It took several months of Russia&rsquo;s full-scale invasion to turn some of the most valuable assets of Ukraine&rsquo;s richest man Rinat Akhmetov into a pile of dust, metal, and concrete.The tycoon&#39;s long list of painful business losses includes the Mariupol-based Azovstal steel plant, one of the largest in Europe, and Ukraine&rsquo;s second-largest metallurgical enterprise Ilyich Iron and Steel Works.&nbsp;According to the <a href="https://www.bloomberg.com/billionaires">Bloomberg Billionaires Index</a>, as of Oct. 31, Akhmetov&rsquo;s net worth fell by 52% to $5.39 billion compared to the pre-war numbers. He now ranks 412th among the richest people globally, 278 positions lower than at the beginning of the year. He is the only Ukrainian on the list.In total, around 70 enterprises owned by Akhmetov&rsquo;s SCM Group, including thermal power plants, a mammoth coke-chemical plant in the city of Avdiivka, Donetsk Obalst, renewables, and branches of his First Ukrainian International Bank, were destroyed, damaged, or occupied by Russians, Liga media outlet <a href="https://biz.liga.net/ua/all/all/novosti/u-ahmetova-iz-za-voyny-postradali-70-predpriyatiy-ubytki-esche-ne-poschitali">reported</a>.Metinvest, one of Europe&rsquo;s largest suppliers of iron ore controlled by Akhmetov, has suspended the work of its most profitable assets &ndash; three ore beneficiation plants in Dnipropetrovsk Oblast &ndash; partly due to logistics problems following Russia&rsquo;s blockade of the Black Sea.Akhmetov&#39;s agroholding HarvEast also suffered. It operates principally in Donetsk Oblast, most of which has been occupied. Since February, it has lost control over some 90,000 hectares, or 70% of the company&#39;s total landbank.&nbsp;At the beginning of September, almost 52,000 tons of the holding&rsquo;s agricultural products, as well as 200,000 tons of metal and cast iron worth $170 million were stuck in the occupied territories, out of reach for the company.&ldquo;Russia is cynically stealing our grain as well as steel in Mariupol,&rdquo; said Akhmetov in a rare <a href="https://www.corriere.it/esteri/22_luglio_18/as-ukraine-becomes-more-european-we-can-get-rid-of-oligarchy-013a955a-06c6-11ed-baf6-636928468fea.shtml">interview</a> with the Italian newspaper Corriere della Sera in July.&nbsp;According to the oligarch, the total value of finished goods and raw materials stolen by Russia from his companies is about $1 billion.&nbsp;In addition, the mining of some 5,000 hectares in Kyiv Oblast made it impossible to carry out the sowing campaign in spring, <a href="https://case-ukraine.com.ua/publications/shho-z-agrosektorom/">according</a> to HarvEast&rsquo;s CEO Dmytro Skornyakov. &nbsp;&ldquo;As a result of hostilities, there are explosions and damage to agricultural equipment,&rdquo; Skornyakov added. &ldquo;The situation is extremely difficult for us.&rdquo;<img src="https://api.kyivindependent.com/storage/gettyimages-1242250430-1667239932OOmTJ.jpg" style="width: auto;" class="fr-fic fr-dib" alt="">Azovstal steel plant is pictured in the occupied city of Mariupol on Aug. 1, 2022, amid the ongoing Russian aggression in Ukraine. Mariupol was heavily bombarded by Russia before its complete occupation in May. (Photo by Stringer/AFP via Getty Images)Energy under attackThe SCM&rsquo;s DTEK &ndash; Ukraine&rsquo;s largest private energy company controlling a third of the energy market and being responsible for mining 90% of the country&rsquo;s coal &ndash; suffered no less.The value of the company has decreased threefold, from a pre-war $1.9 billion to $580 million as of mid-summer, <a href="https://forbes.ua/ru/inside/energetichna-imperiya-rinata-akhmetova-shcho-zalishilosya-vid-dtek-i-skilki-vona-teper-koshtue-18072022-7203">according</a> <a href="https://forbes.ua/ru/inside/energetichna-imperiya-rinata-akhmetova-shcho-zalishilosya-vid-dtek-i-skilki-vona-teper-koshtue-18072022-7203"></a>to the Forbes magazine estimations.On the second day of the full-scale invasion, DTEK lost control over the Luhansk thermal power plant, the only source of electricity for one million people living in the north of the now nearly completely occupied Luhansk Oblast. According to DTEK&rsquo;s CEO Maxim Timchenko, the takeover of the plant cost the company $180 million.Another thermal power plant that belongs to DTEK was seized by Russians in Enerhodar, a city in Zaporizhzhia Oblast, which is also home to the <a href="https://kyivindependent.com/national/life-near-russian-occupied-nuclear-plant-i-dont-know-if-tomorrow-will-come">Zaporizhzhia Nuclear Power Plant</a>.&nbsp;In total, about 2.5 million people were cut off from electricity in Russian-occupied territories, Timchenko reported during a press conference on Oct. 13.After more than seven months of the all-out war, Russia switched its focus to destroying Ukraine&rsquo;s energy facilities. Moscow openly admits that Ukraine&rsquo;s energy infrastructure is one of its main targets now. According to the Geneva Conventions, striking vital public infrastructure is a war crime.Just in the first two days of Russia&rsquo;s campaign to shut down Ukraine&rsquo;s energy infrastructure, on Oct. 10-11, Russia <a href="https://kyivindependent.com/national/ukraine-racked-by-intense-bombardment-of-cities-energy-infrastructure-and-central-kyiv-among-targets">launched</a> 83 missiles and 24 Iranian-made Shahed-136 kamikaze drones to attack multiple cities across Ukraine, including Kyiv, Lviv, and Dnipro. The attack killed 23 people and injured more than 100.As a result of the strike, 30% of the country&rsquo;s energy infrastructure was <a href="https://edition.cnn.com/europe/live-news/russia-ukraine-war-news-10-11-22/h_2093c5424cc0e8f0c2b366dd9e147957">damaged</a> and DTEK had to start rolling blackouts across the country.