On resilience – Benjamin Bidder and Michael Kröger in Der Spiegel:
‘When Putin launched his invasion one year ago, his initial aim was the rapid takeover of Kyiv. But when that proved overly ambitious, and his other war aims likewise began fading as the progress of his military ground to a halt, he began targeting Ukraine’s infrastructure. Starting last fall, hundreds of Russian missiles and kamikaze drones began pounding the Ukrainian power grid, destroying powerplants and substations. At the end of December, 90 percent of the 700,000 residents of Lviv, to name one example, no longer had power. District heating was frequently disrupted in cities around Ukraine, and even in the capital Kyiv, running water was often unavailable. The consequences of the Russian onslaught could be seen from outer space: Nighttime photos showed that the lights in Ukraine were slowly going out.’
‘In just the last three months of 2022, the country bought around half a million emergency power generators from abroad, along with solar-powered blocks of batteries from companies like EcoFlow and Bluetti. Taken together, the power generating devices produce an amount of energy equivalent to a nuclear reactor. And strategically, they are even more valuable, since Russia cannot destroy them in a single strike or conquer them in a ground attack.’
‘But it’s not easy. Ukraine’s economic output plunged dramatically last year. In addition to millions of people leaving the country, the most important steel factories in eastern Ukraine have either been destroyed or are now under Russian occupation. Only the IT sector continues to grow, even during 2022, with export revenues climbing to $7.3 billion, an increase of 6 percent. When calculated in dollars, tax payments from tech companies to the Ukrainian state rose by 16 percent.’
‘The war has mobilized the entirety of Ukrainian civil society, including the economy. According to a survey conducted by the international consulting giant Deloitte, more than half of Ukrainians are donating to the military. Furthermore, 56 percent of companies in Ukraine send money to the troops, while 40 percent provide in-kind donations, according to the European Business Association (EBA). Putin had been hoping to decimate the economy of his neighboring country with targeted strikes on its most vulnerable spots, but it looks as though he may have underestimated the Ukrainian people.
People like Yuri Yakovlev, for example. Right at the beginning of the invasion, the Russians devastated the 61-year-old’s lifework, advancing on the small airfield near Kyiv that Yakovlev’s company used. Called Aeroprakt, the firm builds ultralight aircraft, producing nine of them per month for customers around the world – before the war. The hangar was fired on by the Russians and the roof collapsed. It was only with a bit of luck and derring-do that he was he able to salvage important tools and blueprints. A short time later, the Russians finished the job, essentially pulverizing what was left, says Yakovlev. He initially brought the material he had salvaged to his company’s Polish branch so that he could at least continue maintaining and repairing the aircraft of his Western customers.’
‘But there are plenty of tales of heroism at the opposite end of the pecking order as well – such as the repair crews working for the state energy supplier Ukrenergo. After months of constant work, they have amassed so much experience that they are now able to repair damaged facilities "four times quicker than last fall," as the head of Ukrenergo says. Indeed, he adds, they are now as fast at repairing as the Russians are at destroying, "and sometimes even faster."
The Ukrainians have managed to put the brakes on their country’s economic freefall. Last summer, the World Bank forecast that Ukraine's gross domestic product would collapse by 45.1 percent in 2022. In actuality, the drop is likely to have been around 30 percent by the end of last year – which is still catastrophic. But experts with the German Economic Team, which has provided consulting services to Ukraine on behalf of the government in Berlin for many years, believe that 2023 may see slight economic growth of 1.8 percent.
Will that be enough? Steel production in Ukraine, which used to be one of the backbones of the country’s economy, has plunged by 85 percent. Because Russian troops have occupied steel factories in eastern Ukraine, in addition to destroying the vast Azovstal steel plant in Mariupol, nationwide production fell from 60,000 tons per day to just 10,000 tons. Unemployment has tripled to an estimated 30 percent, despite the fact that hundreds of thousands of men have been drafted into the military since the beginning of the war.’
‘And yet, members of the international community haven’t been particularly assiduous when it comes to coughing up the money they have pledged. In 2022, 64 billion euros were promised to Ukraine, but thus far, only 31 billion euros of that have actually been paid out, according to the Kiel Institute for the World Economy.’
‘"There are initiatives to integrate Ukraine into EU supply chains," says Michael Harms, director of the German Eastern Business Association. But doing so is frequently more challenging than many might think, he says, since some products may not adhere to EU standards or aren’t yet competitive for other reasons. Sometimes, it just comes down to bureaucracy. There are, for example, agricultural operations in Ukraine that produce and liquify biofuel – and they have potential customers in the EU lined up to buy it. But they lack the necessary certification.
Economists at the Kyiv School of Economics have calculated that war damage now amounts to $138 billion – and rising every day. "Reconstruction will never work without private capital," says economist Robert Kirchner, the deputy head of the German Economic Team. But what kind of investor would willingly send money into a country that is being threated with annihilation by its neighbor Russia? Still, German chemicals and pharmaceuticals multinational Bayer recently announced that it was sticking to plans to invest 30 million euros in a seed plant. Factories belonging to Western automobile parts suppliers have also started up again. To attract new investments, the European Bank for Reconstruction and Development and the World Bank subsidiary Multilateral Investment Guarantee Agency (MIGA) have announced plans aimed at mitigating the risks of investing in Ukraine.’
‘For Ukrainian traders, ensuring that their stores are continuously stocked has become a patriotic duty. Many also offer passersby the opportunity to come inside to warm up or charge their mobile phones and laptops. Some shops have even set up office space, available to anybody who needs it. "The supermarkets," says the head of the country’s retail association, "are now centers of our invincibility."’
Read the article here.
Necessity is the mother of many things, also of Zivilcourage (moral courage).
That’s not to say that the solidarity here on display isn’t admirable.
And also, I’d rather send money to the army than go myself to the front.
States are as untrustworthy as civilians, they promise money, the money never arrives. Complaints appear to be useless.
And the reconstruction after the war will be source of richness, for the happy few I’m afraid.