Ukrainian debt – Cancel it or winter will be a killer

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Winter is coming, and it will be deadly because the war in Ukraine will not be over by Christmas. While Putin may not have anticipated that the war, or the so-called “special operation”, in Ukraine would last beyond March, the decision to strike in late February is now working to his advantage.

Ukrainian winters are not mild. One can survive short stays outside, covered in a warm coat, but a return to the warmth of a home is a must. With Ukraine experiencing a shortage of gas and other fuels to heat its home, as well as reeling from the damage suffered during the Russian offensive earlier this year, the outlook for the coming months is bright. announce dark.

The February-March Russian offensive aimed to eliminate all power plants capable of providing heat to homes. The factory in Chernihiv, a regional capital northeast of Kyiv with a population of 300,000 people, was dismantled on 3rd of March leaving the houses without heating or electricity. While Ukraine has had four months of respite to deal with the damage and around £2million has been earmarked for reconstruction, this may be wasted as fuel supplies to these and other stations become the main problem.

Liquid propane gas, scorned as the future of the EU is not an option at the moment. As Western states rush to complete the construction of liquid gas processing facilities, Ukraine lacks those to meet the meagerest of demands.


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The British owner will naturally turn to solid fuels, from peat to coal to wood, as a solution. Indeed, this approach, no matter how crippling the environment, may be the only way for Ukrainians living in houses, but what about the rest. Those of hospitals, nurseries, orphanages, retirement homes and apartments? Life will be difficult if possible.

One solution for Ukraine could be to rely on reverse flows from Central and Western European states that still buy gas from Russia. This approach was adopted by Ukraine in 2014. Ukraine lost Crimea and parts of Donetsk and Luhansk regions to Russian aggression. However, this move comes with an added cost of market value plus reverse transportation on top of whatever Western speculators will add to make a quick buck.

There is also the fact that Russia has no interest in seeing Ukraine and, above all, that the Ukrainians survive. The torture and massacre in Bucha, Borodyanka and Trostianets, as well as the senseless killing of immobile prisoners of war in Olenivka have already shown this. To that end, Russia has already made statements that threaten supplies to Russia’s “western partners” if they wish to reverse the flow back to Ukraine. However, the oil state is unlikely to cut supply and that is just a substantial cash flow.

Even if gas reversal to Ukraine is possible, this financially crippling plan may not be viable for Ukraine’s beleaguered budget. To date, the country has a budget deficit of 41 billion pounds. While to you and me it might seem like money to be spent on a dodgy track and trace app, to Ukraine it’s the lifeline that keeps the country in the world. of the living.

In July, national gas company Naftogaz asked for £3 billion to cover the cost of the next heating season. Even with an anemic and hemorrhagic budget, it is possible to raise the funds, but it may be in vain. World prices are expected to rise and Ukraine will find itself in the cold with more debt. The estimated real value of the gas needed to heat the country during the winter is 12 to 14 billion pounds.

There is a solution that is not expressed.

The Paris Club has agreed to suspend debt repayment until 2023, but with the country’s credit rating dropping to a negative outlook, additional debt at higher rates remains the only option to feed its people and heat its homes. hospitals. At the same time, Ukraine continues to fight unimaginable evil, shielding Europe from Russian aggression while paying through the nose for bullets, food and the ever-escalating cost of maintaining other lenders’ debt. .

Cancellation, rather than freezing or restructuring of debt, is the only way for Ukraine to deal with the invasion and preserve the lives of the civilian population.

The collective West has the financial capacity to do so, whether through the action of individual lenders or through a common relief fund that would repay Ukrainian liabilities on their behalf. Any further delay would put additional pressure on Ukraine’s beleaguered economy, divert funds immediately needed for humanitarian aid and prevent Ukraine from saving the lives of its people in the dark and cold winter.

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