&nbsp;As DTEK repairs its damaged facilities, Russia continues to target power infrastructure across Ukraine. Since Oct. 10, Moscow has carried out two more massive strikes on the energy infrastructure, in addition to regular single-target attacks.&nbsp;Following the very recent, <a href="https://kyivindependent.com/news-feed/another-mass-attack-on-monday-morning-russias-hits-energy-infrastructure-across-ukraine">third massive attack</a> on the energy system on Oct. 31, DTEK said that it was running out of equipment to repair the inflicted damage. [embed-post url=/national/russias-blackout-blitz-on-ukrainian-energy-sites-escalates-ahead-of-winter title=Russia&#39;s_&lsquo;blackout_blitz&rsquo;_on_Ukrainian_energy_sites_escalates_ahead_of_winter image=/storage/photo-2022-10-24-185258-1666630400bSqqD-350x350.jpeg id=46372 /]DTEK also had to allocate additional funds for the repair of damaged power grids in the liberated territories and restore the electricity supply.&nbsp;In Kyiv Oblast alone, the figure has already reached $8.3 billion. Another $30 million DTEK will have to spend to bring all power grids to the pre-war state, according to the company&rsquo;s spokesperson Antonina Antosha.&ldquo;But the company&rsquo;s biggest losses are not financial, but human,&rdquo; she told the Kyiv Independent.As of Oct. 13, 85 DTEK employees were killed in combat as they joined Ukraine&rsquo;s Armed Forces and three of its engineers were killed while at work.RenewablesAt the beginning of the year, renewable energy sources in the country accounted for 8.3% of all electricity generation, with a forecast of it growing to 9.2% by the end of 2022.But because of the invasion, as of late October, Ukraine has lost 90% of its wind power plants in Russian-occupied southern regions, as well as half of its solar power stations, <a href="https://www.youtube.com/watch?v=jWC_keQAtyM&t=1486s">according</a> to Energy Minister Herman Halushchenko.They were either destroyed, damaged, or occupied by Russia. &ldquo;It&#39;s definitely a huge loss,&rdquo; Halushchenko said.&nbsp;Half of them are owned by Ahkmetov. His DTEK Renewables alone lost three wind power plants and one solar with a total capacity of 510 megawatts installed in the southern Kherson and Zaporizhzhia oblasts.The list includes the 100-megawatt Orlovska wind farm with 26 Vestas wind turbines worth $145 million and the 200-megawatt Prymorska wind farm worth $350 million. Both are located in Zaporizhzhia Oblast. Another one, the 200-megawatt Botievo wind farm, is in Kherson Oblast.&ldquo;They are not destroyed, not damaged, but they are not operating,&rdquo; said Timchenko.BankingSince Feb. 24, Akhmetov&rsquo;s First Ukrainian International Bank has lost control of every eighth branch, or a total of 31 branches. Some of them were badly damaged.In Mariupol, where Russians heavily bombarded civilian infrastructure and killed an estimated dozens of thousands of civilians, the bank lost control of 95 ATMs and 16 branches. In two other eastern cities &ndash; Kharkiv and Sievierodonetsk &ndash; the war completely destroyed two of the bank&rsquo;s branches.In January-August, the bank&#39;s profit decreased 15 times, dropping to $6.4 million compared to $98.5 million for the same period last year, Finbalance <a href="https://finbalance.com.ua/news/pumb-u-sichni-serpni-skorotiv-pributok-v-115-raziv">reported</a>.In addition, the long-awaited deal on the sale of Lviv-based Idea Bank, owned by Polish financial group Getin Holding, to Akhmetov&rsquo;s bank was canceled.&nbsp;The Warsaw-based financial group, which had been looking for a buyer for two years, <a href="https://getin.pl/getinholding/doc/raporty_finansowe/SF2022Q2_PL.pdf">cited</a> the &ldquo;geopolitical situation in Ukraine&rdquo; as one of the reasons for canceling the plan on selling the asset.Demanding reparationsIn June, Akhmetov <a href="https://www.scm.com.ua/en/news/rinat-ahmetov-podav-pozov-do-yevropeyskogo-sudu-z-prav-lyudini-proti-rosiyskoji-federaciji">filed</a> a lawsuit in the European Court of Human Rights against Russia seeking compensation for &ldquo;trampling of his property rights.&rdquo;Although no specific amount of reparations has been announced, the SCM group says it wants billions of dollars in reparations from Russia.According to the SCM group, reparations for destroyed Azovstal, which produced 4.3 million tons of steel in 2021, and Ilyich Iron and Steel Works alone vary from $17 to $20 billion. Together, the two plants produced 40% of Ukraine&rsquo;s metallurgical products. According to the Ukrmetallurgprom association, by the end of the year, steel production in Ukraine is expected to drop threefold because of the war.&ldquo;Russia&rsquo;s unjustified and brutal aggression against Ukraine has put a key question on the world&rsquo;s agenda: the consistency, fairness, and effectiveness of the global legal system created after World War II,&rdquo; said Akhmetov.&nbsp;According to DTEK&rsquo;s Timchenko, the company together with the Ukrainian government and other companies will file new claims against Russia, including for damages that the country inflicted on the company back in 2014, when Russia initially invaded Ukraine&rsquo;s eastern Donbas region, which comprises Donetsk and Luhansk oblasts.&ldquo;We have legal grounds to make (those) claims. They (Russians) will be accountable as a state for all damages we have received since then,&rdquo; Timchenko said. [embed-post url=/national/Russian-attacks-on-Kyiv-energy-infrastructure-might-cause-problems title=Intensified_Russian_attacks_on_Ukraine_infrastructure_unlikely_to_achieve_Kremlin&#39;s_goals image=/storage/gettyimages-1244054930-1666213106bxFEP-350x350.jpg id=46179 /]

