Ukraine may face an 'economic doomsday' without Western financial aid – Politico

EU leaders are set to vote to provide Kyiv with €50 billion in aid at a summit on February 1. Without this aid and funding from the United States, Ukraine will not be able to continue its fight against Russia or sustain its economy for long, according to a Politico article that interviewed, among others, Danylo Hetmantsev, chairman of the Ukrainian parliament's Finance and Tax Committee, and Andriy Pyshnyy, governor of the Central Bank.

Hetmantsev, in a comment for the publication, emphasized that currently Ukraine "is not currently even considering an option of not receiving this assistance."

"It is critical for us, because the timeliness and completeness of non-military spending depends on it," he emphasized.

At the same time, Central Bank Governor Pyshnyy told Politico that "Ukraine will be able to sustain itself for some time at the expense of its own domestic resources." He is optimistic despite the fact that "risks to the regularity and timeliness of international aid inflows have materialized."

However, Pyshnyy admits that not receiving aid would mean "redistributing the Ukrainian economy’s limited resources toward priority budget needs." Therefore, he said, "critically important to have international funding restored."

One of the strongest arguments for continuing support remains that ending it would be more costly for Europe.

"Ukraine’s victory is key to easing security risks on the Continent," Pyshnyy said, noting that the €50 billion package to be approved this week is small compared to the overall European economy.

"For them, it could prove to be the best investment in their own defense and economies," he concluded.

According to the calculations of the Center for Economic Strategy in Kyiv, since the invasion of Russia in February 2022, Western donors have provided about $73.6 billion in financial aid. Through the International Monetary Fund, they expect to provide a total of $122 billion in the period 2023-2027.

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The European Union is Ukraine's main financial donor, but Ukraine is still without financial support not only from the EU but also from the United States. On October 1, a new fiscal year began in the United States, and the annual budget has not yet been approved. The country lives with temporary budget declarations that do not provide for new aid for Ukraine.

On January 12, 2024, White House spokesman Kirby said that the United States had suspended military aid to Ukraine, so Congress should approve a new package to support Kyiv. Later, US President Biden said that Congress's inaction jeopardizes US and NATO security and called for a speedy resolution of the border and approval of aid to Ukraine.

January 26: Prime Minister Shmyhal announces that Hungary, which had previously vetoed financial aid to Ukraine, has agreed to support €50 billion.

January 29, NATO Secretary General Stoltenberg meets with US Secretary of State Blinken in Washington. They discussed further assistance to Ukraine, its achievements on the battlefield, and the prospect of membership in the Alliance.

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