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Huge Economic Attack Against Russia – Ukraine’s Fate

What will be Ukraine’s fate? The costs to the Ukrainian economy of the Russian invasion are enormous. The World Bank warns that by 2022 the country’s GDP could shrink to 45 percent. According to the Kyiv School of Economics, Russian aggression’s damage to direct infrastructure is currently about $80 billion. And the total cost of rebuilding the country is likely to be much higher. The former governor of Ukraine issued a warning that it is already approaching $600 billion and may exceed $ trillion.

Despite the ever-increasing costs of the invasion – not only for Ukraine but also for Russia; The Russian president does not seem ready for de-escalation. On April 12, Putin said peace talks reached a “dead end.” He said he wouldn’t end his so-called “special military operation” in Ukraine until he achieved all his goals. Three days later, Russia launched a new round of rocket attacks on the Ukrainian capital, Kyiv. For the first time since withdrawing its troops from the region. Since then, attacks in Kharkiv intensified; Russian soldiers are preparing for a new attack on the Donbas region. Putin decided to destroy all the cities in Ukraine that resisted his invasion. He cares little about the lives of civilians and the economic future of the country he seems to be trying to save.

The Fate of Ukraine and Russia

It seems that an even worse fate awaits Mariupol now in the hands of Russia. The population of the strategic port city was always in favor of Moscow. Even after the start of the 2014 war, It continued to vote for parties close to Russia. However, although they were not enthusiastic about Ukraine gradually moving away from Russia, Mariupol residents never wanted to conduct a Russian military operation in the city.

After nearly two months of indiscriminate bombing and heavy fighting, Mariupol is in ruins. Thousand people died, and almost no infrastructure was left to survive after the battle. All Ukrainians living in Ukrainian-controlled and Russian-occupied territories will continue to have the devastating economic impact of Russian aggression for a very long time. The Western economic war against Russia will undoubtedly continue, not limited to a significant change in Russian policy or leadership – and will complicate these financial challenges.

However, the West can punish Russia economically for its current aggression. Also, ensure that it compensates for its damage to Ukraine and the economy. In order to achieve this, Western countries must seize Russian assets and compile a book of costs incurred from the Ukrainian invasion, both direct and indirect damage. Of course, Moscow will fight any such effort with a nail-biter, and it has experience. For example, under existing law, Moscow successfully avoided paying more than $50 billion in compensation to former shareholders of its once-leading oil company Yukos, which it nationalized in 2004.

Conclusion

In addition, Ukraine’s foreign debts must review on Russia’s balance sheet; To expose the economic bleeding in the country. These debts should not stay there forever. However, when Moscow aspires to a dirty default, despite the low debt-to-GDP ratio, which makes them responsible for Moscow, At least for now – Moscow may encourage to make concessions. While all these measures will implement, restoring Ukraine will require investment and support from the West. Therefore, besides Russia paying for what it did, Western countries should also develop a “Marshall Plan” for Ukraine.

Marshall’s first plan revived the European economy after World War II and created lucrative investment opportunities for American firms, finally, for new capital markets. The goal of the Marshal of Ukraine will do the same. Investors damaged by Ukraine’s crisis may get advantageous terms. More countries can join Poland in offering swap lines in Ukrainian currency. State-sponsored long-term investment programs can also be established; they will receive support from official development financial institutions.

The West is assuredly waging an economic war contra Russia. However, there is a legitimate concern that some countries, including the US, are still not fully committed to this “war effort.” If Ukraine wants to withstand this invasion and rebuild its economy, the West must do everything to help Ukraine and weaken Russia – at least economically. To this end, a new “financial NATO” must be formed to help minimize the cost of imposing Russian sanctions on Ukraine’s allies.

None of these steps will resume growth and stop the constant pain caused by the Russian war. However, they can ensure that the Western economic war against Russia will cause maximum damage to the Kremlin and provide the necessary assistance to the Ukrainians.

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