It took several months of Russia’s full-scale invasion to turn some of the most valuable assets of Ukraine’s richest man Rinat Akhmetov into a pile of dust, metal,...

Ukraine’s top oligarch Akhmetov loses half his assets to Russia’s invasion

Before Russia&rsquo;s full-scale invasion, Ukraine&rsquo;s exports were a reason to celebrate. Last year, the country hit a 10-year record with $68 billion in exports.&nbsp;As Russia&rsquo;s invasion enters its seventh month, no one can predict when Ukraine can expect to post these kinds of results again.&nbsp;<a href="https://www.ukrstat.gov.ua/express/expr2022/08/12.pdf">According</a> to Ukraine&rsquo;s State Statistics Service, for the first half of the year, the country&rsquo;s exports decreased by a quarter to $22.7 billion, with imports falling to $25.2 billion, or a 20% decrease year-over-year.Following this downward trend, as of July, the trade deficit has almost tripled compared to the same period last year, reaching $4.3 billion, Ukraine&rsquo;s State Customs Service <a href="https://gmk.center/ua/news/deficit-zovnishnoi-torgivli-tovarami-v-lipni-zbilshivsya-v-4-razi-r-r/amp/">reported</a>.Russia&#39;s brutal war against Ukraine and its five-month-long naval blockade of Ukraine&rsquo;s Black Sea ports vital for grain exports have disrupted logistics and undermined consumer demand, causing Ukraine&rsquo;s international trade to shrink dramatically. The war has also forced Ukraine to rely more on imports to fuel the war effort and make up for lost industries.&nbsp;According to Svitlana Taran, trade policy adviser for Ukraine&rsquo;s Deputy Prime Minister of European and Euro-Atlantic Integration, the &ldquo;first shock&rdquo; to international trade was in March, when the decline in trade was its highest at around 60% in exports and 76% in imports.&nbsp;Now, the decline has slowed as businesses adjust to new realities. But still, by the end of the year, Taran expects &ldquo;there will be a significant drop in exports&rdquo; amid forecasts that Russia&rsquo;s war won&rsquo;t end soon.&nbsp;&ldquo;We are an export-oriented country, and export revenue is very important given the economic situation in the country,&rdquo;&nbsp;Taran&nbsp;told the Kyiv Independent. &ldquo;This should be a top priority.&rdquo;<h3 style="text-align: center;">War-cut exports</h3>While a halt in Ukraine&rsquo;s grain exports due to Russia&rsquo;s Black Sea blockade shook the world and raised alarm over global food security, nearly every industry in Ukraine has seen its exports slashed.&nbsp;Russia&rsquo;s Black Sea blockade of Ukraine&rsquo;s ports led to billions in losses for the country&rsquo;s revenue. Before Russia&rsquo;s full-scale invasion, grain exports accounted for 40% of Ukraine&rsquo;s foreign exchange earnings.&nbsp;While grain exports resumed in August after a United Nations-backed deal ended the blockade, the results are still modest. For the first eight months of the year, Ukraine exported 3.6 million tons of grain, over 50% less than during the same period last year, the Agriculture Ministry <a href="https://minagro.gov.ua/investoram/monitoring-stanu-apk/eksport-z-ukrayini-zernovih-zernobobovih-ta-boroshna">reported</a>.Ukraine&rsquo;s second-largest source of export earnings, metal products, has also been knocked out by Russia&rsquo;s invasion.&nbsp;In the first half of the year, exports of metal products decreased by 47%, to $3.2 billion. Metallurgy producers have only been able to sell 4.1 million tons, almost 60% less compared to 2021.&nbsp;The country has lost two of its steel giants, the Azovstal steel plant and the Ilyich plant, both in now Russian-occupied Mariupol, and both owned by Ukraine&rsquo;s wealthiest oligarch Rinat Akhmetov&rsquo;s company Metinvest. With production destroyed by Russia&rsquo;s brutal siege of the city, Ukraine&rsquo;s metallurgy production has been cut by 30-40%, according to various estimates.&nbsp;&ldquo;There are still other (plants), but they have problems with supply chains,&rdquo; said Taran.By the end of this year, metal exports may see a decline of three to six times compared to last year, to just $3.6-7.2 billion, Dmytro Khoroshun, an analyst at Concorde Capital, <a href="https://forbes.ua/inside/blokada-portov-stoit-agrariyam-15-mlrd-v-mesyats-na-chem-teryayut-eksportery-i-kak-na-voyne-vezti-tovar-za-granitsu-29032022-5109">forecasted</a>. In 2021, metal exports reached $21.1 billion, a third of all of Ukraine&rsquo;s exports.Before the war, 60% of Ukraine&rsquo;s metallurgy products were exported through the country&rsquo;s seaports. The UN-backed deal to open some of Ukraine&rsquo;s Black Sea ports does not currently include metal exports and efforts to export metal products by rail with transshipment in EU ports have failed, according to Serhiy Bilenkiy, head of Ukraine&#39;s Metallurgists Federation.&nbsp;Bilenkiy <a href="https://minprom.ua/news/287241.html">says</a> that if the deal was extended to metal products, it could add around $600 million per month in exports to the struggling industry.Other industries, such as pharmaceuticals, clothing, or the IT sector, managed to escape such a catastrophic decrease in exports. A drop in the export of Ukrainian-produced shoes and clothing was only 10% compared to the previous year, reaching almost $450 million.&nbsp;Pharmaceutical exports dropped by 23% in the first half of the year, reaching only $102 million &ndash; mainly due to the shutdown of factories in Kharkiv, a regional capital in eastern Ukraine under constant shelling by Russia.&nbsp;&ldquo;This is one of the few industries that has survived because these products are easier to export compared to others, and they have fewer logistical problems,&rdquo; said Taran.Against all odds, the country&#39;s IT sector has shown growth and resilience during the war. <a href="https://itukraine.org.ua/en/eksportna-%D1%96t-galuz-prodovzhu%D1%94-p%D1%96dtrimuvati-ekonom%D1%96ku-ukra%D1%97ni.html">According</a> to the IT Ukraine Association, the export of tech services for the first half of the year reached $3.74 billion, 23% more than for the same period of the previous year.&nbsp;In 2021, the IT sector <a href="https://reports.itukraine.org.ua/en">generated</a> about 4% of the country&#39;s gross domestic product and had $6.8 billion in exports. With the beginning of Russia&rsquo;s full-scale war, the industry was able to react quickly, solve logistical problems and move offices to the western regions of the country or even abroad.However, with the <a href="https://cms.law/en/int/publication/war-prompts-ukraine-to-adopt-new-foreign-exchange-rate">central bank&rsquo;s new currency policy</a> and uncertainty about hiring IT specialists, many of whom are potentially subject to conscription, the industry may see &ldquo;a regression in the nearest future,&quot; Konstantyn Vasyuk, head of the IT Association, said.<h3 style="text-align: center;">Import dependence&nbsp;</h3>Forced to live with war, Ukraine&rsquo;s needs have changed.For instance, the import of fuel to Ukraine &ndash; a basic need for the Armed Forces &ndash; has become one of the country&rsquo;s top priorities. Fuel depots all across Ukraine have been targeted by Russian missiles, increasing the need to source fuel from elsewhere.&nbsp;<a href="https://www.kmu.gov.ua/en/news/minekonomiky-za-pivroku-ukraina-v-12-raziv-narostyla-import-palnoho-azhiotazhu-na-rynku-vzhe-nemaie">According</a> to the Economy Ministry, Ukraine has increased fuel imports 12 times since the start of Russia&rsquo;s full-scale invasion in February, reaching 709,500 tons for the month of August. In March that number was 58,800 tons when the start of the war brought the country to a standstill.&ldquo;We are critically dependent on the import of oil products,&rdquo; said Economy Minister Yulia Svyrydenko. She forecasted that in the next four months, the country&#39;s needs would range between 500,000 to 550,000 tons of fuel per month.At the same time, Ukraine has completely stopped buying Russian fuel and &ldquo;switched to supplies from the country&rsquo;s western border,&rdquo; according to Denys Kudin, first deputy minister of economy. &nbsp;Currently, the state imports 95% of gasoline and around 70% of diesel fuel from the EU countries &ndash; Poland, Romania, Lithuania, Slovakia, Greece, and Bulgaria. Before the war, Russia and Belarus were the main source of fuel imports to Ukraine, <a href="https://gmk.center/news/ukraine-nuzhny-novye-istochniki-postavok-topliva-issledovanie/">supplying</a> 42% of gasoline and 63% of diesel fuel.The import of goods like fertilizers for agriculture has also increased due to the high dependence on these products among Ukraine&rsquo;s industries.&nbsp;One of the major mineral fertilizer producers in Ukraine, the Azot chemical plant, owned by the DF Group of exiled Ukrainian tycoon Dmytro Firtash, <a href="https://groupdf.com/uk/pres-tsentr/novini/zayava/">said</a> that it had &ldquo;completely lost control over the plant&rdquo; in Russian-occupied Sievierodonetsk.&nbsp;The city, located in Luhansk Oblast, was the scene of intense fighting, with the Azot chemical plant being the last Ukrainian stronghold before the city was occupied.&nbsp;As a result, the country imported nearly 10% more fertilizers as of July, compared to the previous year, which equals more than half a billion dollars.&nbsp;Meanwhile, the import of equipment for businesses as well as consumer goods has fallen sharply since the start of the full-scale invasion.&nbsp;&ldquo;People have fewer opportunities to buy. Instead, they will buy what is produced in the domestic market, because it is cheaper,&rdquo; said Taran.

