Politics is the art of the possible ©. But the last year has shown that the boundaries of what is possible can move quickly. War has become our reality. But Ukraine made possible many things in world politics that were beyond imagination.
Impossible #1: War
In February, the intelligence services of our partner countries warned Ukraine about a planned Russian attack and offered Zelenskyy the chance to flee. His answer went viral: "I don’t need a ride, I need more ammunition."
Ukraine was predicted to hold out for three days. Well, two weeks at most. Instead, the war has been going on for more than 10 months. At the beginning, the world was preparing to hand over NLAWs and Javelins to Ukrainian partisans and evacuated their embassies from Kyiv. By liberating cities in Kyiv and Kharkiv Oblasts and liberating Kherson, Ukraine proved that it can not only resist, but win. Currently, the Ukrainian Armed Forces are armed with HIMARS and state-of-the-art IRIS-T air defense systems, and the U.S. and Swedish embassies in Ukraine are posting information about new openings. Ukraine is receiving weapons deliveries which were called impossible just a few months ago. We are being entrusted with more and more complex and powerful systems.
The "impossible" also included harsh sanctions against Russia. Now there is already an oil price cap, Russian banks have been disconnected from SWIFT, and European countries are working to overcome their long term energy dependence on Russian natural gas. This all seemed impossible even after the annexation of Crimea in 2014. At that time, Nord Stream was being built in Europe, and officials spoke of Russia as a reliable partner. Now several individual states and the European Union as a whole have designated Russia as a terrorist country.
Two more "impossibilities" are awaiting their turn and require political efforts. The first is the provision of long-range weapons. Impunity and appeasement gives rise to increasingly brutal aggression and open terrorist attacks on civilian populations. If Ukraine can destroy the aggressor’s planes and ships on the aggressor’s own territory, their missiles will not reach our cities. The second is the inclusion of Russia on the FAFT black-list. The countries on this list have been made pariahs in the financial world, and this is exactly what needs to happen to Russia – a country that not only finances but organizes terrorist attacks against the civilian populations of other countries. In addition to Ukraine, the list of victims also includes Syria and Georgia at the very least.
Impossible #2: Money
A war coming to a state necessarily brings economic collapse. But Ukraine has proved so far that it will be able to endure economically and financially. The banking system has survived, the government has continued to pay pensions and salaries, and while the hryvnia has been devalued, it has not lost its role as the main means of payment. As a result, after making ad hoc decisions and painful interruptions in the spring and summer, international financial assistance to Ukraine has finally taken on a more systemic character, as our partners believe that our government is in a position to dispense funds, and plans to finance the reconstruction of Ukraine became the number one topic of several top-level international conferences and many lower-level discussions and publications.
Total of international budgetary aid to Ukraine in 2022 amounted to $27 billion. The main donor countries are the USA, EU, Germany, Canada, and Great Britain. Their contribution makes up a third of the expenses of the 2022 Ukrainian consolidated budget as of the beginning of November. At the same time, the total need for financing has exceeded $45 billion since February, and the lack of funds from international partners was covered by monetary financing by the NBU and internal borrowing.
But Ukraine is paying a higher price for its stability than its Western partners combined. Every week between February and September, Ukraine lost $4 billion in asset value, not even accounting for the destruction of civilian energy infrastructure that began in October and is still ongoing.
Our partners need to make financial support even more systematic to ensure regularity, reliability, and opportunities to finance urgent needs for recovery and reconstruction right now, without waiting for the end of hostilities. It is important to strive to minimize financing by printing money, and also, if possible, to favor grants over loans, even preferential ones, because together with the economic decline, the growth of debt will make long-term recovery policies extremely difficult.
At the same time, grants for reconstruction can and should come from sources related to the aggressor. Russia must pay – with the funds of its central bank or its oligarchs. Recent events give reason to hope that this will happen, and the next impossibility will become possible. First, EU and partner countries need to adopt legislation which will enable the confiscation and transfer to Ukraine the funds of Russian oligarchs and the Russian Central Bank. Intermediate solutions — investing assets and channeling interest into rebuilding Ukraine, as well as borrowing against those assets — may also take place.
Impossible #3: EU candidate status
If it weren't for the war and Ukraine's resilience and perseverance, 20 years of the "EU Eastern Partnership Policy" could have easily turned into 40 years, and the Eastern Partnership countries of Ukraine, Moldova, and Georgia would have been just as far away from membership in the European Union. During the war, Ukraine has been able to prove that it is part of Europe and its security architecture. The prospect of EU membership — almost unrealistic just a few years ago — has now become a matter of fulfilling a set of clear preconditions.
But Ukraine has de facto already received part of the four European freedoms, with lightning speed. Aid to refugees, in fact, has become an expression of the freedom of movement. Ukrainians are free to work and move in EU countries, which was granted by the directive on temporary shelter. The free movement of goods has been partially implemented through the exemption of Ukrainian goods from import duties, the abolition of tariff quotas, and security measures for goods from Ukraine for a one-year period. Ukrainian power grids have become part of ENTSO-E — the European Network of Transmission System Operators for Electricity. Ukrainian cargo truckers no longer need to obtain special permits to travel across Europe, and Ukrainian railways are likely to soon become part of the European TEN-T network. This speed could not even be dreamed of under the implementation plan of the Association Agreement. While the agreement paved the way for obtaining these freedoms, it suffered from slow implementation on both sides.
Ukraine’s immediate and important “homework” includes seven steps for the opening of membership negotiations. No less important are other steps in cooperation with the EU, which require active steps and negotiations in Brussels and other capitals:
- Achieving a more permanent status regarding the abolition of import duties and tariffs for Ukrainian goods, ideally to obtain an "industrial visa-free" agreement (an ACAA: agreement on conformity assessments and acceptance of industrial products) and an agreement on mutual recognition of authorized economic operators at customs.
- Obtaining an agreement on the mutual recognition of professional qualifications, as well as internal market status for postal and courier transportation, digital services, and telecommunications.
- Joining transport European agreements, including the agreement on common aviation space and the internal market for maritime trans-port.
Institutionally, Ukraine can and should do everything to make progress towards the EU irreversible, and so that even before obtaining full membership in the European Union, Ukraine will be able to enjoy the freedoms that will allow deeper integration.