Frontloading the Support for Ukraine

James Clarke famously observed that a politician thinks of the next election, while a statesman thinks of the next generation. In today’s Europe, the next elections will likely determine the fate of the next generations, and this is a challenge European politicians must face. The rising popularity of ultra-right parties across Europe, including major European states such as Germany and France, is a great risk to the next generation of Europeans, not least because they are usually friendly to Russia and are often supported by Russia. If met with appeasement rather than strength, Russia, enabled by China and other autocratic regimes, will advance to implement its proclaimed goal of erasing Ukraine and destroying NATO.JOIN US ON TELEGRAMFollow our coverage of the war on the @Kyivpost_official. Today, only Ukraine is holding Russia and its allies back from an open attack on Europe. Therefore, political parties that promise to reduce support for Ukraine and normalize relations with Russia are not only supporting Russia’s genocidal war but also threatening the future of Europe. To save it, European politicians have several lines of action. The first is to more decisively counteract Russia: curtail trade with it, ban visas to Russians, close “Russian houses” and similar institutions (which offer ripe ground for espionage), sanction any organizations, political parties, NGOs, and firms that work with or in Russia or promote its agenda. The second is sanctioning China, which is the main enabler of Russia’s war, as well as acting seriously about sanctions evasion (it is obvious, that the order of magnitude growth of, for example, German exports to Kazakhstan or Kyrgyzstan is due to sanctions evasion). Other Topics of Interest China Rejects Ukraine Talks With Trump and Putin Xi told the German president that Europeans would need to be at the negotiating table, as reports circulate of a possible three-way meeting in November. Although the case for these tracks is clear-cut, there is too much hesitation to implement them despite Russia’s intensifying hybrid attacks on Europe. Hence, we focus on another track: design and implement commitments to secure European defense. In the bluntest terms, this means securing and locking in sufficient funding for Ukraine for a number of years so that this support is available and functioning irrespective of the outcome of future elections. This is not a trivial task. Due to Russian attacks on its economy, Ukraine’s needs for external support for defense and social issues increased from $40 billion in 2022 to over $90 billion for 2027. Some of these needs are covered by the Ukraine Support Loan and other mechanisms, but it is only a fraction, and the outlook for 2028 and beyond remains vague. The choice is not between spending and saving. It is between spending now on someone else’s soldiers, or later on your own. At the same time, there is no indication that Russia is looking to end the war anytime soon. If anything, Russia plans to weaken Europe and Ukraine by helping its European “friends” who would halt support for Ukraine in order to get elected. With the latest AI developments, election interference costs practically nothing. To make support for Ukraine durable and to signal to Russia that it cannot outmaneuver Europe, we suggest establishing a “rainy day fund” – an independent institution with reliable revenue sources and proper corporate governance, which would raise money in support of Ukraine and disburse it as needed. This fund may continue to enforce the “money in exchange for reforms” framework currently applied to the majority of international aid Ukraine receives. Where would the money come from? One obvious source is frozen Russian assets. (We are aware of legal objections against this move. But we are also confident that a state which has breached multiple laws and treaties should not enjoy the protection of the European legal system. In other words, if there is a will, there is a way). Another possibility is using proceeds on these assets to leverage European borrowing for Ukraine. There are also other options. For example, the fund could issue (or help Ukraine issue) “solidarity bonds” available to European citizens (including the Ukrainian diaspora) and businesses. If these bonds are fairly easy to purchase (e.g., via online instruments, like Ukrainian government bonds), one can expect high demand for them: 75% of Europeans still support financial and humanitarian aid to Ukraine. Other income streams such as tariffs on goods from countries supporting Russia and a surcharge on windfall profits from high energy prices might seem difficult politically, but they may align with popular objectives such as protecting European markets, reducing carbon emissions, and redistributing income. “Not looking up” or appeasing the aggressor is a poor strategy. Keeping a blind eye to Russia’s attack on Georgia in 2008, Ukraine in 2014, and Syria in 2015 has dire consequences, and each day of hopes for return to “business as usual” increases the cost of war. The current arithmetic is clear: the $90 billion Europe committed for 2026-27 works out to about a hundred euros per resident per year. Financing Europe’s own defense costs a large multiple of that. The choice is not between spending and saving. It is between spending now on someone else’s soldiers, or later on your own. Europe’s leaders still have the votes to build something that outlasts them. In two years they may not. What stands between their voters and catastrophe is a thin blue-and-yellow line, and it will not hold on good intentions. The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post. Anastassia FedykAnastassia Fedyk is an Assistant Professor of Finance and a Barbara & Gerson Bakar Faculty Fellow at the Haas School of Business at UC Berkeley. She holds a Ph.D. in Business Economics from Harvard University and a B.A. in Mathematics with honors from Princeton University. Prior to pursuing her academic career, Anastassia Fedyk was a researcher and portfolio manager at Goldman Sachs Asset Management. She serves as the Chief Economist at the AI for Good Foundation and is a co-founder of Economists for Ukraine. Tatyana DeryuginaTatyana Deryugina is an Associate Professor of Finance at the University of Illinois Gies College of Business. She is also a co-founder of Economists for Ukraine, a nonprofit network of economists supporting Ukraine through research and policy advocacy, where she has co-authored analyses of Russia's wartime economy and disinformation campaigns. Ilona SologoubIlona Sologoub is the Scientific Editor, former CEO of Vox Ukraine, Member of the Editorial Board of Vox Ukraine and the Reform Index. Until 2019, she was the Director of Political and Economic Research at the Kyiv School of Economics.