Before Russia’s full-scale invasion, Ukraine’s exports were a reason to celebrate. Last year, the country hit a 10-year record with $68 billion in exports. As Russia’s invasion enters...

Russia’s war slashes Ukrainian exports, forces country to increase imports

As Ukrainian soldiers fight Russia on the front lines, workers at Ukraine&rsquo;s state employment centers are fighting their own battle: finding jobs for the hundreds of thousands of people who are now unemployed as a result of Russia&rsquo;s war.&nbsp;The war has forced the country&rsquo;s unemployment rate to jump threefold to an &ldquo;unprecedented&rdquo; level of 35%, or 5.2 million people, due to a &ldquo;sharp decline in economic activity and migration from the front-line regions,&rdquo; according to a recent report <a href="https://bank.gov.ua/admin_uploads/article/IR_2022-Q3.pdf?v=4">published</a> by the National Bank of Ukraine.&nbsp;The International Labor Organization puts the number of unemployed at closer to 4.8 million, or around 30% of pre-war employment in Ukraine.Experts say these figures can hardly give a real picture of unemployment in the country. The war has either destroyed thousands of businesses or forced them to close, displacing workers internally and abroad. And in the country&rsquo;s center and west, the labor market is slowly coming back to life.&nbsp;Since the start of Russia&rsquo;s full-scale invasion on Feb. 24, around 10 million people, or more than a third of Ukraine&rsquo;s population, have either been displaced internally or have become refugees abroad.&nbsp;Large numbers of people who are out of work are still considered officially employed on paper, according to Tetyana Pashkina, an expert on Ukraine&rsquo;s labor market. For the first six months of this year, the number of officially registered jobless people was only 656,000, which is 23% less compared to 2021 and a far cry from the millions of people the National Banks says have lost their jobs during the war.&nbsp;According to Pashkina, many people were never able to register as unemployed as they fled abroad quickly without documents from cities being bombed and shelled en masse by Russia.&nbsp;What&rsquo;s more, nearly a fifth of the 15 million people aged 18 to 60 working in the pre-war labor market was estimated to be working in the shadow economy. In some sectors, such as trade, agriculture, and construction, the share of people working unofficially ranged between 40-60%, Pashkina said.&nbsp;While Pashkina is certain the number of people who have lost their jobs as a result of the war is enormous, she says it is &ldquo;impossible&rdquo; to calculate exactly the unemployment rate.&nbsp;Slow recovery&nbsp;Despite all the damage and terror Russia has caused in Ukraine, the labor market has slowly started to recover in Ukraine&rsquo;s central and western regions farther away from the front lines. &nbsp;<a href="https://www.facebook.com/artur.mikhno/posts/pfbid0jD48WC9nLhjRVcepTD7m2r7booVHLmhj6F9V8FdgKiyj2xoVGkf13W4gQ4kTUmUrl">According</a> to Arthur Mihno, CEO at Ukraine&rsquo;s largest job searching online platform Work.ua, in July the number of job vacancies increased by 14% compared to previous month, reaching more than 40,000 openings. &nbsp;Before the war, usually &ldquo;there was always a drop&rdquo; in vacancies during the summer time, he said. However, the number of job posts is still only 38% of the pre-war figure.&nbsp;Before the invasion, the amount of vacancies at job sites ranged from 100,000 to 120,000. &nbsp;Currently, the figure ranges from 35,000-40,000.In eastern regions, previously known for metallurgy and mining industries, there are almost no job openings due to heavy hostilities.War-torn Kharkiv, once one of the busiest cities for business and education in the country, has a modest 670 job offers, 14 times fewer than Kyiv.At the same time, in western Ukrainian regions, like Lviv and Ivano-Frankivsk, the number has already optimistically reached 80% of pre-war figures, mainly in the hotel and restaurant industry.&nbsp;&ldquo;The most difficult period of confusion and mess has already passed,&rdquo; said Pashkina.However, experts predict the downward trend in salaries to continue in the long term.According to a report <a href="https://eba.com.ua/lypen-2022-zarplaty-ne-vstygayut-za-spozhyvchoyu-inflyatsiyeyu/">published</a> by the European Business Association, wages have already been cut by 50% in some industries. Meanwhile, inflation has already reached 20.1%.&nbsp;But while some companies were forced to cut wages in order to survive during the war, &ldquo;some employers are trying to benefit from this, but that&#39;s another story,&rdquo; Pashkina said.

As Ukrainian soldiers fight Russia on the front lines, workers at Ukraine’s state employment centers are fighting their own battle: finding jobs for the hundreds of thousands of...

Ukraine’s unemployment rate record high amid war, but labor market recovering in some regions

