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Interview With Ukraine’s Former Economic Minister: How Much Will It Cost to Defeat Russia and Rebuild Ukraine?

War in Ukraine
War in Ukraine. Image Credit: Creative Commons.

Ukraine has had remarkable battlefield successes repelling the Russian invasion, but there is no denying Putin’s onslaught has caused massive destruction of lives, cities and farming fields.

On the ground, Russian troops looted countless civilian homes, and rendered huge swathes of farmland unusable with mines and shelling. Moscow furthermore is shipping stolen grain abroad, and blockaded Ukraine’s own shipments until July when Turkey brokered a deal to avert global famine.

Missile attacks targeting factories, fuel and grain stores, railway junctions and commercial centers like shopping malls further stress the economy. Even as stocks of long-distance missiles run low, Moscow doubled down in October with strategic raids bolstered by cheap Iranian kamikaze drones targeting Ukraine’s energy sector, disrupting heating, water and electricity for millions, reportedly causing $127 billion in damage.

Other war-related factors contributing to a projected 35% contraction of Ukraine’s economy are refugee outflows causing the population to shrink by 7.7 million (nearly 18%), currency devaluation, a 40% inflation rate, and Russia’s capture of the port cities of Mariupol and Kherson. Altogether, these make it hard for Ukrainians to earn their living and for Kyiv to collect adequate tax revenues to sustain basic services while also paying for a war for national survival.

Fortunately, Ukraine is receiving substantial economic and humanitarian aid, not just weapons. That includes $13 billion from Washington by the end of 2022, with $1.5 billion per month planned for 2023. European institutions, though moving slower, claim they will disburse $9 billion by the end of 2022. However, that falls short of the $38 billion annually Kyiv says it needs to rebuild.

Even if victorious on the battlefield, how can Kyiv recover from such wanton destruction? What costs must be paid to not only defeat Putin’s invasion but to rebuild what it destroyed?

To answer those questions, in October, I spoke over Zoom with Tymofiy Mylovanov, president of the Kyiv School of Economics since 2016, former minister of Economic Development, Trade, and Agriculture, and a professor at the University of Pittsburgh in various capacities since 2010. Mylovanov flew back into Kyiv hours before Russian forces massed in Belarus began rolling towards the Ukrainian capital. Since then, he’s focused his efforts on obtaining international assistance for Ukraine.

Note: This interview has been edited for clarity and concision. Additional context is provided in brackets in some places.

Sébastien Roblin: Ukraine will require a massive reconstruction effort. How much will it cost?

Tymofiy Mylovanov: I was just at a restaurant in Kyiv. They were raising money for the military and it was packed. So such businesses are thriving, which is in many ways surreal. They’ve adjusted to the war! But of course, between 20% and maybe up to 40% of GDP has been destroyed. Plus much of the agricultural land is now mined.

We should think of Ukraine’s economy as being like the United Kingdom’s in World War II. It will require support from the rest of the world for the duration of the war, and even after the war.

U.S. Aid to the UK During and After World War II
Cost Approximate worth in 2022 dollars
Lend-lease Aid (1941-1945) $31.4 billion (donated) $600 billion
Anglo-American Loan (1946) $3.7 billion at 2% interest (paid off 2006) $60 billion
Marshall Plan (1948-1951) $3.3 billion (donated) $40 billion

Currently, military spending is about half of the budget in 2022, and half next year too. We wouldn’t be able to sustain that even if we retained our undamaged, pre-war economy. We will need economic support equivalent to $30 to $50 billion a year.

SR: To what extent has Russia’s strategic bombing with long-range missiles and drones actually harmed Ukraine’s economy?

TM: We actually have suffered $100 billion in economic  losses, and of that, I would make an educated guess that one-third is the strategic damage to infrastructure. They are trying to deny the future of the economy, so they are attacking energy, logistical hubs, railroad hubs, some manufacturing facilities, and metallurgy.

SR: What kind of assistance does Ukraine need most?

