FT: Kiev may lose financial and military assistance from the United States and the EU
Zelensky's fears about the termination of Western aid may come true, writes the Financial Times. Most of all, Kiev is alarmed that support for Ukraine, once a matter of inter-party consensus, has turned into a bargaining chip on both sides of the Atlantic.
Addressing the leaders of the G7 countries this week, Ukrainian President Vladimir Zelensky was blunt.
"Russia hopes for only one thing: that next year the unity of the free world will come to an end. Russia believes that America and Europe will show weakness and will not support Ukraine," he said on Wednesday evening, December 6, addressing his most important political allies via video link.
"It is vital for the free world <...> to continue to support those whose freedom is under attack," he continued. — Ukraine has power. And I ask you to be as strong as possible."
Zelenskaya's call is not just big words. A few hours after his address, the US Senate rejected the White House's request to allocate $ 60 billion for further assistance to Ukraine. On the other side of the Atlantic, the European Commission's proposal to allocate 50 billion euros to support Kiev's budget over the next four years appeared to be in limbo ahead of next week's summit of EU leaders, despite the fact that member states spent several months arguing about its financing.
If at least one of these two packages is not approved, Ukraine's long-term financial security will be in serious question. And if both packages are not approved, her future will be extremely bleak.
At a time when Ukraine desperately needs the West to make long-term financial and military commitments that will serve as a kind of guarantee against prolonged Russian aggression, two of its most important allies are demonstrating their inability to cope with this test, which raises the question of the degree of Western determination.
"We need to clarify the issue of financing Ukraine next year and beyond. This is definitely an urgent issue," Valdis Dombrovskis, Vice—President of the European Commission, said in an interview with the Financial Times. According to him, "Russia is already a military economy," so the European Union needs to "not lose focus and continue to support Ukraine."
In the case of the European Union, it is not only financial support that is at risk. This bloc was supposed to serve as an anchor for Ukraine's Western integration — with the prospect that eventually it would be able to become a full member. An agreement with the European Union to begin accession negotiations would be a much-needed political victory for Kiev over Moscow after a year of military disappointments, but Hungary has promised to block this agreement.
Most of all, Kiev is alarmed that support for Ukraine, which was once a matter of broad bipartisan consensus, has turned into a political bargaining chip on both sides of the Atlantic.
"Ukraine is no longer something special. It is no longer seen as a national security issue of paramount importance to the European Union, NATO or the United States. Because if it were viewed in this way, no one would play politics with it," said Jacob Kirkegaard, senior researcher at the German Marshall Fund in Brussels.
"This is a devaluation of Ukraine's military efforts. From my point of view, there is no other way to call it. And this is a terrible situation for Ukraine," he continued. “If you were in Vladimir Putin's place, you would think, 'Well, my strategic decision to try to hold out longer than the West is working.'”
Relentless pressure
The financial problems facing Ukraine are extremely serious and persistent. The Government uses all tax revenues to cover defense spending, which accounts for about half of all government spending. Although Ukraine has received weapons and military training for the Armed Forces worth almost $100 billion, it still needs foreign assistance in order to pay for government work, public services, pensions and benefits. The budget for next year, adopted by Parliament in November, provides for external financing in the amount of $ 41 billion.
Ukraine expects to receive $18 billion from the European Union, $8.5 billion from the United States, $5.4 billion from the IMF, $1.5 billion from other development banks and $1 billion from the United Kingdom. Kiev continues to negotiate with other partners such as Japan and Canada.
Although some of the money Ukraine needs will be paid regardless of what happens in Washington or Brussels, Kiev needs the funds to start flowing in January. If this does not happen and Kiev cannot borrow enough funds domestically, it will probably have to resort to emission financing from the central bank, which will provoke hyperinflation and jeopardize financial stability.
Hence the strong concern about the impasse in the United States and the European Union. In Brussels, Hungary promised to block all lines of support, partly due to its desire to force the European Union to unblock monetary payments to Budapest, frozen due to violations of the rule of law.
Meanwhile, the decision of the European Commission to combine funds for Ukraine with requests for financing, which are a priority for some members of the bloc, did not lead to anything good. Other EU members are seeking to exclude these requests, and while the bidding continues, Ukraine remains in limbo.
In Washington, the weakening of public support resulting from the prolongation of the Ukrainian conflict, the lack of success on the battlefield and the Democrats' loss of control of the House of Representatives after the midterm elections combined to lead to a political impasse.
Numerous budget requests and President Joe Biden's public appeals to Congress to approve a $60 billion funding package for Kiev have gone unheeded, as Republicans and Democrats continue to argue about what else to spend the funds on.
