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Ukraine: Authorities commandeer major companies for the war effort, Nov 2022

In early November, under the auspices of martial law, the Ukrainian authorities commandeered privately held stakes in five prominent companies, handing responsibility for wartime management of the businesses to the Ministry of Defence. Of the five, significant shares in Ukrnafta (the country’s largest oil-producer) and in Ukrtatnafta (oil refining) were held by Ihor Kolomoyskyi, who heads the Private Group. For Zaporizhzhia’s Motor Sich, which makes aircraft engines, Vyacheslav Bohuslayev was the main shareholder. The vehicle producer, AvtoKrAz, was linked to Kostyantyn Zhevaho of the Finance and Credit group, while Zaporizhtransformator, which makes parts for electricity plants, was owned by Kostyantyn Hrihorishin. All of these figures may be described as “oligarchs”—that is, business leaders who, over a lengthy period, have been able to use their wealth and business networks to tilt political and economic rules and outcomes in their favour. Oleksiy Danilov, the secretary of Ukraine’s...
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Ukraine: Electricity outages lengthen as Russian attacks take their toll, Nov 2022

In early November the Ukrainian president, Volodymyr Zelensky, said that up to 40% of Ukraine’s energy infrastructure had been damaged or destroyed, following several waves of missile and drone attacks  by Russia  over the past month  on cities across Ukraine. Russia’s switch in tactics to targeting civilian utilities followed significant military reversals in September—most notably, a rapid counterattack by Ukrainian forces in Kharkiv region in the north-east. The strikes appear to be aimed at demoralising the population by subjecting them to additional adversity through the upcoming winter, probably in the hope that this will force the Ukrainian authorities to sue for peace, allowing Russia to retain some of territorial gains from the latest phase of the conflict, especially the “land bridge” to Crimea. In Ukraine, typically, the coldest months are from December to February, although the official weather forecaster predicts only a low probability of a severe winter in 2...
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Ukraine: Displaced return home—but for how long? Oct 2022

Around 6m Ukrainians displaced by the ongoing war with Russia had returned home, according to a survey by UN’s International Organisation for Immigration (IMO) published in mid-October. Of these, most had returned from the places within Ukraine they had fled to earlier in the war. Around 1.2m of them, however, or 22% of the total, had come back from abroad. According to sociological surveys, those who returned from abroad have done so for a range of reasons, including family disruption (since men of military age are not allowed to leave the country), depletion of savings, or a desire to take part in the country’s struggles at a crucial juncture in its history. In October, the total number of Ukrainians registered as refugees in Europe reached 7.65m, according to UNHCR, the UN’s refugee agency, with many going to Poland (1.4m) and Germany (almost 1m). There are, moreover, 2.85m “registered Ukrainian refugees” in Russia, subsuming both voluntarily and involuntary arrivals. Those bussed o...
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Russia-Ukraine: Putin declares martial law in “annexed” Ukrainian regions, Oct 2022

Towards the end of October, Vladimir Putin, Russia’s president, signed a degree declaring martial law in the four regions of Ukraine (Luhansk, Donetsk, Zaporizhzhia and Kherson) that were annexed illegally by Russia in late September. At first glance, it is hard to see what practical difference this makes, since, in effect, the parts of Ukrainian regions still held by Russia are already under military rule, while in Ukrainian-held Ukraine, martial law has been in operation since the onset of Russia’s full-scale invasion of late February. However, this is one of a series of ad hoc responses by the Russian leadership to some recent adverse developments, including an ongoing Ukrainian offensive in Kherson, reportedly prompting the imminent withdrawal of Russian forces back across the Dnipro River; as well as the domestic political and economic fallout from a mismanaged and unpopular military mobilisation campaign. The earlier snap “annexation” of further Ukrainian territories was itself a...
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Ukraine: EU begins to disburse next tranche of financial assistance, Oct 2022

In late September, EU bodies approved an additional €5bn in macro-financial assistance (MFA) to Ukraine, and in early October, Ursula von der Leyen, the president of the European Commission, announced that the first payment, of €2bn, would be made shortly, with the rest to follow by the end of 2022. This is the second instalment of a €9bn package first announced in May, and follows the delivery of €1bn in early August. It is designed to address the substantial budgetary shortfalls facing the Ukrainian government linked to the ongoing war with Russia, which has closed off access to capital markets, but led also to agreements with creditors for delays in debt repayments. The latest EU funding comes in the form of “highly concessionary” long-term loans—that is, at a low interest rate, but still adding to the stock of public debt. The form of the final €3bn of the facility—whether it will be offered as a loan or a grant—has yet to be decided among the 27 EU member states. As the EU Commiss...
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Ukraine: GDP fell steeply in Q2, but activity may have risen since; Oct 2022

Real GDP fell by 37.2% year on year in April-June, according to the Ukrainian authorities, compared with a fall of 15.1% year on year in the first three months, linked to the multiple domestic and global impacts of the ongoing war with Russia. The steep fall in economic output, and so income, follows a relatively weak recovery last year from the downturn triggered by the Covid-19 pandemic in 2020. More recent information points to an ongoing pick-up in business activity, which nevertheless remains well below pre-invasion levels. For example, the share of firms surveyed that were still shut in August, and so conducted no work at all, fell to 11%, from 21% in June, according to the latest macroeconomy overview from the National Bank of Ukraine (NBU, the central bank). Similarly, firms working at below 25% capacity dropped to 10% of those surveyed in August, from 22% in June, according to the Institute of Economic Research (IER). However, there was considerable variation in capacity usage...
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Ukraine: NBU governor resigns amid scandal, Oct 2022

On October 4th, Kyrylo Shevchenko, the governor of the National Bank of Ukraine (NBU, the central bank), announced his resignation, which was formalised by the finance committee of the Verkhovna Rada (parliament) shortly after. Mr Shevchenko has been in the post since July 2020. Volodymyr Zelenskyi, the Ukrainian president, proposed Andriy Pishnyi, another career banker, to replace him, and this was confirmed by the Rada on October 7th. The consolidation and strengthening of the banking system in 2014-16 under the leadership of Valeriya Hontareva was one of the main policy achievements of the immediate post-Euromaidan era. Since then, however, as in many other areas of reform, there has been some back-tracking, with both Hontareva and her successor, Yakiv Smoliy, subjected to political pressure by vested business-political interests, raising concerns about the bank’s independence. In his resignation statement, Mr Shevchenko, 49, said that he was stepping down as NBU governor ow...
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