TM: What we need is foreign currency. We’re spending most of our reserves on the military. We can print as much local currency [the hryvnia] as we want, but really, we have to import it so it’s not a liquidity issue. That way, we can avoid hyperinflation [when high inflation causes money to lose value catastrophically fast] and economic crisis.

SR: How is this affecting the labor market in Ukraine?

TM: On the microeconomic scale, there’s amazing agility, a lot of innovation. Educational companies are having all-time profits as people re-skill, moving away to IT jobs and expert services they can provide via the internet thanks to internet-based conferencing [like Zoom, Teams, Webex etc.].

SR: And that helps acquire foreign currency?

TM: Yes! They are doing education, and cybersecurity, and they get paid by Western companies. Some of them are donating. Some of them—it’s providing consulting services for companies outside Ukraine.

SR: Structurally, how is Ukraine’s post-war economy likely to change as a result of the war in terms of labor allocation, international business partnerships and so forth?

TM: Most of our experts were in the metallurgy sector—and while we still have plants, they’ve been mostly destroyed like the famous Azovstal factory in Mariupol [site of a last stand by Ukrainian forces in May.] So probably will have to go to raw ore.

Agriculture is going to rebound, but there is the problem that 20-30% of land is contaminated by mines. We don’t want to have farmers and children lose their lives to mines. It’s very expensive to clear them—at $50,000-75,000 per hectare, it’s not worth it. So people are looking for innovative methods. Perhaps we can come up with robotic agriculture equipment. All of the non-military applications of military innovations [like unmanned mine-clearing vehicles] will have a use. And all those veterans with experience using them will return to the civilian job market.

SR: Ukraine is currently seeking to accede to the European Union. How is that going?

TM: There’s a very formal process ongoing. You have to meet some standards. In my view Ukraine is as compliant with EU standards as Hungary is, or more. But accession is a political process that we hope will not take too long.

SR: And how would accession affect Ukraine’s economy?

TM: We’re standing up for European values but we feel we haven’t been as supported as we could have been by Europe. So we would be perceived to be Europeans. And on technical grounds, you have all these bureaucratic experts, in the best sense of that word.

Since 2010, the EU has done a fantastic job improving the laws of Greece. We could have benefited from something like that. We need anti-trust authorities that can take on the oligarchs. We still have all of this [outdated] legal infrastructure inherited from Soviet Union. For example, many things considered collusion in U.S./Europe are not considered that way in Ukraine. It’s a very difficult charge to prove.

T-84 Ukraine

A T-84 tank from Ukraine. Image Credit: Creative Commons.

We have done a fantastic reform to the central bank—and guess what? It hasn’t stopped work for a day during the war. But our anti-trust authorities remain unreformed, even though we have some good people appointed there.

SR: Any insight into the future of Ukraine’s defense industry, given tough choices between adopting foreign hardware and building locally?

[Context: Ukraine retained a sizable military industrial sector upon separating from the Soviet Union, and in the 2000s, exported many Soviet-built weapons abroad, ranging from tanks and jets to even an incomplete aircraft carrier. But despite some successful new weapons like the Stugna anti-tank and Neptune anti-ship missiles, and BTR-4 fighting vehicle, it has struggled to deliver many defense goods in volume and on time, and can’t produce Soviet-type shells fast enough. Kyiv therefore is becoming increasingly dependent on Western arms and ammunition.]

TM: Arms exports are done for now. It made billions before, now we’re not exporting anything. We’ve essentially run out of Soviet-type weapons, and we’re relying more or less on NATO. So we need to learn how to service [NATO arms]. There’s certainly issues of technology and protocol of servicing. Many of these use parts built in multiple countries, which won’t be workable long term. So I think there’s an opportunity and demand domestic industry can fulfill and we’ll see over time more robust solutions prevail.

And though we have run out of Soviet-type equipment, we have got a lot of equipment donated by Russian troops. They supply more than NATO countries (though NATO’s are more powerful and precise.) So we’ll need to service Russian “trophy” equipment too.

