Ukraine’s economy hit as war drags on; Biden presses Congress to pass more military aid

The war in Ukraine is hitting both Russia and Kyiv’s economy hard, with both expected to see sharp plunges in economic output, according to research from the European Bank for Reconstruction and Development (EBRD) published Tuesday.

Russia’s economy, hit by international sanctions, is expected to contract 10% in 2022 while the Ukraine invasion — which has caused extensive damage to the agricultural producer’s economic hubs and output — is forecast to cause Ukraine’s economy to shrink by 30% this year, the EBRD said.

“With the 3.4 per cent GDP growth recorded in 2021 no more than a distant memory, the war is putting Ukraine’s economy under enormous stress, with the heavy devastation of infrastructure and production capacities,” the EBRD said. It’s estimated that between 30% and 50% of businesses have stopped their operations completely in Ukraine, causing about half of all employees to lose their jobs and income.

That latest gross domestic product forecast for Ukraine is a downward revision of ten percentage points compared with the bank’s projections released in March.

Ukraine’s GDP is forecast to bounce back to 25% next year, the EBRD said, but that’s assuming that substantial reconstruction work is by then already underway.

— Holly Ellyatt

At least a million Ukrainians have been “forcibly relocated” and sent to Russia, according to a Ukrainian human rights official cited by NBC News.

“Not only are the occupiers hiding their crimes, but also relocating everyone they deem unreliable,” said Lyudmyla Denisova, Ukraine’s ombudsman for human rights.

“We have proof that forceful deportation was prepared beforehand,” Denisova said, according to NBC News. “There are facts that confirm that Russia had directives for their districts on how many Ukrainians and where to deport them.”

NBC News and CNBC were not able to confirm those claims.

An estimated 20,000 Ukrainians are in “filtration camps,” with most being sent to Russia, while the fate of the rest remains unknown, Denisova added, NBC News said.

Last month, the United Nations Human Rights Monitoring Mission in Ukraine documented about 109 cases of suspected detention or enforced disappearances among civilians since the invasion began.

However, local officials said the figure does not represent the tens of thousands of Ukrainians who have been deported via “filtration camps.”

— Chelsea Ong

Just hours after the U.S. announced it would suspend tariffs on Ukrainian steel for a year, Ukrainian Prime Minister Denys Shmyhal expressed his appreciation for the speed with which the Biden administration moved on the issue.

Shmyhal said he first spoke about the tariffs with Commerce Secretary Gina Raimondo when he visited Washington on April 21.

Less than 3 weeks later, the U.S. announced that the current 25% tariff would not be applied to steel from war-torn Ukraine for at least a year.

The tariff suspension is the latest example of the White House and federal agencies slashing bureaucratic red tape in Washington in order to get money, weapons and humanitarian supplies to Ukraine.

— Christina Wilkie

President Joe Biden has very publicly shifted course in his quest to pass a $33 billion emergency funding package for Ukraine through Congress.

“Previously, I had recommended that Congress take overdue action on much needed funding for COVID treatments, vaccines and tests, as part of the Ukraine Supplemental bill,” Biden said in a statement.

Recently, however, Biden says he was informed that Republicans in Congress are not prepared to vote to pass a Covid bill anytime soon.

Given the reality of the situation, linking the two funding requests — as he had initially proposed — would have in practice meant slowing down the desperately needed money for Ukraine in order to give Congress time to debate the Covid funding.

“We cannot afford delay in this vital war effort,” Biden said. “Hence, I am prepared to accept that these two measures move separately, so that the Ukrainian aid bill can get to my desk right away.”

Biden’s change of strategy was also adopted by Democratic leaders in Congress, who have said they are prepared to move quickly on a standalone Ukraine bill. It is expected to be relatively easy to pass with bipartisan support.

— Christina Wilkie