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Ukraine’s 2024 budget expects $43bn
in funding from the international community to cover the $39bn deficit – half of all of Ukraine’s funding for next year is supposed to come from its foreign partners. US President Joe Biden has proposed to submit a bill for a package ranging from $50bn to $200bn, according to various reports this week, that would put the funding issue to bed for the next one or two years. But the passage of
the bill, which may be submitted in the coming month, is in doubt.
US support for Israel will not affect aid to Ukraine, the US president's national security adviser, Jake Sullivan, said on October 11. The US can support Ukraine in Europe, its allies in the Indo-Pacific region, and Israel in their hour of need, as the White House tries to play down worries that further funding of Ukraine’s war with Russia are about to dry up.
The EU is also debating a four-year, €50bn package, however, the visibly growing Ukraine fatigue has also raised question marks over this allocation. For example, Hungarian Prime Minister Viktor Orban has already suggested that
€50bn is too much and wants to cut the sum in half.
Due to uncertainty of further US support, the chairwoman of the US Federal Reserve bank, Janet Yellen, approved the EU's plan to tax the Russian Federation’s frozen assets on October 12.
Yellen strongly supported the EU's plan to introduce a windfall tax on frozen Russian assets as a way of increasing the funding for Ukraine. It is hoped the plan will also stimulate the attraction of new funds to support Ukraine.
The governments of some EU countries were waiting for official US approval of a plan to use the profits obtained from more than €200bn of frozen assets belonging to the CBR before giving the green light to its own €50bn package. The Russian assets in Euroclear had generated €750mn in profit by the first quarter of this year.
After a meeting in Brussels with Ukrainian President Vladimir Zelenskiy on October 11, the Belgian prime minister promised to create a fund of
€1.7bn to finance assistance to Ukraine. Euroclear received €1.7bn in profit from investing frozen Russian assets in the first half of 2023.
While the Belgium money will help,
it remains far too little to pay for the reconstruction of Ukraine. Kyiv School of Economics recently estimated the value of just the physical damage to the country at $150bn and, in April, the World Bank estimated the total cost of the damage
at $411bn. Without using the frozen CBR money to pay for Ukraine’s recovery, the plan has turned to calling on the private sector to invest into Ukraine, as outlined at the Ukraine Recovery conference held in London in June. But that remains
an ambitious goal, given that investors remain wary as Ukraine has a corruption problem that is far from being solved.
An extension of using taxes on frozen Russian assets is likely to be included
in the 12th sanctions package that is currently being prepared. The European Commission has not yet described the details for the new sanctions package, although all deadlines have already passed.
Ukraine to become “a military production hub”
as counter-offensive stalls
Ben Aris in Berlin
Ukraine hosted an international defence industry conference
in Kyiv on September 30. The country hopes to attract international arms manufacturers and make Ukraine a “large military production hub”, as the government searches for ways to arm itself and break a stalemate that has developed on the battlefield.
Ukraine's President Volodymyr Zelenskiy suggested that the West create an “arsenal of the free world” in Ukraine where Western firms establish the production of shells, missiles and drones in the first Defence Industries Forum, which brought together representatives
www.bne.eu
of 252 foreign military companies from over 30 countries. Defence ministers and representatives of several countries also attended the event.
Zelenskiy is ready to offer “special conditions” to companies that will produce weapons with Ukraine or on its territory. The event marked a new development in support of Ukraine, with the previous focus being on the delivery of weapons, repair of damaged equipment and military training of Ukrainian soldiers.
“Heroism alone cannot intercept missiles. Ukraine needs capabilities, high quality,
high quantity, and quickly. There is no defence without industry,” said Nato Secretary General Jens Stoltenberg, who spoke by video link during the forum on the day after his visit to Kyiv.
As bne IntelliNews reported, Ukraine was running out of ammunition
last year, and since then the West
has invested almost nothing into ammunition production, leaving the AFU undersupplied and outgunned by their Russian opponents.
Next year Ukraine will likely come under more pressure as Russia’s 2024 budget has doubled the military spend to RUB10.8