Take away foreign sponsorship and Ukraine's economy would basically be zero.
That before the war, Ukraine was rivaling some Sub-Saharan African countries for GDP per capita and corruption perceptions is also hardly cause for cheering.
"...despite the frustratingly gradual advance of the offensive...". Mr. Tooze, peeking out of all those charts pumped up with US, EU and IMF money (IMF broke its own rules to provide loans to Ukraine), you would have found out that the only ones advancing are the Russians, accross the entirety of the front lines.
I do hope more and more "investors" will buy Ukraine debt, and so on, just to see them burn.
I dunno, as Professor Tooze himself pointed out, the House of Morgan were thr biggest lobbyists for US intervention in WWI, as they had bought huge amounts of British government debt and feared that they might not get their money back.
There has been much discussion in opinion circles about using a portion of frozen Russian assets for Ukraine aid.
I don't see a downside to doing so, other than the endless posturing about "escalation". We have wars on two continents...escalation has already occurred.
It's far better option than the performative circus of waiting for Congress to act....playing games in the face of life and death crises.
As far as I can tell they are accounting entries in a computer somewhere. They aren't real resources. We can create new accounting entries at the Fed anytime we want without reference to Russian accounting entries, but it won't conjure 155mm shells from the ether.
Since these Russian accounting entries are currently frozen they can't use them to bid up any real resources. Since they will not be unfrozen until there is peace there is no possibility of them being used to finance Russia's war. If (when) we do make peace with Russia the return of these accounting entries is going to be one of the items to be negotiated.
At best I think "let's spend these Russian accounting entries" is an attempt to get around needing to go to Congress and request funding for the war, which is no longer popular and might not work. In other words is duplicitous, and will create a situation where if Russia demands the return of the reserves as part of the peace deal a whole new bill will have to go through congress to re-fund those reserves, which makes peace a lot more difficult. I believe this is the goal of the people talking about using Russian reserves, to play games with congressional funding and try to fund an unpopular war through dishonesty.
Congress has not acted because the American people do not support the war. The war isn't a game, people are dying so you can act tough.
Yes, the assets exist...over $300B in cash and physical assets.
No, the Ukraine war is not broadly unpopular, a majority of Americans support pushing back against Russia's invasion and self-proclaimed genocide. Those who oppose the war use the same isolationist rationale that proved so costly to America in the run-up to WWII. To date, we've provided only older weapons from our stockpiles and humanitarian relief to Ukraine.
Yes, Congress is broken, and incapable of passing any legislation...the House has been utterly dysfunctional since the majority passed to the GOP. Creativity is essential if the system in place is unable to do its job.
Russia is uninterested in peace. Putin has made this crystal clear over and over and over. This is not a war the US started, but the damage to NATO countries would be disastrous if Ukraine fails.
1) Accounting entires on a computer are not real resources that can be used in a war. If the United States wants it can create new $ and try to buy 155mm shells from defense contractors. It doesn't need Russian assets to do this, but it does need the consent of legislation via elected representative.
2) If the Ukraine war was popular then pushing through funding would be easy. The reason it hasn't been pushed through is that politicians fear revolt from their constituents. If anything congress is broadly more supportive of the war than the public, which is typically the case for basically every war.
3) Russia proposed a white peace one month into the war and Zelensky was instructed to reject it by US/UK. They promised him that economic sanctions and wonder weapons would allow Ukraine to achieve easy victory without getting bogged down in a war of attrition. This gambit failed and basically destroyed Ukraine.
The war effort consists of shanghai'ing conscripts off the streets and having them re-enact the Battle of the Somme over and over in an attempt to...conquer parts of Ukraine that voted 90%+ for the guy the US overthrew in 2014.
It's possible Putin isn't interested in peace anymore because he's winning and he's been burned trusting us. And its certainly the case that watching Ukraine get wrecked has sent a firm message that NATO finds its "allies" expendable cannon fodder for the military industrial complex and a couple of Current Thing tweets.