In its brutal war of conquest in Ukraine, Russia has been destroying everything in its path since its <a href="https://kyivindependent.com/national/putin-declares-war-on-ukraine">full-scale invasion</a> began on Feb. 24.&nbsp;In addition to the immense human toll Russia&rsquo;s war has taken on Ukraine, the country&rsquo;s businesses &ndash; from small сozy cafes, cinemas, and supermarkets to large metallurgical plants and agricultural corporations &ndash; have suffered greatly from the full-scale invasion.According to the National Bank of Ukraine, direct losses of enterprises, housing, and infrastructure reached $100 billion since Russia invaded in February. This is equivalent to 50% of the country&#39;s gross domestic product in 2021.Physical damage to businesses is at an estimated $8.8 billion, according to the Kyiv School of Economics (KSE). In five months of Russia&rsquo;s war, the Russian military has damaged, destroyed, or seized more than 380 enterprises, 23 shopping centers, nearly 44,000 pieces of agricultural equipment, and 28 oil depots, KSE says.&nbsp;Some one-tenth, or 2,910, of the country&rsquo;s retail stores with a total area of 1.6 million square meters were bombed or shelled by late April, the Association of Retailers of Ukraine <a href="http://rau.ua/novyni/zbitki-ritejleriv-ukraini/?fbclid=IwAR1kYb5y3ybSatCXL-kKVxEas2CwBPiMZhAjcwZ10HG9DZ9GVYDZn6E-weM">reported</a>.&nbsp;Taking into account total economic losses, businesses and heavy industry have suffered the most out of any sector of Ukraine&rsquo;s economy with $29.8 billion in losses, according to KSE&rsquo;s findings.&nbsp;There are virtually no legal mechanisms available, internationally or domestically in Ukraine, to recover business damages caused by the war. Companies can report damages, but with a lack of proper legislation to handle all these claims, businesses may wait years before they see any compensation, if any at all.&nbsp;&ldquo;We are here like blind kittens because the next step is unclear,&rdquo; Olga Balytska, a member of the Supervisory Board at the Center for Economic Strategy, told the Kyiv Independent. &ldquo;Businesses have been left alone with their problems.&rdquo;Read more:&nbsp;<a href="https://kyivindependent.com/business/russias-war-may-halve-ukraines-economy-increasing-budget-deficit-by-billions">Russia&rsquo;s war may halve Ukraine&#39;s economy, increasing budget deficit by billions</a>&nbsp;A <a href="https://www.google.com/url?q=https://itd.rada.gov.ua/billInfo/Bills/Card/39283&sa=D&source=docs&ust=1659635764984341&usg=AOvVaw1v4uArgOLWLKuaNcPrY4H4">bill</a> approved in its first reading in Ukraine&rsquo;s Verkhovna Rada only focuses on compensation for destroyed personal property of citizens, not businesses.&nbsp;Numerous amendments have already been filed to the draft law, including some that would use leftover funds from the restoration of housing and critical infrastructure to compensate for business losses.&nbsp;Balytska says some large companies may consider defending their own interests in international arbitration courts, but for small to medium-sized businesses that is hardly an option.International arbitration &ldquo;can cost not just tens but even hundreds of thousands U.S. dollars, according to Balytska. &ldquo;It&rsquo;s exorbitant&rdquo; for many businesses. &nbsp;No plan for actionEven though there is no roadmap based on international law, experts seem to agree that sooner or later Russia will have to pay reparations to Ukraine, including compensation to companies.&nbsp;Which is why, they say, it is crucial Ukrainian businesses report damages to state authorities in any way available, in the event Russia is one day forced to pay for the damage it has caused.&nbsp;Ukrainian businesses can call the State Emergency Service directly or register the damages through Diia, a mobile app for public services in Ukraine with details about the damage or any remaining materials that may have been left behind.&nbsp;However, there are currently no legal norms in Ukraine that indicate what information sufficiently documents damage.&nbsp;As businesses wait for changes in the legislation, Balytska believes they may soon run out of patience because of a lack of clarity on how to proceed.&nbsp;Gennadiy Chizhikov, head of the Ukrainian Chamber of Commerce, says he&rsquo;s snowed in with work helping companies survive the war. Two requests &ndash; how to report on damages and how to get compensation in the future &ndash; are the most common.He says that while there is no mechanism from the state on how to deal with such situations, a presidential <a href="https://www.president.gov.ua/documents/3462022-42577">order</a> in mid-May announced the creation of a 20-member expert group that will deal with compensations.But after two months, Chizhikov has seen no solution from the group.&ldquo;Will it be a single register where companies will wait in line (for compensation), or will each company find its own way and take the case to court?&rdquo; he said. &ldquo;This is a huge question.&rdquo;Long road aheadRussia&rsquo;s massive aggression against Ukraine has left the entire legal world at a loss of what to do.&nbsp;&ldquo;Today&rsquo;s international and national legal instruments are either ineffective or non-functional,&rdquo; said Deputy Justice Minister Iryna Mudra.Even after the destruction of the Balkans caused by the Yugoslav wars in the 1990s, no proper mechanism was put in place.&ldquo;Many people died, but there wasn&rsquo;t the same scale of destruction (to infrastructure) as we have in Ukraine,&rdquo; Chizhikov said. &ldquo;Today&rsquo;s situation is unprecedented.&rdquo;In the rare case of Iraq, it took 31 years for the country, along with the work of a U.N. Compensation Commission, to <a href="https://www.reuters.com/world/middle-east/iraq-pays-last-chunk-524-billion-gulf-war-reparations-un-2022-02-09/">pay off</a> $52.4 billion in compensations to individuals, companies, and governments as a result of its invasion of Kuwait in 1990.&nbsp;Since 2014, when Russia invaded Donbas and illegally annexed Crimea, there have been no cases of business losses or damages covered by Russia after court verdicts that ruled in favor of Ukrainian businesses.&nbsp;Chizhikov hasn&rsquo;t heard of any successful cases, at least. But he says that many business losses in Ukraine&rsquo;s eastern Donbas region occupied since 2014 were due to illegal seizure instead of destruction, the current scale of which is incomparable to what was seized.There is a massive debate about which international organization will be able to handle such these types of cases when the war ends, according to Balytska.Even if Ukrainian companies report damages and other losses properly, there is no clear understanding of who will receive Russia&rsquo;s reparations and in what order.The line to get compensation from Russia is long. According to Chizhikov, there&rsquo;s Ukraine as a victim country, the countries that helped us, and, for instance, Russian tycoon-turned-dissident Mikhail Khodorkovsky who won a <a href="https://www.reuters.com/article/uk-russia-yukos-echr-idUKKBN0G00QO20140731">court battle</a> in The Hague for $50 billion in compensation.&nbsp;Both Balytska and Chizhikov said some international law firms, mostly British and American, have expressed interest in helping large Ukraine companies receive compensation through international arbitration.&nbsp;These firms are &ldquo;in a hurry now, because there may not be a lot of reparations, and there will be more people waiting to receive funds than what is actually available,&rdquo; Chizhikov said.&nbsp;Read also:&nbsp;<a href="https://kyivindependent.com/tech/ukraines-resilient-tech-industry-doing-well-in-spite-of-war">Ukraine&#39;s resilient tech industry doing well in spite of war</a>

In its brutal war of conquest in Ukraine, Russia has been destroying everything in its path since its full-scale invasion began on Feb. 24. In addition to the...

