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In Ukraine, an economy at the service of war

Roadblock near a wheat field, on March 19, 2022, in the Tuzly region of southwestern Ukraine.

Run the economy like a war machine. Since the outbreak of the Russian military offensive on February 24, exports from Ukraine have been controlled, the sale of basic foodstuffs there has been rationed, and production planned. In addition, some prices are capped. “Ukraine is moving to a war economy”declared Denys Chmyhal, the Ukrainian Prime Minister, on March 10.

This transformation occurred from the first hours of the conflict. At the end of February, the Ukrainian State plunged the economy into an artificial coma in order to protect it from the shocks to come. Capital flow controls have been put in place to filter the outflow of foreign currencies. The State now uses it to buy so-called “essential” goods abroad. The payment of customs duties has even been suspended in order to speed up the delivery of certain imported goods. “Three categories of products have been identified as essential: food, medicine and fuel”explains Nataliia Shapoval, director of the institute attached to the Kyiv University School of Economics.

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Overnight, this economist abandoned her work on the reform of corporate governance or the health sector. At the head of a team of around fifty analysts, she submits every day, at 1:30 p.m., to the government, a note on the impact of economic sanctions in Russia. Then she counts and quantifies the destruction caused by the Russian army, by crossing the information collected on social networks and the media with testimonies from residents. A website has even been created, on which Ukrainians can list the destruction they have witnessed. These were assessed in mid-March at 500 billion dollars (455 billion euros) by the government.

“If you have been forced to evacuate, find a job where you are! », launched, at the beginning of March, Oleksii Reznikov, the Minister of Defense. The country wants to avoid economic collapse at all costs, even if it means rebuilding factories elsewhere. “Part of the damaged productive apparatus can be rebuilt in the west, where the destruction is less significant, wants to believe Nataliia Shapoval, although this obviously depends on the duration and extent of the conflict. » This is already happening in this area, where the United Nations Development Program (UNDP) is helping farmers displaced by war to cultivate new land, lent by the state.

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