This is probably the worst piece on future prospects of Ukraine as a state and its economy. It is already in shambles, no monetary central bank tricks nor any financial spending will be saving it from raging inflation given the material basis and the destruction out of that slowly progressing deliberate Russian attrition war aiming at infrastructure destruction. Just look at the railway system which can not be fixed by the west due to its Soviet type specifics - no one is going to finance that. This war will leave Ukraine as as rump state with seriously limited possibilities of economic rebuilding. It is up for balkanization and a neoliberal assault to exploit its remaining assets, similarly to what happened to some former Soviet republics. The biggest hurdle to recovery is all those loans - there are no grants as the western mainstream likes to depict Ukraine support - which will be crippling Ukraine just like Germany was crippled after the first world war. Ukraine will never be able to repay that debt. There is no substance and economic foundation for all those fancy graphs Adam Tooze cobbles together, none of which forms a coherent picture of an serious economic outlook but just baseless speculation and wishful pseudo economic underpinning of a distorted western mainstream. To put it mildly Adam Tooze is out of touch with macroeconomic reality. If you want to learn some facts about Ukraine's war economy and its future path consult interviews and papers by non-mainstream economists like Michael Hudson et al. This post is a piece of meaningless junk and a worthwhile textbook contribution to bolster the bad reputation of mainstream economists
Er... You do realize that the GDP stabilization is simply the result of that external financing, it's a chicken and egg situation. Money flows in, is spent, mostly on services, and thus produces a stabilization of GDP.
Instead of being funds to increase commodity production and developing infrastructure, which in turn would be a dead end given the war torn environment where there would be no demand for any increased supply - except the military complex of course
I am more about confused accounting identity - the financing can go anywhere, pretty much, but one has to be clear that "real" GDP should be counted ex that funding.
Hi AT. Great post, really interesting. I recently read Wages of Destruction and note your comments on macro aggregates as a poor guide to the performance of a war economy, nevertheless Ukraine’s budget and fx constraints were and are real. It’s position seems similar to Britain in 1940-41. Other similarities are the new capital investment that will be producing armaments next year, and the final shares of GDP of military expenditure.
Take away foreign sponsorship and Ukraine's economy would basically be zero.
That before the war, Ukraine was rivaling some Sub-Saharan African countries for GDP per capita and corruption perceptions is also hardly cause for cheering.
I don’t think this post ages well.
Ukraine is ceasing to exist.
"But its remarkable battlefield success should not obscure the daunting challenge Ukraine faces."
Perhaps you could elaborate a bit on this "remarkable battlefield success".
Ukraine has been sold for pennies and in return it has lost a large fraction of working age men. What a great deal!
"...despite the frustratingly gradual advance of the offensive...". Mr. Tooze, peeking out of all those charts pumped up with US, EU and IMF money (IMF broke its own rules to provide loans to Ukraine), you would have found out that the only ones advancing are the Russians, accross the entirety of the front lines.
I do hope more and more "investors" will buy Ukraine debt, and so on, just to see them burn.
I dunno, as Professor Tooze himself pointed out, the House of Morgan were thr biggest lobbyists for US intervention in WWI, as they had bought huge amounts of British government debt and feared that they might not get their money back.
The thinking might be the same, but the situation is soo different this time.
Explain, please.
Trying to make a buck out of war and thinking their side will win and they get back their investment 5 fold....
Not sure how that is different.
This time thir side is not likely to win...
There has been much discussion in opinion circles about using a portion of frozen Russian assets for Ukraine aid.
I don't see a downside to doing so, other than the endless posturing about "escalation". We have wars on two continents...escalation has already occurred.
It's far better option than the performative circus of waiting for Congress to act....playing games in the face of life and death crises.
So much for the much hyped property rights and rule of law.
Do these Russian assets exist?
As far as I can tell they are accounting entries in a computer somewhere. They aren't real resources. We can create new accounting entries at the Fed anytime we want without reference to Russian accounting entries, but it won't conjure 155mm shells from the ether.
Since these Russian accounting entries are currently frozen they can't use them to bid up any real resources. Since they will not be unfrozen until there is peace there is no possibility of them being used to finance Russia's war. If (when) we do make peace with Russia the return of these accounting entries is going to be one of the items to be negotiated.
At best I think "let's spend these Russian accounting entries" is an attempt to get around needing to go to Congress and request funding for the war, which is no longer popular and might not work. In other words is duplicitous, and will create a situation where if Russia demands the return of the reserves as part of the peace deal a whole new bill will have to go through congress to re-fund those reserves, which makes peace a lot more difficult. I believe this is the goal of the people talking about using Russian reserves, to play games with congressional funding and try to fund an unpopular war through dishonesty.