As Russia’s war continues, Ukrainian businesses struggle to compensate damages

Russia&#39;s war in Ukraine is not only killing civilians but defenseless animals as well.Marine biologists and ecologists from countries in the Black Sea region are sounding the alarm, as dolphins die en masse for the fourth month in a row.Ivan Rusev, an environmental scientist at Ukraine&#39;s Tuzly Estuaries National Nature Park, estimates at least 5,000 dolphins have died in the Black Sea between March and July.&nbsp;This number is three times higher compared to pre-war figures, according to Rusev.Dolphins use echolocation, also known as sonar, to communicate, find food, and navigate. The constant underwater noise caused by submarines of Russia&rsquo;s Black Sea Fleet and their powerful hydrocollators, as well as explosions, is causing dolphins acoustic trauma, paralyzing this vital echolocation system. &nbsp;As a result, dolphins are dying in higher numbers as they have trouble finding food and become susceptible to viruses and parasites due to weakened immune systems. As Russian warships use the Black Sea to fire missiles at Ukrainian territory, the decline is expected to continue, with devastating effects on the Black Sea ecosystem.&nbsp;If before Russia&#39;s all-out invasion on Feb. 24, biologists recorded traces of nets on the bodies of dead dolphins with their fins cut off by fishermen and poachers, now they are found untouched.&nbsp;&ldquo;I have never seen this before. This is something absolutely new and terrifying for scientists,&rdquo; Rusev told the Kyiv Independent.&nbsp;<h3 style="text-align: center;">Disaster for all</h3>The dolphin population in the Black Sea has been rapidly declining over the last hundred years.&nbsp;It has dropped more than 20 times, from 6 million last century to today&rsquo;s 253,000, according to Ukraine&rsquo;s Ministry of Environmental Protection and Natural Resources.&nbsp;Ecologists from Bulgaria, Romania, and Turkey have all reported an &ldquo;extraordinary increase&rdquo; in the number of dead dolphins washed ashore.In the Bulgarian city of Burgas alone, about 60 dead dolphins have been found around since the beginning of the year, according to ecological inspection expert Maria Andreeva.Rusev says that the number of dolphins that wash up on shore generally represents only 5% of the total that have died. Those that aren&rsquo;t found on beaches are eaten by birds, crustaceans, and other sea predators.&nbsp;The Turkish Marine Research Foundation Tudav reported that at least 80 dead dolphins have been found in the western part of the Black Sea as of May.&nbsp;Although Turkish biologists agree that the Black Sea has never had &ldquo;so many ships and so much noise,&rdquo; they say they have no direct evidence that dolphins are dying because of the war in Ukraine, some 630 kilometers north of Turkey by sea.&nbsp;However, Rusev believes that there is convincing evidence. He received laboratory tests that his colleagues conducted in Romania that showed that out of the 10 dolphins examined, half had died due to infection or parasites.&nbsp;&ldquo;A healthy dolphin is a very powerful creature and is rarely affected by such diseases. It&rsquo;s definitely acoustic trauma,&rdquo; he said.<img src="https://api.kyivindependent.com/storage/291918128-2015266248659457-7439286288027142632-n-1658333213bw4NM.jpg" style="width: auto;" alt="" id="isPasted" class="fr-fic fr-dii">An employee of Ukraine&#39;s Tuzly Estuaries National Nature Park in Odesa Oblast examines the body of a dolphin that washed up on shore on July 16, 2022.What&rsquo;s more, constant explosions in the Black Sea trigger dolphins to swim rapidly to the surface of the water causing air embolism &mdash; similar to &ldquo;the bends,&rdquo; or decompression sickness, that occurs when scuba divers surface too quickly and nitrogen bubbles form in the bloodstream.&nbsp;&ldquo;When it happens quickly, blood clots appear and dolphins die,&rdquo; said Rusev.Radioactive pollution and chemical pollution from missiles is also threatening wildlife in the Black Sea, but the effects will likely only be visible later.&nbsp;Even before the war, one of the conditions for Ukraine to enter the European Union was to raise the percentage of protected natural areas from 6% to 15% by 2025.&nbsp;But not much was done to reach that goal. If the dolphins, who also act as sanitarians of the sea by eating sick fish, continue to disappear, life in the sea will degrade, the expert fears.&ldquo;Many of the unique fish species we have today will disappear. We will lose a whole ecosystem,&rdquo; said Rusev.

Russia's war in Ukraine is not only killing civilians but defenseless animals as well. Marine biologists and ecologists from countries in the Black Sea region are sounding the...

