Zelensky’s assistant: Ukraine needs funds, extends sanctions against Russia | Economic news

BERLIN (AP) — In addition to the human cost of the war, Ukraine’s efforts to defend itself from Russia are placing a heavy financial burden on the country that it can only bear with the help of a external support, said a Ukrainian government economist. Thursday.

The speed of victory, however, will largely depend on how much pressure Ukraine’s allies exert on Russia, said Oleg Ustenko, chief economic adviser to Ukrainian President Volodymyr Zelenskyy.

Ukraine is currently running a monthly budget deficit of 5 billion euros (dollars), compared to a deficit of 7 billion euros that the country had forecast for the whole of 2022 before the start of the war.

Pre-war forecasts of 3-4% economic growth in 2022 have also been dashed, and gross domestic product is expected to shrink by 30-40% this year as factories lie in ruins and large swathes of Ukrainian fertile lands are inaccessible or too dangerous to cultivate. , Ustenko said.

“The damage to our economy from this war amounts to 1 trillion euros,” he told The Associated Press in an interview in Berlin. That’s five times the country’s total GDP in 2021, he added.

But while Ukraine hopes for additional financial aid from its allies, the country also desperately wants tougher sanctions imposed on Moscow to rein in the Russian war machine, Ustekno said.

“Providing us with funding and providing us with ammunition and weapons is extremely important,” he said. “But it is equally important to continue to ensure that the country that commits this aggression against us is really cut off from any possible funding.”

With today’s high energy prices, Russia received more from the export of oil, gas and coal every day than it spent on the war, Ustenko said.

Much of that money comes from Europe, he said. “It’s ridiculous.”

“On the one hand, we are talking about the need to also help Ukraine financially. On the other, you know, the Europeans continue to send money to Russia.”

In Berlin to pressure German politicians to support tougher sanctions on Moscow, the economist said this included advancing the EU embargo on Russian oil which is due to come into force on December 5.

On natural gas, Ustenko said a proposed price cap should ensure payments are limited to the cost of production. Several European countries that have relied heavily on Russian gas over the years, such as Germany, have already been cut off from supplies by Moscow.

Ustenko said many businessmen and politicians he spoke with in Germany were hesitant to talk about new sanctions, perhaps concerned about the economic impact in their country.

High energy prices have become an election issue in Europe and governments have planned massive support programs for citizens to tackle energy poverty this winter.

Ustenko said he understands those concerns, but thinks most ordinary Europeans are willing to bear higher energy costs to help Ukraine.

“They really want us to win this war as soon as possible,” he said. “They know why they are paying this price.”

He urged European politicians to think about how they would justify their actions to voters once the war, which he confidently predicted Ukraine would win, was over.

“And if you did nothing? He asked. “Do you really think you have a political future as a politician? Certainly not.”

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