SR: What of the much-anticipated cyberwar?

TM: There was a lot of expectation that the banking, telecom sector would be shut down. There are a number of factors explaining why that didn’t happen on a large scale, especially that Ukraine had seen it before [since 2014] and was ready. There have been some embarrassing cyberattacks, but they’re mostly symbolic. We don’t know what the more substantive or meaningful were.

I think Russia has lost a lot of IT talent. I talked to some Russian IT guys, and they say even before the mobilization began everyone who can move and can code has left, often with the rest of their office, for Dubai, Kazakhstan, Austria, maybe even the U.S. We have few entrepreneurs in Ukraine, half of them are in the senior leadership. But in Russia, there are zero left.

SR: Russia has so far weathered economic sanctions better than most expected. Do you think that will eventually change, and if so—when and why?

TM: I have argued since the beginning that it’s going to take time. Russia has difficulties with the international supply chains, things are not as rosy as Putin expected. They are also manipulating data in many ways—unemployment is higher than official numbers. They’re limited in their ability to circumvent the sanctions, though they are still constantly trying to.

It’s also not so easy to switch oil exports to India and China. It takes time to build pipelines. They have different types of oil. Often you have to move things by tankers, and those need to be insured (mostly by Western companies!)

According to our research, these developments will accumulate by Spring in 2023. So Ukraine’s ability to get through this winter will be decisive.

That said, the West could have created panic and caused economic collapse if assets had been seized from the beginning, and a gas and oil embargo imposed immediately. But the world has been afraid to impose stricter sanctions. Instead, it’s been a wait-and-see approach, step-by-step, and I think that’s not the right way.

It’s like Western deliveries of weapons. It’s a policy choice not to be harsh enough. Imagine if Ukraine had been given HIMARS or air defense missiles before the invasion—it could have avoided the massacre at Bucha and Izium!

Sébastien Roblin writes on the technical, historical and political aspects of international security and conflict for publications including the The National InterestNBC NewsForbes.com, War is Boring and 19FortyFive.  He holds a Master’s degree from Georgetown University and served with the Peace Corps in China. You can follow his articles on Twitter.


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Written By

Sebastien Roblin writes on the technical, historical, and political aspects of international security and conflict for publications including the 19FortyFive, The National Interest, NBC News, Forbes.com, and War is Boring. He holds a Master’s degree from Georgetown University and served with the Peace Corps in China.  

21 Comments

21 Comments

  1. 403Forbidden

    November 4, 2022 at 12:17 pm

    There’s no hope of rebuilding Ukraine.

    And no hope of defeating Russia either. Did the fascists defeat the USSR ?

    After Russia dishes out a TKO against Kyiv, ukraine will descend into anarchy and social chaos, with perpetual extremists in charge.

    Result is Ukraine turning into like or sort of an European version of somalia or Yemen or libya.

    Once winter of 2022-2023 goes by, Ukraine can look forward to black hawk down situation.

    • Gary Jacobs

      November 4, 2022 at 3:23 pm

      403forgotten,

      LoL, you seem to forget that the USA was supplying Russia with massive amounts of equipment during WWII. This time the USA, and 50 other countries are backing Ukraine. The Russian Army is being defeated. Its only a matter of time to completion, and how badly Russia will lose.

      Russia tried the TKO to Kiev last year, and was defeated. Same thing in Sumy, Kharkiv, etc. Expect more of that in Kherson and other areas of the south coming soon.

      Have a liberating day.

      • gre81

        November 5, 2022 at 1:10 am

        🤣what news you watching? The MSM propaganda

    • Doyle

      November 5, 2022 at 5:25 am

      Delusion runs deep in this one. I doubt Russia gets much more than a stalemate at this point. Your professional army was defeated by Ukraine and now you believe your conscript army will fare any better??? You manufacturing sector cannot make up for material losses by your army in a sufficient manner to run a war. Putin can only prop up the economy for so long, yes it will take time but the economy will fail. No I’d say the failed state is Russia and Ukraine will over time be rebuilt. Pity poor Russia, the reap the seeds they sow.