More than 5,000 dolphins die in Black Sea as a result of Russia’s war

Ukrainian farmers begin the July harvest knowing there may be nowhere to store their grain or export it, as Russia&rsquo;s naval blockade of Ukrainian Black Sea ports enters its fifth month.&nbsp;According to Ukraine&#39;s estimates, 22 million tons of grain already stockpiled across the country remain in their silos. By fall, that number <a href="https://edition.cnn.com/europe/live-news/russia-ukraine-war-news-07-05-22/h_aed4a8628fdc5c2f562cc33f539cdcbb">may reach</a> 60 million.&nbsp;While the Kremlin has failed to reduce Ukraine to a landlocked country, Russia has captured naval superiority in the northern Black Sea, obstructing ports through which 95% of Ukraine&rsquo;s exports once flowed, according to the Ukrainian Sea Ports Authority.&nbsp;This means Ukraine is currently only able to export 1.5 million to 2 million tons of grain a month &ndash; one-fifth of its pre-war figures &ndash; via 11 railway crossings to the EU and three ports on the Danube River.Negotiations on unblocking the ports have all but stalled as world leaders make feverish attempts to prevent a new wave of famine threatening dozens of vulnerable countries. And as Russia continues to deny responsibility, demanding sanctions relief while targeting grain silos and looting Ukrainian grain, any hopes of ending the blockade are quickly evaporating.&nbsp;According to Agricultural Minister Mykola Solskyi, the way to successfully deblock Ukraine&rsquo;s Black Sea ports is by defeating Russia militarily.&nbsp;&ldquo;This is why we are asking and requesting our partners to give us weapons to do this, to defeat Russia &ndash; it&rsquo;s the only way to solve the problem,&rdquo; Solskyi told the Kyiv Independent.&nbsp;Grain at riskUkraine&rsquo;s upcoming harvest is expected to reap an additional 35 million tons of grain, says Nikolay Gorbachov, head of the Ukrainian Grain Association. Already unable to move last year&rsquo;s yield, there may be nowhere to store this season&rsquo;s harvest.&nbsp;Prior to Russia&rsquo;s full-scale war, Ukraine&rsquo;s grain terminals at the seaports of Mykolaiv, Odesa, and Kherson, easily loaded vessels with 12,000-13,000 tons of grain per day. Some ships could even carry up to 40,000 tons per day.&nbsp;By contrast, the three ports still operating in Ukraine &ndash; Izmail, Reni, and Kiliya &ndash; are only able to load up to 1,000 tons of grain per day. All three ports are in Odesa Oblast.Railway transportation has grown in response. By the end of May, grain exporters managed to transport seven times more grain monthly compared to their pre-war capacity of 200,000 tons per month via railway going to western Ukrainian borders, according to Gorbachov.&nbsp;But this solution has reached its limit, experts say. Ukraine&rsquo;s railway infrastructure, unlike its seaports, is not equipped to handle all of the grain the country produces for international markets.As a result, nearly 100 cargo ships loaded with Ukrainian grain lined up to enter Romania&rsquo;s Sulina Canal a few kilometers from its border with Ukraine due to the waterway&rsquo;s inability to accommodate additional vessels.&nbsp;Even as new projects are undertaken to expand Ukraine&rsquo;s export capacities via its western borders, Gorbachov says &ldquo;European infrastructure is not able to process the volume of grain that Ukraine can offer.&rdquo;<img src="https://api.kyivindependent.com/storage/graph-3-1657207468VGw8S.png" style="width: auto;" class="fr-fic fr-dib" alt="">And then there is the grain harvested in Russian-occupied territories, in which Solskyi says farmers are working at a risk to their own lives.&nbsp;&ldquo;They harvest grain knowing it could be stolen,&rdquo; the agricultural minister told the Kyiv Independent.&nbsp;Ukraine has also called on world leaders to reject grain shipments from Russian-flagged cargo ships it says are carrying stolen Ukrainian grain.&nbsp;On July 2, Ukraine <a href="https://www.politico.eu/article/ukraine-turkey-urgent-measure-grain-ship-black-sea/" rel="noopener noreferrer" target="_blank">asked</a> the Turkish government to take &ldquo;urgent&rdquo; measures to detain the Russian-flagged Zhibek Zholy cargo ship that was carrying 7,000 tons of stolen grain from the Russian-occupied port of Berdiansk.&nbsp;But on July 4, a Ukrainian investigative journalism team Schemes <a href="https://www.radiosvoboda.org/a/news-skhemy-zerno-turechchyna/31928702.html">reported</a> that satellite images showed that ships loaded with grain have been leaving Ukrainian ports in the occupied territories and unloading in Turkey.&nbsp;Meanwhile, Russia has targeted Ukraine&rsquo;s grain storage facilities. As of April, Russia had destroyed six grain storage facilities in Ukraine. And on June 4, a Russian missile strike hit and destroyed Ukraine&rsquo;s <a href="https://twitter.com/JosepBorrellF/status/1533870695586971648" rel="noopener noreferrer" target="_blank">second-largest grain storage facility</a> in Mykolaiv.&nbsp;<img src="https://api.kyivindependent.com/storage/grain-storage-1657020322CCjAi.jpeg" style="width: auto;" class="fr-fic fr-dib" alt="">A grain storage facility in Siversk, Donetsk Oblast on fire after a Russian shelling on May, 25 2022. (Kaoru Ng)At an impasseAs the blockade bottlenecks the world&rsquo;s supply of food, world leaders have attempted to initiate diplomatic efforts to loosen Russia&rsquo;s hold on Ukrainian grain.The EU and the UN are attempting to negotiate the creation of Black Sea grain corridors from Ukraine&rsquo;s ports.&nbsp;EU&rsquo;s Foreign Affairs Chief Josep Borrell <a href="https://www.dw.com/en/eu-tries-to-get-grain-from-ukraine-as-russias-war-drags-on/a-62206745">told</a> Deutsche Welle on June 21 that he is confident that the UN can reach an agreement with Russia, adding that resisting the pressure from the international community is &ldquo;unthinkable.&rdquo;&nbsp;But the U.S. is skeptical that UN-Russia talks will free Ukrainian grain. Describing Moscow&rsquo;s request for the lifting of sanctions in exchange for easing the blockade as &ldquo;extortion diplomacy,&rdquo; a U.S. official <a href="https://www.politico.com/news/2022/06/05/un-russia-ukraine-grain-00037240" rel="noopener noreferrer" target="_blank">said</a> the White House will not agree to a deal that lifts economic pressure from the Kremlin, according to Politico.Turkey, which has authority over maritime traffic through the Bosphorus strait when entering the Black Sea, is also attempting to broker talks between the United Nations, Ukraine, and Russia to discuss a Black Sea grain corridor. <a href="https://www.milliyet.com.tr/gundem/turk-gemileri-ukraynadan-ayriliyor-6777310" rel="noopener noreferrer" target="_blank">According</a> to Turkish newspaper Milliyet, the talks are set to take place in Istanbul in the coming weeks.&nbsp;On July 4, President Volodymyr Zelensky <a href="https://www.eurointegration.com.ua/news/2022/07/4/7142576/" rel="noopener noreferrer" target="_blank">confirmed</a> that Ukraine is currently in negotiations with Turkey and the UN.&nbsp;Turkey offered to create a command center with an office in Istanbul, as well as routes for the export of Ukrainian grain, ensuring the safety of ships and demining ports.However, Gorbachov from the Ukrainian Grain Association, whose members are responsible for 90% of the country&#39;s grain exports, doubts Turkey&rsquo;s proposal.He called it &quot;non-working,&quot; since the purchased grain belongs to exporters and these are mainly international companies, carefully looking at geopolitics. For such companies, Turkish-UN-Russia guarantees cost little.&ldquo;For these companies, real guarantees are American, British, French, but not Turkish,&rdquo; said Gorbachov. &ldquo;It can be done technically if, for instance, a British or American aircraft carrier enters (the Black Sea)&rdquo; to provide protection for vessels carrying grain.&nbsp;But Russia&rsquo;s guarantee is worth nothing according to Gorbachov. &ldquo;We cannot trust their words. They are liars,&rdquo; he said.No end in sightAs Western leaders scramble to find a solution and President Volodymyr Zelensky calls for additional weapons to protect Ukraine&rsquo;s vessels and key maritime routes, unblocking the Black Sea route without military intervention remains difficult.&nbsp;Russia, along with others in the West, has also called for Ukraine to demine its waters to allow for the safe passage of grain. Ukrainian officials reject these proposals, saying that demining the seas around Ukraine&#39;s ports would leave them vulnerable to amphibious Russian attacks.&nbsp;Moscow, meanwhile, is seeking to pressure European nations to ease sanctions and to push for a ceasefire on Russian terms as it uses the imminent threat of global hunger as leverage, Sidharth Kaushal, a naval expert with the Royal United Services Institute think tank, told the Kyiv Independent.Similar to how the Syrian civil war was preceded by a sharp rise in food prices, Russia is aware that it can employ &ldquo;second-order effects such as state instability&rdquo; to effectively pressure European nations, says Kaushal.&nbsp;The Kremlin intends to &ldquo;undermine Western cohesion and leverage global opinions,&rdquo; Kaushal said.&nbsp;He also said that Russia is also likely trying to curry favor with lower income countries through the delivery of grain, while pinning the blame on the West and Ukraine for the lack of food supplies and rising prices.&ldquo;If Russia was thinking about how to feed these people, they wouldn&rsquo;t target Ukraine&rsquo;s infrastructure, including silos with grain that is ready to be exported,&rdquo; said Oleksandr Khara, foreign affairs and security policy expert at the Center for Defense Strategies.&nbsp;<img src="https://api.kyivindependent.com/storage/graph-2-1657207529AwORD.png" style="width: auto;" class="fr-fic fr-dib" alt="">Andrii Klymenko, head of the Institute for Black Sea Strategic Studies&rsquo; Monitoring Group, said he doesn&rsquo;t expect negotiations to yield positive results, even if the U.S. or Germany get involved.Klymenko said that Western countries will not commit to a military escort for the transportation of Ukrainian grain as Russian forces will target a ship under any flag, potentially leading to a war with NATO.&ldquo;The blockade will continue until the war is over,&rdquo; Klymenko told the Kyiv Independent.

Ukrainian farmers begin the July harvest knowing there may be nowhere to store their grain or export it, as Russia’s naval blockade of Ukrainian Black Sea ports enters...

Ukrainian grain has nowhere to go as Russian blockade persists

<figure class="wp-block-image size-large"><img src="https://api.kyivindependent.com/storage/2022/05/279787111_369109875258512_1954977469097038780_n-1024x768.jpg" alt="" class="wp-image-36990"/><figcaption>Firefighters put out a fire in the museum of Ukraine's poet and philosopher Hryhoriy Skovoroda after Russia's missile attack on May 7, 2022. (State Emergency Service in Kharkiv Oblast/Facebook)</figcaption></figure>



In 1937, Pablo Picasso, widely acknowledged as one of the greatest painters in history, said after visiting an exhibition in Paris: “I bow down before the artistic miracle of this brilliant Ukrainian.”



