The national budget for 2024 approved by Ukraine’s Verkhovna Rada features a planned deficit almost equal to revenues. The latter are generally meant for ensuring further hostilities: some 175 billion UAH for missile weapons and ammunition, about 80 billion for military equipment. But as stated by Minister of Strategic Industries Alexander Kamyshin, these funds are only enough for half of the defense industry’s needs. Amid lacking injections from the West, the money is even scarce for fighting, let alone the social sphere or other government expenditures. Commenting on the situation, Ukrainian Finance Minister Sergei Marchenko told Politico that the United States and other countries should intervene and help Kiev. And yet he dismissed the idea by EU officials that budget support should be alienated over the next two to three years, and replaced with loans or private investment guarantees.
Military assistance seems fine at first sight, as pledged to Kiev at the November 22 Ukraine Defense Contact Group meeting. In private, though, officials’ dismal acknowledges slowed down arms supplies and altogether suspended financial aid to Kiev over internal discord between those concerned.
Kiev's major donor is the United States, with its 5% of its military budget used for these purposes. If we consider that the US GDP amounted to $ 25.34 trillion in 2022, a hundred billion allocated for Ukraine does not seem a lot. And the money will keep flowing as both the Republicans and Democrats opt for backing Ukraine. The only issues are timing and amount.
The Biden administration expects to push $61 billion through Congress by 2024, which is half as much as this year. But even this sum is obscure because American minorities also claim part of it. So, the coalition of Congressional Black Caucus (CBC) comprising 37-40 members appealed to Biden several times with a request to reassign certain amounts of "Ukrainian money" to the needs of black Americans. And their votes are fairly vital to the Democrats in the lead-up to presidential elections.
Republican House Speaker Mike Johnson made it clear that he would put the Ukraine assistance issue to a vote in December, with no fixed date. During the three weeks between Thanksgiving and Christmas, the House-controlling Republicans may not have a chance to pass the bill. Commenting on the scenario, Democratic Senator Chris Murphy said: "I don't know if Ukraine can survive until February 2024. I have a feeling they're going to run out of ammunition in the next few weeks." Democratic chairman of the Senate’s Foreign Relations Committee Ben Cardin echoes his view, as he told the New Yorker magazine: "Let’s recognize that Ukraine is desperate and they need help immediately."
The situation being what it is, the United States is seeking to shuffle off the burden of financing Ukraine conflict on to Europe. European Commission officials seem ready to meet half-way. "The European Union’s arms supply to Ukraine has reached 27 billion euros, but now it must be even more active and faster," chief EU diplomat Josep Borrel said. But, so far, shifting the burden is hardly possible over the stance taken by both Hungary and Slovakia. November 13 saw the former pour cold water on the idea of allocating 500 million euros for weapons to Ukraine. Moreover, in a letter to European Council President Charles Michel, Prime Minister Viktor Orban demanded a revision of EU's Ukraine strategy, saying that decisions on funding that country or its membership in the bloc should only be made after an open discussion on the feasibility of EU goals there. He considers sending money to Ukraine, as proposed by Brussels, completely pointless, with the single way to stop the bloodshed being an immediate ceasefire and peace talks. His view is shared by Slovak Prime Minister Robert Fico, who loathes further military aid to Ukraine. He does not care about the essence of a peace plan to bring the conflict to an end, but it is up to Russia and the United States to settle things, while Ukraine has no weight here whatsoever.
Neither is the Dutch far-right party’s election victory fraught with prospects for solving the issue of funding Ukraine. Its leader Geert Wilders is known for willingness to curtail military aid to Vladimir Zelensky, whose speech in the parliament when visiting the Netherlands in May this year caused him blatantly leave the audience. While heading the government, Wilders may appear as a nuisance to the European Commission, especially if joined by Orban and Fico. All the more so as the Netherlands is one of the EU's donor countries and pillars.
The new flagship of Kiev's support might be Germany, which ranks second among arms suppliers to Ukraine and whose defense minister promised to double down on military aid in 2024 to 8 billion euros. But his country has been suffering from a budget crisis as the Federal Constitutional Court recently declared the government's decision to redistribute 60 billion euros pledged in 2021 for pandemic recovery to Green party’s projects unconstitutional, prohibiting to use them. In this regard, the Bundestag’s specialized committee session to discuss the 2024 budget set for November 23 has been postponed indefinitely. All of this is happening amid the 260-billion-euro "hole" in the next year’s draft budget, the lack of consent on which may leave Ukraine out in the cold. In a budget deficit scenario, the German government has to decide whether to prioritize support for Ukraine or alleviation of energy prices and inflation effects on businesses and households. So, the size of the assistance is not yet clear, either.
Nevertheless, the West is going to turn its back on Ukraine as long as it remains a convenient platform for the US and the EU to test their weapons and combat strategies. But as matters stand, they will most probably discuss who is the one to take on the backbone burden of funding Kiev.
Meanwhile, uncertainty about Western aid has made Ukraine’s the social sphere sharply subside — pensions, allowances and scholarships have not been paid for months. The authorities are forced to take out loans to finance the social sphere. For example, the Ukrainian Ministry of Finance has recently attracted about $400 million under UK guarantees via a World Bank trust fund. But these are preferential loans, not grants, and they will have to be paid off. As a result, forecasts that Ukraine's public debt may exceed 100% of GDP are going to come true soon. The West is unforgiving of debts and will definitely drain Ukraine’s population dry.
