Ukrainian Economy at Risk From US Funding Cutoff

Ukrainian government salaries and other expenditures are at risk of collapsing and spreading to the rest of the economy as the United States pumps its brakes on aiding Kyiv.

According to The Wall Street Journal, U.S. Secretary of State Antony Blinken warned Senate Minority Leader Mitch McConnell, R-Ky., on Sept. 24 that the effects could be visible as early as the end of October.

Concerns have spiraled after a stopgap spending deal among the White House, Senate Democratic leadership, and House Republican leadership did not include previously floated billions in aid for Ukraine.

While most of the discussion surrounding aid has focused on the military, the Council on Foreign Relations estimated that between Jan. 24, 2022, and July 31, 2023, nearly 40% has been financial and humanitarian.

The U.S. and other Western countries help support the salaries of 150,000 Ukrainian civil servants and more than 500,000 teachers, professors, and school faculty, the Journal noted.

In addition, Western aid has proved vital in supporting other government expenses, such as healthcare, housing subsidies, and local law enforcement.

But the U.S. Congress, which has provided most of the aid, is split over whether that support should continue. The sentiment is felt in particular by House Republicans and some progressive Democrats.

Matt Miller, a spokesman for the U.S. Department of State, stressed in a Monday statement that the Biden administration was committed to finding ways to support Kyiv, both financially and militarily.

“They are going to be a neighbor of Russia in perpetuity; they need to have the economy that can support a security apparatus that can deter future Russian aggression,” Miller emphasized.

One Ukrainian official informed the Journal that Kyiv had been preparing for U.S. funding delays for months — factoring in Washington’s budget battles.

However, the official said those preparations do not buy much time. By November, the government could be facing decisions about what services or salaries to cut or whether to attempt to borrow.

The U.S. Agency for International Development will process an October funds transfer of $1.15 billion through the World Bank program, but future disbursements are unclear.

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