• Economics
• Ukraine

January 17, 2025, 10:21 AM View Comments ()

Russian President Vladimir Putin’s war against Ukraine is not only an attempt at military conquest—it is also very much a total war against the Ukrainian people and their economy.

For almost three years, Russia has pummeled Ukraine’s critical infrastructure, ports, and trade routes with thousands of missiles, drones, and other weapons, many of which are supplied by Russian allies Iran and North Korea or produced with components imported from China. Russia has mined Ukraine’s farmland; seized critical infrastructure, including Europe’s largest nuclear power plant; and escalated its attacks on Ukraine’s electricity generation capacity in an attempt to weaponize winter against the Ukrainian people.

Economic resilience has been a central tenet of Western support for Ukraine, and the country’s economic recovery will be a core element of any postwar settlement. Despite the horrific damage that Russia has done, Ukraine’s economy has been remarkably resilient. Real GDP grew by 5 percent in 2023 and an estimated 4.2 percent in 2024, and it is projected to rise by more than 3 percent in 2025.

Kyiv’s incremental but steady economic gains have been reinforced by the opening of official European Union membership talks in June 2024 and numerous successful reviews by the International Monetary Fund. Ukraine registered 37,000 new businesses over the past year, more than half of which were founded by women. Shipments of agricultural products—a mainstay of Ukrainian exports, including sunflower oil, wheat, and corn going mainly to Africa, Asia, and South America—rivaled pre-invasion volumes earlier this year. Iron production in the first half of 2024 was up 21 percent from the previous year.

The energy system, despite suffering severe damage over almost three years of Russian attacks, continues to function, thanks to the tireless efforts of Ukrainian energy workers and coordinated support from the international community. And almost miraculously, Ukraine has reopened its shipping lanes to and from its Black Sea ports despite ongoing Russian attacks.

Beyond these wartime efforts lies Ukraine’s vast untapped economic potential. Take strategic metals and minerals: Ukraine either produces or has recoverable deposits of 32 out of the 34 mineral commodities listed as critical by the EU. These include titanium, copper, chromite, graphite, lithium, nickel, molybdenum, rare earths, and uranium. The investment opportunities are vast, and they would help to meet growing demand in the United States and EU for critical supplies required to power the green energy transition and artificial intelligence revolution.

Ukraine also has one of the world’s largest reserves of highly fertile black soil—the source of the country’s moniker as the breadbasket of Europe. Ukraine can feed large parts of the world, currently producing enough food to feed some 100 million people with the potential to produce for 500 million more. Even as the war has raged, Ukraine at one point supplied 80 percent of the wheat distributed as aid by the U.N. World Food Program; just this month, it shipped 500 metric tons of grain in a humanitarian shipment to help feed post-Assad Syria. Thanks in part to a $284 million grant from the United States, Ukraine has already demined an area the size of Maryland and is restoring thousands of acres of agricultural land to its farmers.

Ukraine’s postwar economy will also build on an extremely dynamic information technology sector, which has tripled its exports from $2 billion in 2015 to $7 billion in 2023—higher than the pre-war peak.

Ukraine has five tech unicorns (privately held companies valued at more than $1 billion), which is more than any other country in Central and Eastern Europe; it also has one of the highest numbers of tech graduates per capita in Europe—more than Britain or France. The country has more than 5,000 tech companies, collectively employing nearly 300,000 developers—from start-ups to the five unicorns: GitLab, Grammarly, Genesis, People.ai, and Firefly Aerospace.

The war has vastly expanded Ukraine’s defense industrial base, which has grown tenfold in some sectors in response to Russia’s invasion. Once the war ends, Ukraine will have one of the most modern, competitive, and experienced defense sectors in Europe, able to take global market share from Russia and supply allies with NATO-standard munitions and equipment.

