With the frustration of hopes raised by the summer offensive, it became clear that Ukraine is locked in an attritional struggle for survival. Ukraine has taught us how misleading macroeconomic aggregates can be as indicators of fighting power. But its remarkable battlefield success should not obscure the daunting challenge Ukraine faces.
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.
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.
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.
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.
Perhaps Ukraine should negotiate
"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.
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.
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.
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.