  2. Gary Jacobs

    November 4, 2022 at 12:53 pm

    “Perhaps we can come up with robotic agriculture equipment”.

    Israeli company Tevel Aerobotics is an AI based autonomous fruit picking drone system. Lots more where that came from.

    On the sanctions and seizing of Assets, the The Magnitsky Act is a baseline to freeze assets, and to gather allies to do the same. And RICO forfeiture provisions can be used as a model to force Russians to forfeit their money in western banks for the rebuilding of Ukraine. Currently RICO provisions can be interpreted to authorize forfeiture of a defendant’s entire enterprise regardless of the amount of illicit profits or the seriousness of the crime.

    The Russians have acted like gangsters in Ukraine [among other places] and they should be treated accordingly. There is extensive documentation of their crimes in Ukraine, and each time a city is liberated from Russian tyranny a team of people is sent in immediately to make sure Russian crimes are documented for later use in legal proceedings.

    • from Russia with love

      November 4, 2022 at 3:30 pm

      Gary Jacobs:
      what if Russia defeats NATO in Ukraine and reaches the western border of Ukraine? Are all your amazing ideas still valid? The United States also allocated the frozen reserves of Russia for the restoration of Ukraine? 😲 or not? in Mariupol, there are no hostilities now, but the infrastructure has been badly damaged. The United States, which recently worried so much about the inhabitants of this city, did something to help these people? No? oh! 😲
      who helps the residents of Mariupol? of course, the “bloody Putin regime” which restored water supply, electricity, communications, public transport. built houses for those who lost their homes. a hospital was built and schools restored. what did the US do for these people? supplied weapons to the fascist junta in Kyiv so that there was something to kill the civilian population.🤷‍♂️
      in short, don’t flatter yourself Gary Jacobs, you’re an ordinary hypocritical freak who doesn’t care about Ukraine and Ukrainians. you really want someone to fight with the Russians and you don’t care who dies there and in what quantity, the main thing is that it’s not you. 😉 assistance to Ukraine will end as soon as Ukraine refuses to fight with Russia. and humanitarian aid too.

      • Gary Jacobs

        November 4, 2022 at 4:30 pm

        From Russia with hate.

        LoL. You live in a Putinista fantasy world. Keep dreaming if you so choose… as Russia continues to lose.

        What else is there to say… but have a liberating day.

      • Doyle

        November 5, 2022 at 5:34 am

        So Russia restored some basic infrastructure in a city it has now claimed as being part of Russia….how novel. Suggesting that anyone in the west would send funds into a Russian controlled area for the purpose of aiding the civilian population is ludicrous beyond imagination or your typical Russia inanity, propaganda without thought. Quite frankly if you had a thought process you’d not have posted your nonsense but at least being a last rate propagandist pays the bills…right?

    • Doyle

      November 5, 2022 at 5:29 am

      I’m not sure on what planet it takes $50k per 2.5 acres to clear land mines but after the war there will be plenty of soldiers for that task. Yes it’s time consuming. It’s not as if the mines are spread over 100% of the country and in fact the Russians have not occupied much more than 20% of the Ukraine.

  3. Dr. Scooter Van Neuter

    November 4, 2022 at 3:06 pm

    The free world will rebuild Ukraine because that’s what compassionate societies do.
    Russia will be an international pariah, embraced only by godless, brutal, authoritarian regimes like China, North Korea, and Iran until moral and sane leadership regains control.

  4. ross knode

    November 4, 2022 at 8:28 pm

    These Russian trolls are hilarious. Love how they so easily call for the annihilation of millions of Ukranians. That’s how 5-year olds act.

