“Thrive in War”
European think tank warns against state fragmentation and a criminalized war economy in event of a long war in Ukraine.
BERLIN/KIEV (On report) – A current statement from the European Council on Foreign Relations (ECFR), a think tank headquartered in Berlin, warns that Ukraine may succumb to state fragmentation and a “criminalized war economy.” The statement contests key demands of the strategy paper, entitled „Survive and Thrive,” also recently published by the ECFR, which sets the tone for a “long war” in Ukraine. It suggests investing more than €100 billion in the complete replacement of Ukrainian weaponry stocks with state-of-the-art Western-designed weapons. In addition, Ukraine should be rapidly integrated into the European single market. In contrast, the authors of the current statement raise the objection that, in this case, widespread impoverishment in Ukraine would be expected. The poverty rate in the country is already soaring to 40 percent this year and presumably to 58 percent next year, while Western states are egging Kiev on in the war, while not even beginning to cover the huge state deficit that could lead to collapse.
“Many Years of War”
The debate centers around the „Survive and Thrive” strategy paper on the Ukraine war, recently published by the European Council on Foreign Relations (ECFR), a think tank headquartered in Berlin and networked across seven European capitals. The authors anticipate the war to last many years, even if the violence may level off, possibly even subside at times.[1] According to the strategy paper, it is thus necessary to demonstrate that Ukraine “can develop, and even thrive” under the conditions of war. The authors draw up a plan with four key elements, comprising military assistance and security assurances, economic support and steps to secure Ukraine’s energy supply. The plan should also convey to the EU public, that it is “necessary to consolidate European unity despite the war fatigue.” It would also allow the EU “to take a leading role on supporting Ukraine”– in place of the United States – the authors explain.
100 Billion for Ukraine’s Military
The ECFR strategy paper proposes, among other things, massive EU military support for Ukraine. For example, the Union should work intensively to upgrade the Ukrainian armed forces’ weaponry. It must be converted to achieve state-of-the-art Western-designed weaponry in line with NATO standards. The replacement of older Soviet-era weapons, alone, will cost more than €100 billion.[2] The proposal that the EU, in particular, take on this task, de facto amounts to the allocation of a large portion of the procurement contracts to European arms manufacturers. The ECFR strategy paper also proposes that in the future large numbers of European military “advisers” be “embedded” with the Ukrainian armed forces for training and advisory purposes. In addition to military proposals, the authors of the ECFR strategy paper, call for Ukraine’s rapid accession to the EU’s single market, of course, without involvement in the accompanying decision-making structures. And last but not least, the authors call for the integration of the Ukrainian energy structures into those of the EU, thus “the Ukrainian energy market should be reformed.”
State Fragmentation and War Economy
The strategy paper is being sharply criticized, even from within the ECFR itself. On the one hand, according to a statement, published yesterday, it is unacceptable to unconditionally orient toward a “long war.” Although presently it may well be the “most likely scenario,” the more it is repeated, the greater the chances are of it becoming a “self-fulfilling prophecy.”[3] The particular risk of a “long war” is that the conflict takes on the characteristics of “intractable conflicts” to become a “forever war” that can be observed elsewhere in the world. Such conflicts are typified by “state fragmentation,” a “criminalized war economy,” and a range of state and non-state actors increasingly acquiring a “continuing economic and/or political interest in the reproduction of violence.” It should be noted that “economic liberalization,” can facilitate such a development, where both “income and production fall dramatically,” and where individuals can only survive through participation in murderous, warlike violence.
Minus Five Billion per Month
Exactly these living conditions are currently threatening to develop from the conditions of the war in Ukraine, as was pointed out in yesterday’s ECFR statement. The socio-economic situation is disastrous. According to a comprehensive study jointly published recently by the World Bank, along with the EU Commission, and the Ukrainian government, Ukraine’s economic output has so badly slumped since the beginning of the war, that its volume this year is expected to be a third less than last year’s.[4] Severe poverty – less than US $5.50/person/day – has been relatively rare in the country, according to the study. However, it now threatens to skyrocket to 21 percent of the population. Inflation – currently at 23 percent, possibly 30 percent, by the end of the year – will push this year’s overall poverty rate up to about 40 percent – and to 58 percent next year. 18 million people are dependent on humanitarian aid. In spite of the manifold military costs with drastically failing state revenues, the government in Kiev is trying to meet the costs of the necessary social, humanitarian, and medical payments. Kiev’s budget shortfalls could increase to nearly US $28.8 billion in the second semester of 2022.[5]
Destabilizing the Home Front
This is in drastic contrast to the financial support Western countries are prepared to render. As the economic historian Adam Tooze noted, so far, Kiev has been receiving US $1.5 billion a month in monetary aid. Pledges extend to the end of 2022, with no firm commitments for 2023.[6] The EU signed up to a notional total of €9 billion in budgetary support in May, but only about €1 billion has been disbursed. Without a dramatic step up in assistance, writes Tooze, Kiev will be in danger of “continuing the war at full intensity” – like western countries want – and “risking a social and economic crisis that will destabilize the home front.” This would be a situation wherein “state fragmentation,” and a “criminalized war economy,” would threaten, as warned in yesterday’s ECFR statement.[7]
Additional Profits
That ECFR statement points also to the fact that Ukraine’s rapid accession to the EU single market, supported by the “Survive and Thrive” strategy paper, would under the current circumstances have disastrous consequences. The reason is simple: It is hopeless for the Ukrainian economy, in its current condition, to reach a firm footing with the superior industries of Western Europe. If Ukrainian enterprises are abruptly submitted to competition with West European companies on a leveled single market, the Ukrainian economy would soon completely collapse. On the other hand, Western European enterprises – particularly those from Germany – can hope for attractive additional profits.
[1], [2] Piotr Buras, Marie Dumoulin, Gustav Gressel, Jeremy Shapiro: Survive and thrive: A European plan to support Ukraine in the long war against Russia. ecfr.eu 09.09.2022.
[3] Luke Cooper, Mary Kaldor: In Europe’s gift: How to avoid a Ukraine ‘forever war’. ecfr.eu 26.09.2022.
[4] World Bank, Government of Ukraine, European Commission: Ukraine: Rapid Damage and Needs Assessment. August 2022.
[5], [6] Adam Tooze: Success On The Battlefield Whilst The Pressure Mounts On Ukraine’s Home Front. adamtooze.com 10.09.2022.
[7] Luke Cooper, Mary Kaldor: In Europe’s gift: How to avoid a Ukraine ‘forever war’. ecfr.eu 26.09.2022.
