Opinion: US can’t abandon Ukraine’s economy — especially when we’re winning the battle

Opinion by Samantha Power

(CNN) — Vladimir Putin has tried to destroy Ukraine in two ways — militarily and economically.

Much has rightly been made of how — with US and European military support—Ukraine’s soldiers have defied the odds and not only fended off attacks by a country more than three times its size, but have already taken back over half of the territory Russia seized.

Far less attention has been paid to the remarkable story of Ukraine’s economic survival, which now hangs in the balance as Congress debates whether to sustain critical economic support. Without this support, Putin can win the war without Russian forces firing another shot.

When Putin launched his full-scale invasion of Ukraine in February 2022, he — and most of the world — thought he would succeed within a week or two. When Ukraine’s military quickly proved him wrong, he tried another assault, this time on Ukraine’s economy.

He attempted to sabotage Ukrainian industry by attacking the electrical grid and bombing a key steel production facility. He tried to destroy the agricultural sector — the largest export sector of Ukraine’s economy — by blowing up grain silos and putting landmines in fields to prevent the farming of arable land. And he shut off critical Black Sea trade routes and bombarded Ukraine’s ports to try to keep them from exporting their goods to the world.

But the fact is, in the fight to destroy Ukraine’s economy, Putin is losing ground.
During the first year of the war, Russia’s attacks caused Ukraine’s economy to contract by nearly a third. Today, thanks to the resilience of the Ukrainian people and the united front of support from partners around the world, businesses are bouncing back, foreign investment is returning and alternative export routes are growing. The economy has not only stopped the freefall from the first year of the war, but the World Bank and IMF both project that — even as the Kremlin’s attacks continue — Ukraine’s economy will grow this year. Given the relentlessness of Putin’s missile and drone assaults, this is a staggering achievement.

In response to the deep contraction of Ukraine’s economy that resulted from Putin’s invasion, the United States and our partners have been injecting critical budget support to help the Ukrainian government continue providing basic services for citizens like health care, education and first response. But even with Russian missiles raining down on Ukrainian cities, the government and people are reducing their dependence on that aid by spurring economic growth and striving towards self sufficiency.

Thanks to congressional funding disbursed by USAID, which is America’s international development arm, we’ve supported Ukrainian companies like TANA, a manufacturer in eastern Ukraine that produces materials for various mechanical, electrical, and chemical products. After Putin’s attacks ground TANA’s business to a halt, USAID helped it relocate to a safer area and acquire equipment so it could resume operations.

Today, TANA has found a new niche developing window seals that are badly needed to repair damaged windows from Russia’s constant shelling. USAID has supported over 20,000 small and medium sized enterprises like TANA to withstand Russia’s brutal bombardments — businesses that employ millions of people and pay taxes that go directly to supporting the country’s self defense.

After investors pulled hundreds of millions of dollars from Ukraine in the first months of the war, we also started working with the Ukrainian government to match foreign financiers with Ukrainian companies looking to attract funds. In the first half of 2023, $2.5 billion in foreign direct investment entered the country. And this is poised to grow substantially, as newly launched wartime insurance markets help investors manage risks.

At the same time, we’re helping to create new export routes so that Putin’s attacks in the Black Sea can’t seal off Ukraine’s economy from the world. These efforts are particularly critical for the agricultural sector that ships food to hungry communities in Africa and beyond, helping to keep prices stable amid the global food crisis.

USAID has worked with private sector partners and other donors to build up alternative transport routes — via road, via rail, via river ports. We are providing equipment like grain elevators that speeds up the process of getting grain onto transport. We are helping Ukraine create and scale an app called E-Queue that reduces border wait times for trucks entering the EU from as long as two days to just two hours.

This month, thanks to the buildup of these alternate routes and Ukraine’s success in establishing a humanitarian corridor in the Black Sea, total food exports nearly reached the average levels they were at before Putin’s full-scale invasion began. And we are helping upgrade border crossing points to export more grain in years to come. Improvements to the first nine border crossing points will increase grain export capacity by an estimated 2.5 million metric tons, meaning our one-time investment of $115 million should boost exports by at least $425 million a year. As new export routes like these expand, the World Bank predicts that Ukraine’s total exports will grow by 15% next year, and 30% the year after that.

And to keep corruption from sapping resources that should be going to the Ukrainian people, we’re conducting an unprecedented level of oversight on our budgetary support — working with the World Bank to provide funds on a reimbursement basis, only after expenses have been verified; enlisting Deloitte as a third party monitor; and working with KPMG to conduct a comprehensive audit of US assistance dollars, while also building Ukraine’s capacity to conduct its own audits through a partnership with the US Government Accountability Office.

We have also invested heavily in strengthening independent anti-corruption institutions, media, and civil society to help root out corruption more broadly—vital not only to secure the integrity of our assistance, but also to give foreign companies more confidence that their investments will be secure. The Ukrainian government told USAID that it has saved nearly $9 billion, thanks to work we’ve done together since 2016 to build a more open, transparent, and competitive procurement system. And recently, with our support, Ukraine launched a new platform for whistleblowers to anonymously report corruption while staying protected against retaliation.

Without the additional resources President Joe Biden has requested from Congress, American economic support to the Ukrainian government will come to an end, and potentially so will the progress we are seeing.

And because we have leveraged our support, with State Department data showing that every dollar in economic and development assistance from the US has drawn in $2 more from other donors, a halt to our funding would likely cause billions of dollars of support from multilateral organizations and allies to dry up as well. A Ukrainian economic collapse would be every bit as devastating as the fall of Kyiv would have been in the early days of the war.

The US cannot surrender in the battle for Ukraine’s economy. Putin’s victory would be a danger to us all, and it makes no sense to give up on a strategy that is working. If we can continue our work, Ukraine will continue on its path toward self-sufficiency — and emerge from the conflict with a growing economy, one that is thoroughly integrated with its European neighbors and that offers Ukrainians the prosperous, democratic and independent future they deserve.

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