Russian war crimes in Ukraine have made global headlines, but the systematic damage being inflicted on the Ukrainian economy by Putin’s invasion also requires urgent international attention. Peter Dickinson, editor of the UkraineAlert service at the Atlantic Council, reported in his article about it.
In a recent address to the EU’s Economic and Financial Affairs Council, Finance Minister Serhiy Marchenko provided details of the catastrophic consequences of the war for Ukraine and its impact on the world economy. In particular, he outlined the growing problems of international food security, as approximately 400 million people in the world depend on Ukrainian grain.
As the Ukrainian authorities struggle to keep the country’s economy afloat while maintaining basic social payments, Marchenko said that the time has now come for a "more ambitious fundraising exercise." He explained that this should involve a major short-term increase in grants ahead of the vast financing initiative that will inevitably be required once the work of national reconstruction begins.
Marchenko’s warnings of potential Ukrainian economic meltdown are no exaggeration, Dickinson stressed. A World Bank report issued on April 10 estimated that the Ukrainian economy could contract by as much as 45% during 2022, with the authors noting that "the magnitude of the contraction will depend on the duration and intensity of the war."
The World Bank report also includes a call for urgently upgraded international funding.
Russian efforts to undermine the Ukrainian economy should not be viewed as a mere byproduct of Moscow’s military campaign, Dickinson believes. On the contrary, economic attacks are a central element of the Kremlin plan to weaken Ukrainian statehood and force the country back into the Russian orbit. Putin has frequently made clear that he does not recognize Ukraine’s right to exist as an independent state. In order to break Ukrainian resistance, he now seeks to deprive the country of the ability to function economically.
While Kremlin officials frequently claim that Russian airstrikes and artillery bombardments are restricted to military objectives, in reality Ukrainian factories, warehouses, and economically important elements of national infrastructure have repeatedly been targeted and destroyed.
In the south, Ukraine’s ports have been subjected to a naval blockade imposed by the Russian Black Sea Fleet. This has done much to cut the country off from global markets.
There are signs that the international community recognizes the magnitude of the economic challenges facing Ukraine and appreciates the importance of providing the country with a financial lifeline. The World Bank has pledged USD 1.5 billion to help keep critical government services running. Other institutions and partners such as the European Union have also committed additional funding.
"Putin’s initial blitzkrieg in Ukraine may have failed, but his plan to bankrupt the country plays an important part in Russia’s ongoing war against Ukrainian statehood and must not be allowed to succeed," Dickinson urged.