In a recent interview in The Guardian, President Zelensky’s top economic adviser, Oleg Ustenko, catalogues the damage the war has done to Ukraine’s economy.
Dr. Ustenko said: “Can you imagine the feeling of an economist after hearing that assets destroyed in the first week of the war were worth $100 billion, half of our annual GDP?” Ustenko estimates that the losses have totaled $1 trillion so far.
With half of the nation’s businesses either shuttered or operating only partially, the economy is set to have shrunk by a quarter by next month. All state expenditure has been frozen, barring defence, social support and emergency funds to provide food, water and shelter for displaced people. The budget deficit has ballooned from an expected $7bn for the year to the same amount every month.
Yet Ustenko believes in the power of economics to tackle the human cost of Russia’s invasion – the death, destruction and atrocities emerging in Bucha and elsewhere. Key to this is convincing the west – and Europe in particular – to forsake Russian oil and gas and ramp up punitive sanctions on the Kremlin. The other mammoth task is to start planning for the reconstruction effort that will follow a Ukrainian victory, of which he is certain.
In the interview, Dr. Ustenko has harsh words for Europe’s economic response to the invasion of his country. He estimates that Moscow receives about $1.4 billion per day from oil and gas sales, with the lion’s share of that revenue coming from Europe.
“Imagine how many missiles and bombs you can buy for that kind of money,” [Ustenko] says. “Some people in Europe still have extremely narrow thinking. They believe they can help us, that they’re our great friends and indeed they are. But they do not understand that by supplying this money to Putin, they are funding his military machine. If Russians are committing war crimes, even genocide, whoever is supplying Russia with this bloody money is guilty of the same war crime.”
Much of his frustration is directed at Germany, Europe’s largest economy and among the most dependent on Russian oil and, in particular, gas.
Foreign minister Annalena Baerbock promised last week that Berlin would end imports of Russian oil by the end of the year, phasing gas out later. Ustenko calls this schedule “unacceptable”.
President Zelensky has asked Ustenko to plan for rebuilding Ukraine’s economy.
Ukraine’s defence and eventual reconstruction should, he says, be paid for with frozen Russian central bank funds and assets seized from sanctioned oligarchs.
“I’m talking about football clubs, I’m talking about nice apartments, houses and I’m talking about other properties in the UK. We have to implement big work in trying to identify more assets of Russian nomenklatura [a Soviet-era term for those elevated to positions of power]. MI6 is one of the best services in the world. Your financial service is one of the best in the world. They can do this.”
The future he sees includes greater integration with Europe: “For us, the prospect of being an EU member is a huge motivation. It’s like an extra star that appears in the dark sky. Under these circumstances everyone will win: Ukraine, Europe and our people.”