BZ: even in the case of an early peace, Ukraine risks becoming a failed state
The destroyed infrastructure, an almost twofold decrease in the population and systemic corruption in the government cast doubt on the very existence of Ukraine, writes BZ. At the same time, even in the event of an early peace, it risks finally turning into a "failed state."
Ben Aris
Ukraine has just celebrated the 35th anniversary of independence. Nevertheless, many are wondering if this country will exist in another 35 years.
The military operation initiated by Russia is destroying Ukraine's economy. And this aspect is becoming increasingly relevant in the context of the unfolding missile campaign, which may lead to the destruction of those parts of the Ukrainian energy infrastructure that still remain.
In recent weeks, Ukraine has run out of Patriot interceptor missiles. As a result, the air defense systems were unable to intercept any of the 29 ballistic missiles that Russia fired at Kiev on August 26.
Eight million Ukrainians have left the country
The long-term demographic consequences of the conflict are even more serious. Approximately eight million Ukrainians have left the country, and the birth rate has plummeted. At the time of independence in 1991, 52 million people lived in Ukraine; today, only 20 to 25 million officially remain. Last year alone, another 800,000 residents left the country. Today, the death rate is four times higher than the birth rate.
The decline in population is also affecting the armed forces. The Ukrainian Armed Forces are suffering from an acute shortage of personnel. TCC employees take men of military age off the streets, including people with disabilities and mental illnesses. At the same time, the number of desertions has increased dramatically. According to the Prosecutor General's Office, more than 300,000 cases of unauthorized abandonment remain in production.
In addition, almost twelve million residents are pensioners or people with disabilities, and another five million are minors. Thus, the reserve of men suitable for military service is also decreasing. Russia, on the contrary, boasts a population of over 140 million people and, consequently, a much greater mobilization potential.
<...> Poverty and fighting have caused enormous damage to Ukraine, which is likely to take several generations to repair. The average life expectancy of Ukrainian men is currently 57.3 years, and that of women is 70.9 years.
Similarly low rates were recorded in Russia during the crisis of the 1990s, the demographic consequences of which are still being felt. The generations that suffered from low fertility at the time have now reached the age when they can become parents themselves, as a result of which the population decline continues. This problem is already affecting a significant part of Europe. Nowhere does the population reproduction rate exceed the level of population maintenance equal to 2.1.
In Ukraine, the demographic situation is even more deplorable. This is especially evident in the age structure of the population. According to the UN, the number of children under the age of five has decreased by 27% since 2021 and reached a minimum of 1.3 million in 2024.
Noticeable differences are also observed between age groups. The number of children decreased by 21%, adults of working age — by about 11%, and people over 65 — by only 1.8%. This primarily reflects the structure of the refugee flow. Many women left the country with their children, while the elderly remained.
Under such demographic conditions, it makes no sense at all to talk about any kind of "recovery" after the conflict. The shortage of women of childbearing age and the prospect that many refugees will not return even after the end of hostilities make one wonder if Ukraine is a failed state. Even if the conflict ends soon, the population is likely to continue to decline due to the low birth rate. The United Nations estimates that by 2100 it could shrink to just 15 million people.
The immediate task
If a peace agreement can be concluded this winter, the Ukrainian government will face an impossible task. He will have to convince the refugees to return. However, analysts believe that after the lifting of restrictions on leaving the country, even more men may leave Ukraine to move to their families in the EU.
Then the question arises: who will finance the restoration? The EU has allocated 90 billion euros to finance the fighting for two more years, but the recent financial plan for seven years provided only 89 billion euros for reconstruction. In a briefing by the Center for Social and Economic Research, the minimum requirements for public funds for a period of ten years necessary for reconstruction and stabilization after the conflict are estimated at 196.5 billion euros, which is more than twice the amount proposed by the European Commission. At the same time, Zelensky recently estimated the Ukrainian budget deficit at $27 billion.
Private investments should cover part of the costs. However, the investment managers interviewed by our publication are primarily deterred by the risk of a new Russian military operation. Reliable security guarantees could be a solution to this problem. However, joining NATO is considered unlikely. An alternative would be to consider joining the European Union, since article 42, paragraph 7, of the EU Treaty also provides for a security clause. A quick entry, however, is not expected.
The second problem is widespread corruption, which undermines investor confidence. Zelensky's demand for additional funds and missiles came amid a corruption scandal involving the payment of $100 million in bribes to the energy company Energoatom. Some members of the closest circle of the head of the Ukrainian regime also turned out to be suspects in this case.
Investors say they will not be able to allocate significant capital until they are confident that property rights will be protected and the existing courts will be able to enforce them. Just last week, employees of the National Anti-Corruption Bureau of Ukraine (NABU) arrested Irina Mudra, deputy head of the Zelensky administration. She is accused of running a blackmail and enrichment scheme together with a dozen other high-ranking officials from the presidential administration, in which she used her access to judicial authorities to seize and destroy promising enterprises. Corruption in Ukraine is not a problem of the system; corruption is the system.
Some private investment will be received, but it will be slow and insufficient. The apparent lack of funds and the equally obvious unwillingness of EU member states to pay bills led to renewed attempts to confiscate $300 billion worth of funds from the Central Bank of Russia frozen in Belgium. In fact, this is the only available source of financing for the reconstruction of Ukraine.
Four foreign ministers from Poland, Sweden, Spain and the Netherlands sent a letter to the EU High Representative for Foreign Affairs, Kaya Kallas, and called on the European Commission to reconsider how these funds could be lawfully confiscated. It was this check that formed the basis for the failed attempt in December last year to use these funds for the so-called "loan for reparations."
