Ukrainian Debt – Cancel it or winter will be a killer

Winter is on the horizon, and it will be brutal as the war against Ukraine will not end by Christmas. While Putin may not have foreseen the war, or the so called, “special operation”, in Ukraine to last beyond March, the decision to strike in late February is now playing to his advantage.

Winters in Ukraine can be harsh. While one can survive a few hours outside while wearing a warm coat, it is not enough to return to your home. The outlook for the next months is grim as Ukraine faces a shortage in gas and other fuels to heat homes, as they also have to recover from the Russian offensive damage earlier in the year.

In February and March, the Russian offensive sought to eliminate all power stations that could provide heat to homes. The 3rd Russian offensive took out Chernihiv’s plant, a regional capital in the north-east of Kyiv that had a population of 300,000.rdMarch left many homes without heat and electricity. Ukraine had four months of relief to deal the damage, and around 2 million pounds had been set aside for reconstruction. However, it could prove futile, as fuel supplies to these and other stations become the main issue.

Liquid propane gas is not the future of the EU. While Western countries rush to build facilities to process liquid gas, the Ukrainians lack these facilities to meet the most basic of needs.


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The British homeowner will naturally look to solid fuels like wood, peat, coal, and coal as the solution. This is the only way to provide housing for the Ukrainians, even though it can be very harmful to the environment. But what about the rest of us? People in hospitals, nursing homes, orphanages, retirement communities, or flats?  If at all possible, life will be difficult.

One solution for Ukraine could be to rely upon reverse feeds from Central or Western European states that still purchase gas from Russia. In 2014, Ukraine tried this approach. Ukraine lost Crimea and some of the Donetsk-Luhansk regions to Russian aggression.  This move comes at an additional cost, as well as reverse transportation.

Russia is not interested in Ukraine and, more importantly, Ukrainians surviving. This has been demonstrated by the brutality and murder in Bucha, Borodyanka, and Trostianets as well as the mindless killing of immobile prisoners in war in Olenivka. To this end, the Russia has already made statements that threaten the supply of Russia’s “western partners” should they wish to reverse the feed back to Ukraine. However, it is unlikely that the petro-state will cut supply and it’s only substantial cashflow.

Even if reversing the gas to Ukraine is possible, this financially crippling scheme may not be viable for Ukraine’s beleaguered budget. The country currently has a deficit of 41 billion pounds in its budget. While this may seem like money you can spend on a questionable track & trace app, for Ukraine it is the lifeline which keeps the country alive in the world.

The state gas company Naftogaz asked for 3 billion pounds in July to pay for the heating season. It is possible to raise the funds even with the haemorrhaging and anaemic budgets, but it could all be in vain. Global prices are expected rise and Ukraine will find itself in debt. The real value of gas required to heat the country during winter is estimated at 12 to 14 trillion pounds.

One solution is missing.

The Paris Club has agreed to suspend debt repayment until 2023, but with the country’s credit rating dropping to one of a negative outlook, further debt at premium rates remains the only option to feed its people and heat its hospitals.  While Ukraine fights unimaginable evil and keeps Europe safe from Russian aggression, it continues to pay the price for bullets, food, and the ever-rising debt maintenance costs from other lenders.

Ukraine can only deal with the invasion and save lives by cancelling its debts, not freezing or restructuring them.

The collective West has the financial resources to do this, either through individual lenders or through a joint relief account that would repay the Ukrainian obligations. If Ukraine were to delay further, it would be under more pressure. It would divert funds that are urgently needed for humanitarian aid and stop Ukraine from saving its citizens’ lives during the cold and dark winter.