Ukraine’s finance and energy sectors have stood up to Russia, but they need help

As the war in Ukraine approaches its one-year mark, headlines are dominated by Ukraine’s efforts to secure military supplies and more modern arms from allies. With Germany finally signalling that it will not block any country from sending Leopard 3 battle tanks to Ukraine, there suddenly seems to be movement on that issue.

Yet equally important are Ukraine’s concurrent efforts to secure funds to rebuild the country. At Davos last week, the country stepped up its efforts to secure financial support from business leaders—despite widespread Western support, the funds needed are eye-watering. Last year, a joint report by Ukraine and the World Bank estimated the cost of reconstruction at $349 billion—a number which is rising fast as the war drags on. Ukrainian President Volodymyr Zelensky has estimated that more than $1 trillion will be needed to rebuild the country.

The pressure from Kyiv to receive binding promises of funding for rebuilding efforts is understandable, though reconstruction can naturally only begin in earnest once the conflict comes to an end. While the path to peace is not yet in sight, Ukraine’s resilience across various key sectors in the face of the invasion has been remarkable – and should encourage the international community to step up its support for the embattled country.

Ukraine’s financial system is still standing

Consider that, despite an invasion that has displaced millions of people, Ukraine’s financial system remains stable – there has been no run on any financial institution, and in some cases savings deposits have even increased. According to an assessment by National Bank of Ukraine, “the financial sector continues to operate without interruption: payments are made on time, and clients have full access to their funds”.

Not only has Ukraine’s financial system had to weather a ground invasion and devastating missile strikes targeting critical infrastructure, it has also had to contend with sustained cyber-attacks that have targeted banks, online banking services and government websites. Much like the missile attacks, the goal seems to be to wear out Ukraine’s morale by seeking to cripple Ukraine’s online infrastructure and plunge the population into despair.

Yet these attacks have faltered in the face of the remarkable resilience of the Ukrainian people. Not only is Ukraine’s financial system still standing, but, in fact, almost all of Ukraine’s banks have continued operations during the war. Thanks to the strength of its financial system, Ukraine continues to receive tax income, make social security payments, and administer international assistance. Consequently, the population’s confidence in the financial system remains unbroken.

Keeping the lights on

Aside from the financial system, the sustained attacks on Ukraine’s power grid highlight the remarkable resilience of Ukraine’s energy infrastructure. Russia’s military has fired billions of euros’ worth of missiles at Ukrainian power installations, but has so far caused only relatively minor blackouts given the scale of the indiscriminate attacks. That’s even more remarkable considering that Ukraine has lost around 50 percent of its electricity capacity.

As it turned out, Ukrenergo, Ukraine’s state-owned electricity company, was well-prepared for Russia’s attacks against the country’s infrastructure and prepared by stockpiling crucial spare parts for years—prescient planning which now allows for speedy repairs of damaged power plants and electrical equipment.

Ukraine’s power engineers have been forced to become flexible, and to come up with ingenious solutions to the country’s energy crisis, rerouting power to compensate for the loss of a transmission or generation station. “Even with catastrophic damage […] we are still able to reconnect and deliver energy,” explained Volodymyr Kudrytskyi, the chairman of state electricity firm Ukrenergo. “We can switch on the lights for 80 to 90 percent of Ukrainians within a day of an attack”.

As Russia’s assault on Ukraine’s energy grid continues, local communities must nonetheless be provided with the resources to ensure that the lights and heating stay on this winter. This is best achieved by making them autonomous from the grid, which not only shields them from the effects of bombardments, but also reduces the load the grid needs to carry. Naturally, international assistance is needed to sustain these efforts. Ukraine does not have the capacity to go it alone. Earlier this month, for instance, USAID announced that it would provide $125 million in funding to support Ukraine’s energy and utility infrastructure.

International assistance has not been limited to governments or global NGOs, however. As Ukraine’s leaders in Davos have emphasised, business leaders and companies can play a crucial part in helping to ensure the country’s continued resistance against Russia. A case in point is solar energy firm TIU Canada, run by Canadian-Ukrainian entrepreneur and CEO Michael Yurkovich. In order to support the resilience of Ukraine’s power grid, TIU Canada, which operates three solar stations in the country, has been donating generators to Ukrainians affected by the electricity blackouts. “While our solar stations continue operating during the war,” Yurkovich explained, “the attacks on the energy infrastructure are sometimes preventing our electricity from getting to the people […] the best way to help Ukrainians now is to fill the gap by providing small generators to produce electricity”.

Going the extra mile

The fact that Ukraine’s finance and energy sectors are holding up surprisingly well is an encouraging sign, as is the fierce resistance which the Ukrainian military continues to put up. In order to emerge victorious from the war, however, Ukraine will need continued international help, including military aid such as the heavy tanks that Ukrainian military officials have lobbied their allies for. Western nations have so far been reluctant to provide tanks to Ukraine but, following the UK’s recent pledge to send 14 tanks to Ukraine, there are signs this may be changing. Equally crucial will be the significant financial assistance which Ukraine will need to rebuild its shattered infrastructure once the war is over. The country has shown incredible resilience, as proven by the fact that its banks and power grid are still operational—Ukraine’s Western allies must repay this strength with ever-greater support.

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