Galvanized by war, Ukraine’s drone developers, cyber warriors, hacktivists, and citizen programmers are powering digital innovation. Some of the most dynamic innovation ecosystems have developed in small, open economies facing a persistent, existential security threat: Think of Estonia, Israel, South Korea, and Taiwan, all of which have developed globally competitive innovation ecosystems, often closely linked to defense.­

That is one reason why the Biden administration supported U.S.-Ukrainian defense co-production on Ukrainian soil. In effect, security enables Ukraine’s economic resilience. Economic resilience reinforces Ukraine security.

Just as the United States has been a leader in military support—which helps Ukraine defend its economic and energy infrastructure from Russian attacks—it has also supported Ukraine’s future resilience. The Biden administration is rushing $825 million in emergency energy assistance to help fortify power generation, repair the grid, deploy more passive protection of energy infrastructure, provide backup power options, and restore gas storage facilities.

Much of this support is coming online now. And the Kyiv Independent reported that the first shipments of U.S.-produced liquefied natural gas to Ukraine arrived via Greece in late December—not only opening a new chapter in the U.S.-Ukrainian energy relationship, but also helping lay the foundation for a Ukrainian energy system that is free from Russian coercion.

And thanks to the generous support of Congress, the United States has catalyzed Ukraine’s economic comeback so that the country can stand on its own two feet, create an expanding market for U.S. goods, and provide a return on U.S. investments. This includes $74.7 million to support Ukraine’s export-oriented farmers and food processing facilities; $223 million in additional support to upgrade Ukraine’s Black Sea ports, rail links, and land border crossings; more than $105 million in new funding to train and equip Ukrainians for jobs in a postwar economy; and $35 million to help start one of the world’s largest infrastructure reconstruction efforts. In addition, the United States is contributing $20 billion in loans as part of a G-7 commitment to support the Ukrainian economy, serviced by the interest earned by frozen Russian sovereign assets.

Ukraine’s future membership in the EU and integration into global markets will yield massive dividends in terms of future U.S. economic security and private sector activity. Ukraine will be an essential partner as the United States and Europe emancipate themselves from reliance on energy, manufactured goods, and critical raw materials from adversaries such as China and Russia.

The World Bank estimates that Ukraine’s reconstruction will cost nearly $500 billion over 10 years, the largest such undertaking since post-World War II reconstruction. But unlike postwar Europe, where the United States spearheaded the reconstruction of 16 nations with the Marshall Plan, Ukraine’s recovery involves a broad coalition of contributors—many countries plus the international private sector—focused on rebuilding only one country.

Moreover, Europe’s reconstruction only began in 1948, three years after the cessation of hostilities, whereas our administration’s work in Ukraine has focused intensely on compressing the time between hot war and full-scale economic recovery.

The Pritzker plan—outlined by Penny Pritzker, the former U.S. special representative for Ukraine’s economic recovery—notes that addressing the challenges of economic recovery will require five conditions. First, a cohesive, cross-ministry strategy for reconstruction, project prioritization, and planning; second, the facilities to expand the number of shovel-ready infrastructure projects ready to absorb capital; third, more reform, stronger rule of law, and deeper anti-corruption efforts; fourth, greater capital mobilization in terms of insurance, equity finance, and debt; and, fifth, a concerted European effort to help create the conditions for refugees, internally displaced people, and veterans to return home and fully integrate into Ukraine’s economy.

Taken together, these five elements can be the fuel that powers a strong economic recovery and even renaissance. The Ukraine Donor Platform, the club of major donor countries that have joined to support reconstruction and recovery, must provide Ukraine with the steady hand that sets the overarching framework for reconstruction, recovery, and Euro-Atlantic integration in a way that catalyzes private-sector investment.

The Biden administration has been clear: Our support for Ukraine’s economic recovery isn’t charity, but an investment in U.S. economic and national security interests. It is about realigning Ukraine’s economic future—including supply chains, trade routes, business practices, and the immense innovative talent of the Ukrainian people—toward the EU, the United States, and global markets. Ukraine’s success will have a tangible impact on the United States’ bottom line.

Putin’s war is about reconstituting a dictatorial, corrupt empire that seeks to undermine the shared values of the United States and its partners in NATO, the EU, and throughout the world. Friends and adversaries around the world are watching to see how the United States responds.