Ukraine’s Ministry of Finance revealed on Thursday that the nation’s national debt levels had grown by another billion dollars and reached a historically-unprecedented $133.93 billion, equivalent to more than 84 percent of the country’s projected 2023 GDP.
Emerging from the rubble of the USSR in 1991 with a debt of $0, Kiev’ staggering obligations today are the result of successive governments’ liberal borrowing policies, including of cash loaned by the International Monetary Fund in exchange for economic reforms, and the year-and-a-half long NATO proxy conflict with Russia. Debt ballooned by some $77 billion since the start of 2022 alone, with Kiev’s Western partners ignoring requests to write it off.
Former Ukrainian Prime Minister Nikolai Azarov recently predicted that the country’s debt may reach $173 billion (107 percent of GDP) by the end of the year, while the IMF expects this to occur only in 2025.
The Zelensky government recently began brainstorming new ways to collect cash to try to put a dent in next year’s predicted $40 billion deficit amid hikes in defense spending, and as money owed to Western vulture funds including BlackRock and Fidelity come due, with proposals including selling government bonds to foreigners.
Long-shot hopes of entry into the European Union to get access to hundreds of billions of euros in loans and subsidies also prevail, although European Parliament President Roberta Metsola warned this week that the EU’s economy wouldn’t be able to survive another enlargement.
Weariness Over Further Subsidies
As Kiev’s financial troubles mount, a growing number of officials from the country’s top patron, the United States, are becoming increasingly weary of the idea of continuing to prop up the nation’s economy, particularly amid a steady stream of scandals of corrupt Ukrainian officials purchasing fleets of luxury cars, and reports of US aid sponsoring everything from Ukrainian designer knitwear companies to private equity firms that don’t even have anything to do with Ukraine, as Americans feel the squeeze of inflation, spiking energy costs and a debt crisis threatening to shut down the government.
The Biden administration has asked Congress to authorize an additional $24 billion in assistance to Ukraine, including $13 billion in military aid. However, GOP fiscal conservatives in Congress and some presidential candidates have sought to stop or at least reduce further assistance, so far to no avail.
“I don’t know who can keep track of these figures anymore,” Dr. Nicolai Petro, an international politics professor at the University of Rhode Island, told Sputnik, commenting on the current battle in Congress over additional Ukraine aid.
“When I talk to my students about budgetary numbers, I always use the generic designation ‘gazillion’ because I simply no longer have a grasp of how much money this is and over what time it’s being sent,” Petro explained. “I’ve tried to keep track of the assistance being offered, which falls into different categories – humanitarian, financial, administrative and military to Ukraine, but it is an impossible task, because on the one hand there is what is designated, [but] on the other hand, we don’t know over what time period it is designated to be dispersed.”
“Situations change, objectives change and the money is simply reallocated. So we can only speak of what has been done in the past tense. This money, for example, has actually been allocated: All we can really say is it’s in the $100 billion or so [range]. And if one adds in the EU, I think it is somewhere at least twice [that] if not two-and-a-half times greater. What does this mean for Ukraine? It means, according to Neil Ferguson, I think writing in Bloomberg…[that] 70 percent of Ukrainian government functions are paid for by the West. So what that means is, in effect, Ukraine is no longer a functioning state; it must be thought of, sadly, as a failed state. And one of the things that derives from that, as I believe Secretary of State Colin Powell once said, is ‘if we broke it, we bought it,’” the academic added.
Amid recent polling finding that a majority of Americans no longer want the US to continue funding Ukraine, Dr. Petro suggested the question of future support depends on just how “responsive” Western democracies are to their voters.
The scholar warned that the US has really only “skimmed the surface” on the final real costs Washington will ultimately accrue in Ukraine.
“It’s going to get larger and larger as time goes on. Again, having paid this much for Ukraine, there’s no end in sight, and there’s no keen interest that I can discern on having negotiations that would bring about an end to the conflict. As a result, how are we dealing with this cost? Well, as Senator Schumer said, ‘we’re kicking the can down the road to November 17.’ [i.e. the next debt deadline, ed.] And then what? Then all over again? This is a totally dysfunctional system and way of running the government,” Petro summed up.