ZELENSKY'S PEACE FORMULA

The start of this year has caused uneasiness and brought trouble not only for Ukraine, but also for everyone who incidentally and for political reasons found themselves directly and indirectly involved in the Russian-Ukrainian war. This includes, at the very least, much of the rest of the world, which is suffering from an unprecedented crisis of international relations. Despite the New Year and Christmas holidays and the declaration of a temporary ceasefire by Moscow, the hostilities did not stop for a moment.

Talks about talks

There have been already calls for holding negotiations. In the first days of the year, Ned Price, Spokesman of the US State Department, said that Washington was trying to get Russia to "negotiate a settlement in Ukraine by giving up its new regions". A few days earlier, Turkish President Recep Tayyip Erdogan had a telephone conversation with Russian President Vladimir Putin, during which the Russian leader reiterated his readiness for a serious dialogue on Ukraine. But he rejected the possibility of returning the seized areas and agreed only to talks concerning the possibility of continued military action.

In response to suggestions for peace talks, Ukrainian President Vladimir Zelensky has presented his own ten-point peace formula.

The Ukrainian leader confirmed his readiness to seek the complete liberation of Ukraine, including Crimea and Donbass, the release of all prisoners and deported citizens, as well as effective security guarantees to prevent a resumption of hostilities.

It is clear that with such diametrically opposed approaches make real negotiations impossible. Rather all this rhetoric is there to create an appearance of willingness of the sides to end the war as soon as possible. It could also mean that the sides are ready to move towards peace talks, but start from such different positions that the path to negotiations may take more than a month.

In response to Russian proposals regarding its future involvement in dialogue with Kiev Ned Price said that Moscow's reluctance to relinquish the annexed territories was a clear sign that Moscow had no genuine appetite to engage in dialogue and diplomacy that would lead to a just and lasting peace. "We hope to change those plans by continuing to provide Ukraine with necessary military assistance," Ned Price said.

The Bakhmut frontier

On January 6, US Secretary of State Anthony Blinken announced a new military aid package worth more than $3.75bn to Ukraine and the countries support it.

Shortly after Blinken's statement, the Pentagon published details of the new aid package. It includes 50 Bradley infantry fighting vehicles, 500 anti-tank guns with ammunition, 55 MRAP armoured mine-resistant vehicles, 100 M113 armoured personnel carriers, Sea Sparrow surface-to-air anti-aircraft missiles upgraded for launch from SAMS Buk and other weapons for Ukraine alone.

Washington underlines that all these weapons are dispatched to Kiev based on the current needs of the military operation in the Donbass region and in the southern front.

The fight are particularly active around Bakhmut and Soledar. The Russian side has been trying to seize this strategically important transport hub for months, but it is facing fierce resistance from the Ukrainian army.

Ukrainian army could carry out a successful operation to liberate the right bank of the Dnieper River in Kherson Oblast also due to paralysing a significant group of Russian troops around Bakhmut.

Analysts believe that the mobilisation of the Ukrainian army to hold Bakhmut is a result of changes in the overall strategy of the military campaign. The defence of Bakhmut has become a symbol of Ukraine's national struggle against the Russians.

Recently The New York Times published an article reminding readers of the doubts President Zelensky had publicly expressed about the Ukrainian side's daily losses (around 100 troopers) in the battles for Severodonetsk and Lisichansk.

According to NYT, the Ukrainian army has managed to avoid direct clashes in other directions by successfully manoeuvring and using long-range Western weapons to force Russia to retreat. Now the Ukrainian commanders have to accept new realities, that is open combat when the Russian side attacks their positions by large numbers of manpower.

More tanks are always welcome

Undoubtedly, the Ukrainian army needs modern weapons and an economic boost to maintain a high level of resilience.

The transfer of modern Western tanks and self-propelled artillery systems to Ukraine has been a hot topic of discussions throughout the months of the conflict. The low efficiency of these strategic weapons was also explained by the Ukrainian military's lack of skills.

In fact, the Ukrainian military has been so far supplied mainly with Soviet equipment from the arsenals of Eastern European armies, which Ukrainians know well. This also allowed former socialist countries to get rid of obsolete weapons. Now the stocks are getting depleted mid the growing Ukrainian demands. That is why Western political and military circles are now thinking about the transfer of modern weapons to Ukraine.

The first country to hand over its tanks to the Ukrainian army is France. These include AMX-10 RC tanks equipped with 105mm guns, as well as Bastion armoured personnel carriers. Later it was reported that the US was also considering transferring to Ukraine armoured personnel carriers Bradley equipped with 25mm guns, machine guns and anti-tank guided missiles. Next in line are German Leopard-2 tanks and Marder armoured personnel carriers, which the Ukrainians have long been asking Berlin for.

The Ukrainian president praised France's decision and thanked President Macron. "This is a clear signal to all our partners that there has never been a rational reason why Ukraine could not have been supplied with Western tanks so far," President Zelensky said in his daily video message.

However, Berlin is in no hurry to help Ukraine with its tanks, preferring first to placate the opponents of such a move before making a final decision.

In terms of economic aid, according to the National Bank of Ukraine, the country received €30b of foreign aid last year. This includes contributions from the US (40%), followed by the EU (almost 25%), and IMF (8%). According to the Ukrainian Economy Ministry, this is about 16% of GDP.

Wartime economics

Preliminary figures published by the Ukrainian Economy Ministry for 2022 show a 30.4% drop in GDP. Experts report that risks and uncertainty about the future remain high, especially if Russia continues to attack critical Ukrainian infrastructure.

The war resulted in mass deaths and destruction, the emigration of millions of Ukrainians, agricultural problems, restricted access to the Black Sea ports vital for grain and metal exports, and increased defence spending.

Ukraine's economy has always been export-oriented, which has fallen sharply since the outbreak of hostilities. According to the Ukrainian Ministry of Economy, the relative volume of exports dropped by 35% compared to 2021, while physical volumes dropped by 38.4%.

Analysts believe that the country's economy has done the impossible as it has managed to adjust to new realities thanks to external support. Ukraine's economic downturn slowed in the last months of 2022 after Russia retreated from some southern regions of Ukraine, including the Kherson region.

Foreign aid remains crucial to Ukraine's financial stability and economy. The country's budget deficit in 2023 is forecast at $38b. The government intends to cover it with foreign aid.

However, risks for 2023 include Russian missile strikes on energy and other infrastructure, which have caused severe power blackouts since mid-October.

Experts do not expect a noticeable economic recovery in 2023 because of weak domestic demand and significant constraints to export logistics. Investment bank Dragon Capital believes that Ukraine's economy will fall by 5% this year.

Yet Ukraine is no stranger to such problems, as it bears the lion’s share of these problems as a country at war. The Ukrainian economy may soon be governed by one and only principle: All for the front, all for the victory!