Planning timeframe shrinks
The Soviet motto saying “Everything for the front, everything for the victory!” and the Third Reich’s “Guns instead of butter” were only formally different, as both totalitarian regimes viewed the wartime economy the same way: arms above all. Both managed to get the best of their potential capacities. But Ukraine is neither Hitler’s Germany nor Stalin’s Soviet Union. What does the notion of “wartime footing” mean in a democratic country? How long will the economy endure being this way, and who pays for the whole thing?
When talking about wartime economy, it is important to understand what kind of objectives the country pursues and what capacities it has. The main objective is to survive and win the war, which requires money, manpower, and material resources. In other words, the war has a precise economic cost.
Ukraine’s military economy has two components. The first one is external resources. That includes, first and foremost, Western munitions, military-grade hardware, and technology we receive directly from our partners at NATO and the anti-Russian coalition. This is our rear, so to say. Why is it this way? The reason is that those items are either not produced in Ukraine at all or are produced in insufficient quantity. Since the entire territory of Ukraine is in Russia’s field of fire one way or another, that means we do not have any completely safe location where we could concentrate our military production to supply the front lines with ready-to-use items. Additionally, we lost a part of our productive capacity. Also, we need weapons and ammo right here and now, in large quantities.
The second component of wartime economy is financial aid our partners supply us with. This money is essential for the state to continue functioning at all during the war. The state must, above other things, support its people socially. People must be able to live rather than survive. Money is needed to patch “holes” created by the war, for instance, for repairing energy facilities after missile strikes. Ukraine received a total of $31.2 billion worth of aid in 2022: $14.3 billion in loans and $16.8 billion in subsidies.