  5. YS

    November 4, 2022 at 9:19 pm

    What is going on in Ukraine is mostly pro-russian ukrainians fighting extremist neo-nazi ukrainians… It really is a civil war in action. Plug in the rest of Russia *united* (with all multinational and multireligious might) – you’ll get my point.

    Shall I offer Libya as an example? How did that end?
    Perhaps, another example to consider is Syria. How will that end?

    Do not get stuck on filtered propaganda and listen to european journalists covering conflict (and getting silenced and jailed back home).

    IMO, we’re going to see some unexpected development over winter and next year both in politics and in war progress.

    “Assume nothing, question everything”

  6. gre81

    November 5, 2022 at 1:08 am

    Defeat Russia? 🤣 There is no way Ukraine can defeat Russia. I don’t even think NATO could defeat Russia.

  7. gre81

    November 5, 2022 at 1:11 am

    Where was NATO over the last 8 years when they were killing 15,000 of their own people? 🦗

  8. Yrral

    November 5, 2022 at 3:03 am

    Jacob,Dr Scooter,when are the free world gonna rebuild Forida,Jacob you still supporting the lost cause in Ukraine,you have no knowledge of US opinion about Russian Assets Google Yellen Russian Assets

  9. John

    November 5, 2022 at 8:05 am

    The reality seems to be that the war was counterproductive. Better to wait and fix the ruler later.

  10. ltexpat

    November 5, 2022 at 9:54 am

    Very, very soft interview. No hard questions, especially about the fact that Ukraine has been notorious as far and away the most corrupt country in Europe for decades.

    e,g, how about these for questions?

    Given the known scale of corruption in Ukraine, what proportion of foreign aid do you think is likely to be diverted for personal gain?

    Shouldn’t Ukraine tackle corruption before asking for reconstruction aid?

  11. OIF Combat Vet

    November 5, 2022 at 10:57 am

    While US weapons intended for the Ukraine are ending up on the black market in the middle east and else where…my guess is the Ukrainian money pit will be largest transfer of money from the West this century so far. The elite will enrich themselves at great cost to the peasants.

  12. David Tate

    November 5, 2022 at 4:50 pm

    The United States spent over 20 years fighting the Global War on Terror (GWOT). A recent Brown indicates that the United States spent well over $6 Trillion and resulted in well over 1.5 million casualties. We know that the Ukrainian economy generated less than $150 Billion annually. The Ukrainians will need US taxpayer support to maintain their economy, this year and for next five to ten years as a result of this war. Hundreds of Billions of dollars in Ukrainian public and private property has been destroyed over the last nine months. More will be destroyed in the coming months.
    Therefore, Ukrainian government will ask the American taxpayers to support re-contruction for both public and private property. The Ukrainian government will be right to do so under the circumstances. We must also consider the US taxpayer dollars provided to Eastern European NATO member states to support replacing the weapons that they “donate” to the Ukraine. The United States also appears to be subsidizing and enhancing Eastern European NATO member states military infrastructure and weaponry, even as the Russian Federation is severly diminished economically and militarily. Therefore, it may be reasonable to assume that the American taxpayers will provide well over $3 Trillion to pay for the Ukrainian War.

    The US National Debt stands at $31 Trillion today and is expected to exceed $34 Trillion as soon as 2024. The Ukrainian War will certainly add to the US National Debt substantially. President Biden has stated that he intends for the American taxpayers to support the Ukraine for as long as it takes and for what-ever it takes. This represents a “blank check.” This will cost the American taxpayers a great deal.

    • David Tate

      November 5, 2022 at 5:42 pm

      I meant to write “Brown University Study.” My apologies.

  13. Tom Armand

    November 5, 2022 at 8:29 pm

    There is little in this article that reflects reality. The opening paragraph is more propaganda pablum.

    Ukraine society is in chaos. Almost 10 million refugees and this will swell to 15 million with recent attacks on infrastructure. Many of these will never be returning. In fact, more likely to be joined by adult males it there is some negotiated settlement. Ukraine can’t be ‘rebuilt’ because much of it will no longer exist.

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