The West will be forced to spend money on Ukraine one way or the other, either in the form of direct financial and military support to the regime in Kiev, or by taking on the “economic burden” of Ukrainian refugees, higher global food prices, and other costs, economists speaking to an English-language Ukrainian outlet have suggested.
“An increase in Ukrainians fleeing to Europe and other countries as refugees” would create “a greater economic burden” for these countries, Volodymyr Lugovskyy, a professor of economics at Indiana University, stated.
Meanwhile, King Banian, interim dean of St. Cloud State University in Minnesota, said a cutoff in American assistance would also likely mean further increases in global food costs, given Ukraine’s status as a major agricultural powerhouse.
On top of that, if Kiev doesn’t get money from Washington, that could threaten its international credit rating, including with International Monetary Fund, which “doesn’t usually lend to countries that cannot afford to repay,” in Banian’s words. That would cause Ukraine’s foreign currency reserves to “decline rapidly.”
West Texas A&M Associate Economics Professor Ryan Mattson agrees, saying that up until now, Ukraine’s foreign lenders (which, incidentally, include US-headquartered vulture funds like Goldman Sachs, BlackRock, and JPMorgan), “credibly believed” that Kiev would “survive this war,” and were “willing to provide support for this spending since the war effort” accordingly.
If forced to take losses in Ukraine, it can be safely said that foreign hedge funds and banks will try to pass them off on other clients.
New Take on Old Problem
The "give money or face knock-on problems" argument floated by the outlet is a novel approach to the Zelensky government’s increasingly pressing problem of how to squeeze additional funds and weapons out of its Western sponsors as the latter grow increasingly weary of sending additional billions to Kiev. The argument at least sounds more appealing than the old, worn-out logic still being used by Ukrainian officials about the defense of "democracy, Western values" and the “rules-based order.”
But it underestimates the damage Washington and its European allies have already proven willing to take with the fanatical strategy of trying to block Russia from world trade, which did not impact Russia’s interaction with the rest of the world, but did result in a global rise in energy and food prices, inflationary pressures unseen in the West in decades, and a Eurozone economy balancing on a recessionary tightrope.
As far as refugees are concerned, recent efforts by a growing number of European countries to entice Ukrainian nationals to go home by offering cash handouts have shown that the "European hospitality" has its limits. Among European countries, only Russia and Belarus have moved in the opposite direction, with President Vladimir Putin signing a decree in September to further ease entry of Ukrainian nationals into Russia, including using expired documents which have become impossible to renew amid the conflict.
Russia took in close to two million Ukrainians in 2022, while another 4.8 million settled in EU countries and Britain. In the latter country, thousands have become homeless due to inadequate state support to ensure their wellbeing.