Congress has not acted because the American people do not support the war. The war isn't a game, people are dying so you can act tough.
Yes, the assets exist...over $300B in cash and physical assets.
No, the Ukraine war is not broadly unpopular, a majority of Americans support pushing back against Russia's invasion and self-proclaimed genocide. Those who oppose the war use the same isolationist rationale that proved so costly to America in the run-up to WWII. To date, we've provided only older weapons from our stockpiles and humanitarian relief to Ukraine.
Yes, Congress is broken, and incapable of passing any legislation...the House has been utterly dysfunctional since the majority passed to the GOP. Creativity is essential if the system in place is unable to do its job.
Russia is uninterested in peace. Putin has made this crystal clear over and over and over. This is not a war the US started, but the damage to NATO countries would be disastrous if Ukraine fails.
1) Accounting entires on a computer are not real resources that can be used in a war. If the United States wants it can create new $ and try to buy 155mm shells from defense contractors. It doesn't need Russian assets to do this, but it does need the consent of legislation via elected representative.
2) If the Ukraine war was popular then pushing through funding would be easy. The reason it hasn't been pushed through is that politicians fear revolt from their constituents. If anything congress is broadly more supportive of the war than the public, which is typically the case for basically every war.
3) Russia proposed a white peace one month into the war and Zelensky was instructed to reject it by US/UK. They promised him that economic sanctions and wonder weapons would allow Ukraine to achieve easy victory without getting bogged down in a war of attrition. This gambit failed and basically destroyed Ukraine.
The war effort consists of shanghai'ing conscripts off the streets and having them re-enact the Battle of the Somme over and over in an attempt to...conquer parts of Ukraine that voted 90%+ for the guy the US overthrew in 2014.
It's possible Putin isn't interested in peace anymore because he's winning and he's been burned trusting us. And its certainly the case that watching Ukraine get wrecked has sent a firm message that NATO finds its "allies" expendable cannon fodder for the military industrial complex and a couple of Current Thing tweets.
You are so uninformed...it's not worth responding.
Enjoy all those corpses it took to make you feel important on the internet.
This is probably the worst piece on future prospects of Ukraine as a state and its economy. It is already in shambles, no monetary central bank tricks nor any financial spending will be saving it from raging inflation given the material basis and the destruction out of that slowly progressing deliberate Russian attrition war aiming at infrastructure destruction. Just look at the railway system which can not be fixed by the west due to its Soviet type specifics - no one is going to finance that. This war will leave Ukraine as as rump state with seriously limited possibilities of economic rebuilding. It is up for balkanization and a neoliberal assault to exploit its remaining assets, similarly to what happened to some former Soviet republics. The biggest hurdle to recovery is all those loans - there are no grants as the western mainstream likes to depict Ukraine support - which will be crippling Ukraine just like Germany was crippled after the first world war. Ukraine will never be able to repay that debt. There is no substance and economic foundation for all those fancy graphs Adam Tooze cobbles together, none of which forms a coherent picture of an serious economic outlook but just baseless speculation and wishful pseudo economic underpinning of a distorted western mainstream. To put it mildly Adam Tooze is out of touch with macroeconomic reality. If you want to learn some facts about Ukraine's war economy and its future path consult interviews and papers by non-mainstream economists like Michael Hudson et al. This post is a piece of meaningless junk and a worthwhile textbook contribution to bolster the bad reputation of mainstream economists
Er... You do realize that the GDP stabilization is simply the result of that external financing, it's a chicken and egg situation. Money flows in, is spent, mostly on services, and thus produces a stabilization of GDP.
Instead of being funds to increase commodity production and developing infrastructure, which in turn would be a dead end given the war torn environment where there would be no demand for any increased supply - except the military complex of course
I am more about confused accounting identity - the financing can go anywhere, pretty much, but one has to be clear that "real" GDP should be counted ex that funding.
Hi AT. Great post, really interesting. I recently read Wages of Destruction and note your comments on macro aggregates as a poor guide to the performance of a war economy, nevertheless Ukraine’s budget and fx constraints were and are real. It’s position seems similar to Britain in 1940-41. Other similarities are the new capital investment that will be producing armaments next year, and the final shares of GDP of military expenditure.