How can Ukraine’s economy move forward post-war?

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It can be difficult to imagine eastern Europe without the Russia-Ukraine war. After nearly three years of fighting, there are many unknowns regarding when and how the conflict may end.

What is certain is that whatever Ukraine’s future looks like post-war, the process of rebuilding its economy will be tricky. Issues such as labour shortages and supply chain damage will likely persist long after fighting stops. 

Take Olteya, a Ukrainian footwear business. The company owns a factory in Zhytomyr, but is struggling to stay afloat with an exodus of male employees. 

“A lack of staff makes it hard to focus on exports,” Olteya founder Vita Korovina told Euronews. “We don’t see the point because we can’t plan ahead. For example, if we take summer orders for winter shoes, there are too many risks. We might not deliver on time.”

The factory is currently staffed with women and a few remaining male employees. Korovina said her “biggest fear” is that she’ll have to close production if these men are taken to the military. 

The employee shortage remains one of Ukraine’s most pressing economic issues. The country has mandatory conscription for men starting at 25 years old, which has led many to join the military. Some have also fled the country despite a travel ban for men ages 18 to 60.

Sultan Barakat, a public policy professor at Hamad Bin Khalifa University, told Euronews the war has created a “brain drain” in Ukraine, with skilled professionals leaving to work abroad. 

He said these workers are being replaced with foreign consultants in key industries and the government. This lessens the impact of employee shortages, but it also siphons money out of Ukraine’s economy to the consultants’ home countries. 

Another issue facing the Ukrainian economy is exports. Although the EU lifted most restrictions on importing Ukrainian products, it later reintroduced tariffs for certain commodities, including eggs. 

Some countries such as Slovakia and Poland have also implemented further restrictions on Ukrainian exports to protect their economies. Even then, it can be difficult for businesses to get products across the border of Ukraine. 

“Blocked ports make exporting difficult and shipping through the western border is very expensive and slow also due to Polish farmers’ frequent protests,” Korovina explained. 

The extent to which a country’s economy is dependent on other nations is a crucial part of the post-war transition, Barakat said. For example, an overreliance on foreign aid can prevent governments from making investments into their own infrastructures. 

This is because aid is typically offered on a scale of months. As there’s no guarantee this support will be renewed, it can’t be used to fully fund long-term projects.

“We plotted the assistance to a number of countries, and it was a zigzag, going up and down,” Barakat explained. “That doesn’t allow you, as the government of these countries, to make any serious long-term decisions or invest. You have to borrow money, and that money comes at a very high price.”

For Ukraine to successfully rebuild, Barakat added money planned for reconstruction should be “consistent and predictable.”

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From the perspective of someone living in Ukraine, Korovina said foreign aid will be important for supporting certain industries post-war, including the information technology and renewable energy fields. Before the economy can grow, Ukrainians will first need to rebuild their communities with any financial resources available. 

“Homes, factories, and infrastructure need urgent repairs. I think it will require a lot of help from abroad,” she added. 

But for Barakat, Ukraine’s situation is particularly difficult due to its status as a “buffer zone.”

“For the next few decades, it will become unlikely that anyone will invest serious public money in an area that is a huge risk and is being treated as a firewall between Russia and the West,” he explained. 

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It’s unclear what a post-war scenario will actually look like for Ukraine. At the moment, Russia occupies large portions of the country’s eastern territories, including Crimea — an industrial powerhouse.

This situation is further complicated by US President Joe Biden recently authorising the use of US long-range missiles by Ukraine against Russia. The decision comes just months before the presidential inauguration of Donald Trump, who said he’d settle the conflict in “24 hours” at a CNN town hall in May 2023. 

However the war may eventually end, Ukraine will need to rebuild afterwards. While many disagree on what exactly will need to be done, academics and Ukrainians alike see the road ahead as a difficult one. 

“There’s the psychological interpretation of ‘post-war’ as the end of all problems. But in reality, it’s the beginning of a lot of serious problems,” Barakat said. 

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“Very rarely does the post-war mean going back to what existed before the war.”