Russia's pull-back from Kherson is part of new plan to exhaust Ukraine

Russia's new plan: Ukraine will not make it through the winter, it will be exhausted

Kyiv is running out of resources and money. The assistance from the West is not going to last forever. The manoeuvre of the Armed Forces of the Russian Federation to take advantageous positions along the Dnieper switches the special operation to the purpose of Ukraine's exhaustion.

Ukraine's Minister of Economy Yulia Sviridenko went to Washington for negotiations. She said on Wednesday that rolling blackouts due to Russia's strikes could lead to a larger contraction in GDP in 2022 than was previously forecast, Reuters reports.

According to Sviridenko, a decline of 39 percent is expected instead of 35 percent.

"The problem is that companies are not working. If power outages continue over the next few weeks, GDP could fall even more," she said.

According to Ukraine's Ministry of Economy, the production volume in October fell by 39 percent after it had shrunk by 35 percent from August to September, Reuters said.

Sviridenko assured that the Ukrainian government was cutting expenses by reducing state employees and privatizing small state-owned enterprises. Kyiv would still need foreign assistance, she added.

Sviridenko also tried to negotiate in the United States for the supplies of electrical equipment, such as transformers, power generators and even LED light bulbs that could save electricity. US officials urged the Ukrainian government to carry out reforms to establish transparent economic rules.

According to Ukrainian President Volodymyr Zelensky, Kyiv needs $38 billion to cover an expected budget deficit next year and another $17 billion to begin urgent infrastructure repairs.

The West gets tired of funding Ukraine non-stop

It appears that the West is reluctant to fund Ukraine. The EU pledged to provide $9 billion in loans in 2022, but three billion will never be sent. The European Central Bank will stop the printing press in spring.

Hungary refused to finance the aid package worth 18 billion for 2023. There will only be loans from the EU budget. The IMF promises an injection of $10 billion over the next two years. These are loans as well.

The United States primarily supports Ukraine with arms supplies. In September, nearly all Republicans in the House of Representatives voted against a bill to allocate $12 billion for the Ukrainian budget. House Minority Leader Kevin McCarthy warned that Republicans would refuse to issue carte blanche to Ukraine should they take control of the House.

Kyiv will not have money for war

The underfunding of the Ukrainian economy will trigger hyperinflation in Ukraine. The national bank of Ukraine issued an additional 15 billion hryvnia in early September by buying government bonds, having thereby undermined the value of the national currency, the hryvnia. Since the beginning of the special operation, the bank issued 300 billion, which caused the exchange rate to grow to almost 50 hryvnia per dollar.

In September, the inflation rate in Ukraine rose to almost 25 percent. Given the high cost, it will be even more difficult for Kyiv to stay afloat, not to mention successful military operations.

Russia decided to pull back its troops from Kherson. Ukraine will now have to maintain the city, which automatically increases the country's budget spending.

It is worthy of note that Ukraine's public debt today amounts to UAH 6,406 billion (of which 78.7 percent accounts for external debt), whereas Ukraine's public debt to GDP makes up 100.1 percent. Debt servicing also becomes more expensive due to the growth of the dollar.

Kyiv has no chance to obtain the frozen Russian assets, because Russia froze an almost equivalent amount of Western assets.

In addition, the support for Ukrainian refugees has been declining throughout the EU. It is not ruled out that many will eventually decide to go back home. This will create additional pressure on the labor market, unemployment will rise.

The new phase of the special operation: Ukraine's exhaustion

The manoeuvre of the Russian Armed Forces to take advantageous positions along the Dnieper takes the confrontation with Ukraine to a new phase. Russia wants Ukraine exhausted.

Winter is near. Russia has more than enough resources to make it through the winter smoothly.

Ukraine has no resources. Ukraine only has assistance from the West, but this is not going to last forever either.

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Author`s name Lyuba Lulko
Editor Dmitry Sudakov