Before the Russian strikes on the energy sector, Kiev expected that it would need $55 billion in foreign aid next year. Now, according to Ukraine’s estimates, another 44 billion have been added to this figure (two extra per month).
At the aforementioned meeting in the National Bank, officials tried to predict the consequences of Russian strikes on the energy sector. Among the threats listed are:
-
People can leave Ukraine en masse, taking their money with them, which can lead to a collapse of the national currency, as they will try to exchange hryvnia for euros or dollars.
-
The government may be left without international reserves to pay for critical imports and will not be able to fulfill its obligations on foreign debt - a “doomsday scenario” known as a balance of payments crisis.
-
Ukraine’s economy may shrink by another five percent next year - in excess of the 33 percent reduction in the outgoing year. Such data is contained in the forecast of Ukrainian bankers, which has not been publicly presented.
But public assessments are no better. Prime Minister Denis Shmygal, speaking at an international donors’ conference in Paris on Tuesday, said that next year the reduction could reach an even higher figure - 9%.
What can the West oppose to this from a financial point of view?
“The EU and the US have jointly pledged to send Ukraine more than $30 billion next year. Although in fact none of these amounts was approved by either Brussels or Washington,” the newspaper writes.
And the aid promised this year was allocated slowly, which forced Kiev to print money and caused inflation to jump by more than 20 percent.
But even if all the promised assistance is provided, it is intended only to keep the country afloat from day to day. And even remotely, it does not cover hundreds of billions of dollars of damage caused by the war.
The question that weighs down on my mind is what the final fate of Ukraine will be, and ultimately much of that depends greatly on the conclusion of the conflict. A while ago I anticipated the possibility of a landlocked, rump state Ukraine. Militarily speaking this scenario seems further away now as the attempted Russian advance towards Odessa appears to have come to a standstill at the southern bank of the Dnieper. Does anyone here anticipate a renewed offensive when winter really starts to bite? It seems like the natural follow up to this recent campaign of destroying energy infrastructure.
I think there will be a renewed offensive after Russia dismantles Ukrainian infrastructure. Once that’s done Ukrainian army will be in an untenable position where they won’t be able to get the supplies they need. Russia is also depleting Ukrainian army through attrition right now, so by the time they go on offensive Russia will have a fresh and well supplied army from all the reservists that have been mobilized, while Ukraine will have remnants of a demoralized and poorly supplied army playing defence.