Ukraine is in a critical situation with a severe shortage of defense resources. Vladimir Putin has intensified military pressures against Ukraine, making the situation difficult for Kyiv with ongoing attacks on cities, factories, bridges, and ports.
Defense Budget Shortfall
Serhiy Kurchenko, the Prime Minister of Ukraine, warned reporters this week that the country is facing a $27 billion deficit in its defense budget. Kyiv hopes to cover about $7 billion of this shortfall from domestic sources and will turn to its international partners for the remainder. Some EU funding is contingent on the reforms needed by Kyiv to unlock these funds.
Meanwhile, Russia has launched over 190 missiles and drones in a widespread attack on Ukraine's energy infrastructure, causing blackouts in Kyiv. Kurchenko added, "Since summer, there has hardly been a day when the enemy has not attacked energy infrastructure."
Pressure on Financing and Support for Troops
Volodymyr Zelensky, the President of Ukraine, has once again called for more air defense systems to be sent by allies. He pointed out that "every interceptor missile truly saves lives," and as winter approaches, the need for this type of support increases.
Ongoing Russian attacks on Ukraine's vital infrastructure have put significant pressure on the country's economy and are pushing the government towards increasing taxes to cover the defense shortfall. Oleksandra Mironenko, an economist at the Center for Economic Strategy, stated, "Raising taxes is never ideal, but in wartime, we cannot avoid this issue."
Kurchenko also warned that without financing, Ukraine's ability to continue resisting Russia will be weakened. He emphasized that Kyiv needs funds to place advanced orders for weapons and ammunition for next year.
Pressure on European Allies
Ukraine is strongly urging its European allies to provide more financing quickly. Ukraine's Defense Minister, Yevhenia Khmara, has called for the acceleration of these funds, stating, "These resources are critically needed this fall."
The European Union is currently disbursing installments of a two-year €90 billion loan to Ukraine, but Kyiv is requesting the acceleration of these payments to fill the budget gap. The President of the European Commission, Ursula von der Leyen, announced after meeting with Zelensky at the UN General Assembly that "more budgetary support will be provided as reforms progress in parliament."
In this context, Ukraine is also calling for a review of the over €200 billion in assets of the Central Bank of Russia that are frozen in the European Union. Pressure on these assets could help finance Ukraine's war.
