Paradoxes of war: shadow economy saves Ukrainians
Review by Caliber.Az

REPORTS  20 August 2023 - 16:13

The full-scale Russian-Ukrainian war has been going on for almost a year and a half. More than enough has been written about its military and political component, but the world is insufficiently aware of how the war has affected the lives of Ukrainian citizens and foreigners living in the country with the status of permanent residence and residence permits. We will talk about this today.

In Azerbaijan, judging by the questions that my compatriots ask me, a resident of Ukraine, there is a belief that Ukrainians are almost starving and suffering other hardships. I constantly listen to sympathetic speeches that "They have been fighting for a year and a half, and war is very expensive for any country, and that is why, probably, you have mass unemployment there, and food products have probably become unaffordable for many people". Well, dear friends, this is a misconception.

Yes, Ukraine is at war, and this war requires huge resources. As Finance Minister Serhiy Marchenko recently noted in an interview with Radio Liberty, the country will need at least $42 billion in external funding in 2024. Marchenko also emphasised that budget revenues from international aid have not been confirmed so far.

“No one guarantees help. And even the budget - when we were preparing in 2023, we were not sure that there was an assistance agreement for each of these expenses. Yes, we have secured the year 2023. 2024 - for now, there is only an understanding that we have assistance from the EU. €50 billion for four years. There is the International Monetary Fund, which helps us collect these obligations. I hope the US will. I really hope! It is very important. Because the US provides grant assistance. But so far it remains unconfirmed," he worries.

In addition, the German government, as reported by German Finance Minister Christian Lindner, has planned annual military support for Ukraine in the amount of 5 billion euros. It is planned to provide it until 2027. However, the government's decision still has to be approved by the Bundestag. On the other hand, German financial injections will not help Ukraine to satisfy even the minimum budgetary needs.

But does this mean that ordinary citizens of Ukraine are already living in want? Not at all. Let me start with the fact that the number of officially registered unemployed in Ukraine is, according to data as of June this year, only 113,400 people. For a state whose population even now exceeds the mark of more than 30 million people, this is a minuscule amount. Moreover, the number of people receiving unemployment benefits has fallen from 264,900 to 47,000 over the year.

The need for employers to fill free (vacant) jobs is 45,000. That is, there are often more job offers in Ukraine than there are specialists for a particular position. This is primarily due to the fact that hundreds of thousands of Ukrainians are now at war. In total, more than a million people have gone to the front since the beginning of the war.

In addition, according to the latest UN data, there are more than 5 million Ukrainian refugees in Europe. Tens of thousands of Ukrainians have either already arrived or received permission to stay in the United States and Canada. All this has led to a shortage of personnel in many sectors. And what happens when there is a deficit? Right, prices for goods rise, but in this case only for services. For example, the cost of repair work in Ukraine is such that in Baku I have never dreamed of. I experienced it myself. I was flooded by the neighbour upstairs, just a little bit. And what's the big deal, we decided to repair everything. So, the tiler said that he can start work no earlier than mid-October. And the master, whom we want to entrust to demolish one wall, in order to turn the "three-room" into a four-room apartment, can begin work no earlier than the end of September. Everyone is busy.

An electrician came. He charged 2,800 hryvnias (almost 130 manats or $76.4) for the installation of two new sockets in the room. Electricians in Baku, having learned about such rates, would be very surprised. The tiler, by the way, also has already calculated the cost of his services - 20,000 hryvnias (920 manats or $541). For 4-5 days of work. Such is the situation. And it should be said that Azerbaijanis with residence permits, that is, who are not citizens of Ukraine and therefore do not risk being sent to war, take advantage of this. One of them came to me. He asked for 250,000 hryvnias (11,500 manats or $6,765). I showed the Baku builders the amount of work for which he asked so much. Our craftsmen said that they would have done it all for 5,000-7,000 manats ($2,940-$4,117).

What does all this tell us? That the level of labour remuneration in Ukraine is even now higher than in Azerbaijan. Yes, it is officially stated that the real average salary now ranges from 15,000 to 18,300 hryvnias ($407-496). But the fact is that few people indicate the true size of their income. Plus, people work in several places at once. In general, even in case of a terrible financial deficit of the state budget, there will be no collapse in the country.

The paradox is that Ukraine will be saved... by corruption. Its scale is shocking. But it is thanks to them that a shadow economy has been created that is larger than the official one. Almost all cities of the country are now laying asphalt and tiles, streets and squares are being improved. Tenders are being held for the construction of even stadiums. For example, in Chernihiv, it is planned to build a new stadium. It will be in place of the old stadium named after Gagarin, destroyed in March 2022 during the Russian bombing of the city. It is planned to allocate 20 million hryvnias ($5.4 million) for the construction of a new stadium in Chernihiv by the end of this year.

In total, 620 million hryvnias ($16.8 million) are planned to be allocated from the state budget for the construction of the new stadium. Chernihiv is constantly being shelled by the Russian side. But this does not stop those who are determined to use the budget funds right now. And in this connection, it is appropriate to tell about the scandal with the purchase of vegetable cutters for shelters for 1.5 million hryvnias ($40,720) by the Dniprovsky district administration.

As it became known to the press, the head of the administrative and economic department of the Department of Education of the Dnipro region, which announced this million-dollar tender, was already involved in corruption scandals, was responsible for the purchase of drums, designers, vegetable cutters and pans, chairs for a double price, toilet paper and mops for 4 million hryvnias ($108,600) in shelters of educational institutions of the district.

There are many such examples of rapid enrichment in the warring Ukraine. Including military commissars, MP of the Verkhovna Rada (Ukrainian parliament), city and village councils. It is no coincidence that the main problems at the moment the population of Ukraine calls war (98 per cent), destruction (87 per cent), corruption (77 per cent), lack of professionals in power (61 per cent) and only then unemployment (60 per cent). These are the results of a survey conducted by the Info Sapiens agency commissioned by Transparency International Ukraine.

According to the same report, among the possible risks, 73 per cent of Ukrainians and 80 per cent of business representatives are most concerned about the return of corruption schemes to the country's reconstruction after the war. These are the priorities and concerns.

In the meantime, it is the high level of corruption that, ironically, guarantees that the cost of services in Ukraine will be high. The prices for gatherings in cafes and restaurants, for recreation are also high, on average 30-40 per cent higher than the Azerbaijani prices.

These are the realities of warring Ukraine. As we can see, they are very different from the perception that many people in other countries have of this country.

Caliber.Az