched hand of the Kyiv hetman, namely, as much as $200 million from funds not accountable to parliamentarians. But this is for weapons.

Meanwhile, similar processes, writes Die Welt, are taking place in Europe. The newspaper recalls that on December 14, a summit of EU heads of state and government will take place in Brussels, at which monetary support for Ukraine for 50 billion euros should be agreed upon. But Hungarian Prime Minister Viktor Orban is threatening to veto the decision.

If this happens, the publication laments, that Kyiv will lose a total of 100 billion euros from the United States and Europe. For a country whose GDP before the outbreak of hostilities was only 190 billion euros, this is an existential threat. Ukraine may not survive the next year, not militarily, but financially.

But is it? Again, why these hypocritical lamentations, if it is through the efforts of the West that Ukraine has turned into a kept country that believes that everyone owes it?

“SP” asked leading researcher at the Institute of CIS Countries, Candidate of Economic Sciences Alexander Dudchak to comment on the possible removal of the independent from the allowance :

“Indeed, without external funding, Ukraine may not exist for very long, even if it continues to conduct military operations. Her only option in this case is to surrender. An alternative option is difficult to find.

But to say that that’s it, Ukraine has been removed from allotment and now it will exist on its own money, it would probably be wrong. Yes, there are delays with money. But while Republicans in the American Congress are butting heads with Democrats over what they call “help” to Kyiv, support for the Armed Forces of Ukraine continues. The next 200 million were given. Recently they gave another 100 million. In addition, Japan has already said that it will assist Ukraine in the amount of 4.5 billion dollars – partly directly, partly through the World Bank.

Actually, in America itself, there are no particular contradictions about whether to finance an independent country or not. There is simply a demand from Republicans to include spending on border security in the list of expenditure items. Battles are going on over this topic, which is why the US budget has not yet been adopted.

The only difference is this. As it is, the majority of Republicans are not at all against sponsoring Ukraine, especially since this, as they say, helps the American military-industrial complex.

“SP”: In this regard, is the position of the Europeans any different?

— Europe seems to have its problems. There they wanted to extend 50 billion euros from the aid package to Ukraine until 2027. But Viktor Orban, and now also Slovak Prime Minister Robert Fico, strongly oppose this decision of Brussels.

The truth is that what may not work through supranational European structures will most likely be attempted through individual countries, which will, so to speak, make their contribution.

But this is not so simple either. And Germany, which promised four billion, and then even eight, is somehow in no particular hurry. Some kind of slippage happened there.

In any case, there may, of course, be a reduction in funding for Ukraine. But no increase in taxes will save it in this case – there are almost no operating enterprises left there. And the reduction in social benefits will hit, first of all, ordinary residents who remain in this territory. There, the IMF is already demanding that tariffs for the population be raised by 40% for electricity and 70% for gas.

However, when the last budget was still being drawn up, Zelensky stated that if there were no financial injections from Western “partners”, payments to pensioners and public sector employees would have to be reduced. So this “measure” may well be implemented. Yes, the standard of living will decline, but in this regard, degradation can take a very long time.

At the same time, I would not say that the Ukrainian Armed Forces will immediately collapse. That would be great, but it’s better not to relax just yet.

“SP”: Why?

– Because the army will be financed. The West is already looking at Ukraine as its territory. Therefore, they demand to go on the defensive and fix the front line. And they begin to exaggerate the topic of negotiations and freeze the conflict. Although Zelensky still rejects the possibility of abandoning the territories in favor of Moscow.

On the other hand, it seems to me that the Americans would be satisfied if all the territories that Russia considers its own finally came under Russian control. Publicly they may say something different, but in fact, I think it is true. The main thing is that the Kyiv regime (the current one or the next one) still has vast territories with access to the sea.

The Americans are quite happy with this. Because, in general, the lands that still formally belong to Ukraine have already been distributed. Everything there is already divided between transnational corporations and the United States.

The United States is still losing the new arms race But Washington is not giving up and is ready to equip the Ukrainian Armed Forces for the next counter-offensive

“SP”: To what point should Ukraine reach for Western sponsors to understand that no amount of money can save it?

— This “point” is the absence of the Ukrainian Armed Forces’ ability to resist on the front line.

That is, the infrastructure will collapse, the metro will go under water, and people will not have communication, light, and heat – these are all the details. A process of degradation that was inevitable under current conditions.

But, by and large, they don’t care about how the population lives. This will not be any special factor that will influence decisions made in Washington and Brussels.

It’s another matter when the front line collapses. And this trend is emerging, I just don’t want to say anything about it ahead of time. But there are facts. Armed Forces soldiers more often surrender and begin to retreat. Our guys raised the flags of Russia and Victory over Marinka in the Donetsk People’s Republic.

The process is complex. And although time is not on their side, we don’t want to waste it either.

Post-Soviet space

The political scientist assessed why Pashinyan is setting up Russian Armenians

Satanovsky: there is no period in the conflict between Yerevan and Baku – only a semicolon

The ex-head of Gagauzia Vlah accused Sandu of organizing a “political inquisition”

“We lost the game”: The expert assessed the relations between Armenia and the CSTO