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Ukraine Searches for Cash as Fighting Drains Coffers, Foreign Aid Drops, Creditors Close In

© Photo : Ukrainian President's OfficeUkrainian President Volodymyr Zelensky holds virtual meeting with foreign venture capital giants, including BlackRock CEO Larry Fink, December 2022.
Ukrainian President Volodymyr Zelensky holds virtual meeting with foreign venture capital giants, including BlackRock CEO Larry Fink, December 2022. - Sputnik International, 1920, 18.09.2023
The United States approved some $113 billion toward military, economic and humanitarian aid to Ukraine in 2022 alone, with total Western support approaching $175 billion by May of 2023. Some analysts expect reconstruction expenditures to top $600 billion even if the fighting stops immediately.
The Volodymyr Zelensky government is brainstorming new ways to generate cash as the country’s coffers are emptied by the costly summer counteroffensive, which has drained the nation’s reserves of tens of thousands of troops and thousands of pieces of NATO-provided military equipment with little to show for it to date.
Kiev faces a staggering budget deficit of over $40 billion+ in 2024, and has been informed of the fact that a failure to cough up the cash will cripple the military.

“If the government cannot cover its budgetary gaps, then the government will not be able to finance its military effort,” a Kiev-based brokerage firm researcher whose company is consulting authorities on ways to raise money told US business media on Monday.

The brokerage has proposed a novel idea: selling Ukrainian government bonds to foreigners to help account for at least some of the budgetary shortfall.
Other ideas already implemented have included selling some $10 billion in high-interest war bonds to businesses, banks, and individuals domestically, signing agreements to restructure international debts, launching a coordinated lobbying campaign seeking assistance abroad, and shaking down Euroclear, a Belgium-headquartered financial services company, for some of the interest it has collected from frozen Russian-owned assets. Ukraine-based corporations have been eager to buy up government bonds after being offered inflation-adjusted yields of as much as 10 percent.

However, the government’s efforts, combined with Western loans and assistance, and investments by US-based vulture capital funds have not been enough to plug budgetary gaps, with Kiev planning to spend as much as $45 billion on defense next year, and a $20 billion debt payment holiday by MFS Investment Management, BlackRock, and Fidelity Investments set to run out in mid-2024.

Kiev is looking toward admission to the European Union as a possible panacea for its financial problems, with such a step opening the door to hundreds of billions of additional euros in subsidies and loans. This contingency is recognized as a “long-shot option,” however, with questions remaining whether the bloc, which is already suffering from recession and partial deindustrialization, will be willing to risk economic suicide to admit a country like Ukraine, which even before the escalation of the crisis in 2022 consistently found itself near the top of poverty and corruption listings among European countries.
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The World Bank has estimated that Ukraine will need at least $411 billion in funds for reconstruction. A recent analysis by a fellow from the Center for Security Policy and the Yorktown Institute believes costs will be even higher, estimating total spending needs of over $600 billion, even if fighting were to stop immediately.
Ukraine’s national debt reached $95 billion, or about 47.6 percent of GDP, in 2021, on the eve of the escalation of the Donbass crisis into a full-scale NATO proxy war against Russia. By mid-2023, debt had skyrocketed to over $162 billion, teetering on the brink of surpassing 100 percent of GDP. At the same time, Western governments and corporations have been eager to get a return on the $175 billion+ investment in military equipment, financial, and humanitarian “assistance” they’ve made, with the US and NATO looking to use Ukraine as a battering ram to “weaken” Russia militarily, while investment giants like BlackRock have salivated at the prospect of controlling Ukraine’s fertile agricultural land and untapped rare earth metals reserves.
Senior Western officials have recognized that the Ukraine security crisis which has destabilized the world economy and brought Russia and the West to the brink of a direct conflict would end “in a matter of days” if the US and Europe were to halt their support, but have refused to entertain the possibility of peace negotiations which would be acceptable to both sides.
On Monday, former Ukrainian Prime Minister Nikolay Azarov – who presided over Ukraine’s most successful period of economic expansion in its post-Soviet history in the 2000s and early 2010s, compared the current state of the nation’s economy to a “zombie” that “shows signs of life only due to foreign assistance, which it requires more and more” of to get by. “The closest analogues to Ukraine, with similar problems, are modern-day Afghanistan and Haiti. But to catch up with the current economic level of Romania and Poland, Ukraine, according to the boldest of forecasts, would need more than 30 years,” the politician lamented.
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