The Struggle to Fund the War: Ukraine and Russia's Economic Challenges

Russia's Economic Challenges

The war between Ukraine and Russia is causing serious money problems for both countries. Russia's economy is not doing as badly as some expected. It grew by 3.6% in 2023 and 4.1% in 2024. But it faces big challenges:

• Oil Prices Drop: The budget is based on lower oil prices than before the war.
• Increased Borrowing: This can cause inflation.
• Skilled Worker Shortage: Many have left or been drafted into the military.

Growth is expected to slow down to about 1% in the first half of 2025. However, Russia is good at finding ways around problems, so a total economic collapse is unlikely.

Ukraine's Dire Situation

Ukraine, on the other hand, is in a much worse situation:

• Huge Budget Gap: $61 billion for the next two years.
• Reliance on Foreign Help: The country uses all its tax money for the war and relies on foreign help for everything else.
• European Union's Failed Plan: Disagreements led to the fall-through of a planned aid package.
• Uncertainty and Stress: Europe is not united on this issue, causing a lot of stress for Ukraine.

Corruption in Ukraine

Corruption is also a big issue in Ukraine:

• Reports of Corruption: Even in the president's circles.
• War and Corruption: War often leads to corruption, as seen in other countries.
• Persistent Fighting: Despite corruption, Ukraine has managed to keep fighting.
• Pressure on Government: The current corruption scandal shows how much pressure the Ukrainian government is under.