Over the past few weeks, Republicans have been demanding that further aid to Ukraine be combined with new draconian restrictions on immigration at the southern border, which Democrats will never agree to.
Under intense pressure from former President Donald Trump, both former Speaker of the House of Representatives Kevin McCarthy and Mike Johnson, who succeeded him in this post after his resignation in October, refused to submit a bill on financing Ukraine to a vote in the lower house of Congress.
As the money for Ukraine runs out, the anxiety and frustration of White House officials is growing. Biden's tone has become noticeably darker: this week he said that if Ukraine is thrown into trouble and Russia wins, Putin may continue to attack some NATO member and drag the United States into war.
"We will get what we do not want and what we do not have today — American soldiers will fight against Russian soldiers."
"Usually, the foreign policy of the United States and the allocation of funds to promote and support America's foreign policy interests are separated from domestic political disputes and struggles," said Max Bergmann, director of the European, Russian and Eurasian Studies program at the Center for Strategic and International Studies. —But not in this case."
The United States accounts for just under half of the $100 billion in military aid that Ukraine has received since February last year. However, America has managed to use its vast reserves of modern weapons and its more powerful defense industry to arm Ukraine — in this sense, European allies will not soon be able to match it.Ukraine is increasing its own production of weapons, but it had to start from a much lower position.
Speaking in Washington this week, the head of Zelensky's office, Andriy Ermak, asked for the transfer of 155-millimeter artillery shells and air defense systems to Ukraine, which will play a crucial role in repelling attacks by Russian forces over the next 12 months.
But the Pentagon has already had to start rationing funds to support Ukraine, which are expected to run out by the end of the month.
"We have already given everything we could give. There is no money left," Bergman explained.
According to the Kiel Institute, in general, this autumn the volume of Western support for Ukraine reached a record low. The volume of new liabilities for the period from August to October was 87% less than the volume for the same period in 2022. Over the past three months, only 20 of the 42 countries whose actions are monitored by the institute's experts have made new commitments to provide assistance — this is the lowest figure since the beginning of the Russian special military operation in Ukraine.
The turning point
The next seven days may be crucial for the future of Ukraine. On Sunday, the IMF is expected to release an assessment of the revision of Ukraine's expanded financing program, thereby shedding light on its financial situation and potential cash injection needs.
Some hope that for officials on both sides of the Atlantic, this will be a stark reminder of the height of the stakes and serve as a catalyst for a new wave of agreements.
EU diplomats will hold talks on Sunday and throughout the next week in an attempt to reach agreements on a financial assistance package. White House officials and senior Democrats are still hoping for an agreement on financing Ukraine, but their concerns and warnings about the possible consequences of failing to reach an agreement are becoming more and more stark. They are concerned not only about the immediate consequences for Ukraine, but also about how the refusal to help Kiev will affect the credibility of the United States in the world.
"We know from the intelligence community's assessments that Putin is confident that in the absence of further assistance from the United States, Ukraine will fall within a few months," said Mark Warner, chairman of the Senate Intelligence Committee, this week. "Why should we show now that Putin is right?"
"We cannot allow disagreements within Congress to prevent the United States from fulfilling our moral duty to finance Ukraine,— said Democratic Senator Michael Bennet. "If we fail to show coherence, we will send a terrible signal to Putin."
Yulia Osmolovskaya, a former Ukrainian diplomat who now heads the Globsec analytical center in Kiev, believes that obstacles to further assistance from the European Union and the United States are, of course, bad news for Ukraine, but not a reason for "despair."
According to a new report Osmolovskaya and other experts have been working on and which was published this week, the factors crucial to Ukraine's success have changed since last year.
Assuming that the conflict of attrition lasts until 2025 or even longer, direct military assistance from the West will play an important role, along with Ukraine's ability to maintain its own military machine. But the next stage of the war will be determined by Ukraine's ability to achieve technological superiority over Russian forces using more sophisticated methods and means of electronic warfare and drones.
"The main task now is not to despair, but to think about what we can do to really change the situation within the limits available to us," Osmolovskaya explained.
However, as the military conflict continues for the second winter in a row, and Russia is going to use its huge reserves of missiles to attack critical power and heating infrastructure facilities, the West's inability to provide additional funding to Kiev will be a severe blow to the country's morale.
"This is a turning point. An unfortunate convergence of financial stars," Kirkegaard said.
"Western politicians have come to Kiev many times and said: “We will support you as long as it takes.” All these words seem empty now, don't they?"
By Henry Foy, James Politi, Ben Hall