He <a href="https://www.cnn.com/style/article/maria-prymachenko-paintings-ukraine-peace-symbol/index.html">was talking</a> about the folk painter Maria Prymachenko and her paintings in the “naive art” genre.&nbsp;



Eighty-five years later, on Feb. 26, a collection of 25 of her works almost burned up when the Russian military fired on a museum in the village of Ivankovo in Kyiv Oblast. 



The museum’s other exhibits, such as works of the Ukrainian embroiderer Hanna Veres, did not survive the fire.&nbsp;



“Putin wants to destroy European heritage and culture, wipe them off the face of the earth,” Ukraine's Culture Minister Oleksandr Tkachenko <a href="https://www.kmu.gov.ua/news/oleksandr-tkachenko-sotni-ni-v-chomu-ne-vinnih-zhertv-totalne-rujnuvannya-hramiv-soboriv-ta-muzeyiv-os-cina-ne-zakritogo-neba-nad-ukrayinoyu?fbclid=IwAR1iXZHpPfL1n88OOMaY-JX6Qm_wvkfZWQiBHSaz7zU4BA8_jpXAm3CMQsQ">said</a> in early March.&nbsp;



Almost 100 days into the Kremlin's large-scale invasion of Ukraine, hundreds of cultural heritage sites in the country have been destroyed and thousands of rare historical artifacts have been stolen.



As of May 27, the Culture Ministry has <a href="https://mkip.gov.ua/news/7196.html">documented</a> 367 war crimes against Ukraine's cultural heritage, including the destruction of 29 museums, 133 churches, 66 theaters and libraries, and even a century-old Jewish cemetery. This cemetery in Hlukhiv, Sumy Oblast, which is a site of pilgrimage for Jews, was hit by two Russian missiles on May 8.&nbsp;



“Russians have the precise aim of destroying our culture as part of our identity, something that distinguishes Ukraine from Russia,” Bloomberg <a href="https://www.bloomberg.com/news/features/2022-03-26/ukraine-s-museums-are-leading-a-cultural-rescue-mission?fbclid=IwAR2lKENZrwF2C9HsuYeT3CiA_7SVTuR0E0NWjX0NZL9wM5jA_yT1DGq8hpw">quoted</a> Olha Honchar, co-founder of Ukraine's Museum Crisis Center, as saying. “It has become quite clear now for the whole world that Russia bombs museums, archives, and theaters not by accident.”



Wave of destruction



The destruction of the museum in Ivankovo was just the beginning. Russia's barbaric bombing barrage has wrecked many iconic artifacts of the nation's storied past. 



In three months of the all-out war, Kharkiv Oblast, which borders Russia, saw the most damage to art and landmarks. By mid-May, every fourth crime against Ukraine's cultural heritage was recorded there.



Most of these crimes in the region, 79 cases, took place in Kharkiv itself, the regional capital and Ukraine's second-largest city. In early March, a Russian fire smashed the windows of the Kharkiv Art Museum, which housed 25,000 masterpieces by Ukrainian and world artists.&nbsp;



A version of the famous painting “Cossacks Write a Letter to the Turkish Sultan” by Ukrainian-born artist Ilya Repin was evacuated from the museum, according to Marina Filatova, the head of the foreign art department. The main version of the painting is in a museum in Russia, like many artworks created by Ukrainians during the Russian Empire times. 



However, the state of many other rare and old paintings displayed in the museum can only be assessed after the war. Museum workers had to remove them from the walls in a rush.



On the night of May 7, Russian missiles hit the museum and historic home of Ukraine’s famous poet and philosopher Hryhoriy Skovoroda, located in the village of Skovorodynivka in Kharkiv Oblast.&nbsp;The building was severely damaged, and a number of valuable exhibits were buried under the rubble.&nbsp;



“Not every terrorist will even think about targeted missile strikes on museums,” President Volodymyr Zelensky <a href="https://t.me/V_Zelenskiy_official/1544?fbclid=IwAR2I7AYAcQhLoGnYXmpLNagJ5igOUAmPI_trlvI6uj5EdueGQMYvgPvGAGE">said</a> in response to the destruction. “And this is the kind of army that is fighting against us.”



Some of the worst of the devastation hit the city of Mariupol in Donetsk Oblast. It lost 53 historic sites, including its drama theater, built in the late 1880s. This theater was destroyed on March 16 by a bomb dropped by a Russian aircraft, <a href="https://apnews.com/article/Russia-ukraine-war-mariupol-theater-c321a196fbd568899841b506afcac7a1?utm_source=Twitter&amp;utm_medium=AP&amp;utm_campaign=SocialFlow">which reportedly killed</a> at least 600 civilians that were taking shelter there. 



<figure class="wp-block-image size-full"><img src="https://api.kyivindependent.com/storage/2022/05/newFile.jpg" alt="" class="wp-image-36992"/><figcaption>A man passes by the Mariupol Drama Theater bombed by the Russian military on March 16, 2022. At least 600 people reportedly died in the blast. (Reuters)</figcaption></figure>



A month later, the city council <a href="https://t.me/mariupolrada/9310">reported</a> that Russian occupiers had looted a unique 700-piece collection of coins and medals from a local museum in Mariupol. They allegedly transported the collection to the Russian-occupied part of Donetsk Oblast.



An art museum named after Arkhip Kuindzhi, a famous Mariupol-born landscape painter of Pontic Greek descent, was robbed as well.&nbsp;



On April 27, invaders <a href="https://t.me/andriyshTime/513">took</a> all valuable exhibits from the museum, including three Kuindzhi paintings and “Near the Shores of the Caucasus,” an original painting by famed marine artist Ivan Aivazovsky.



The looted Kuindzhi piece called “Red Sunset,” painted over 115 years ago, alone costs more than $700,000, according to Tatyana Buli, the head of the museum, who evacuated the city and is now in Kyiv.



“What I hid (in the basement of the museum), it survived,” Buli <a href="https://www.bbc.com/ukrainian/features-61472927">told</a> the BBC. “But you see, everything was handed over to the occupiers.”



Russian media reported that more than 2,000 exhibits were taken out of Mariupol museums for “temporary storage” in occupied Donetsk.&nbsp;



In four other Ukrainian oblasts – Kyiv, Chernihiv, Sumy, and Luhansk – the ministry recorded almost 160 war crime cases against historical heritage.



In the 1,300-year-old city of Chernihiv, the Russian military destroyed the former museum of Ukrainian antiquities, a 19th-century building built in the Gothic Revival style, most recently serving as a youth library.



<figure class="wp-block-image size-large is-resized"><img src="https://api.kyivindependent.com/storage/2022/05/da095a712c0c1d978b071dae17c43285-1024x640.jpeg" alt="" class="wp-image-36993" width="840" height="525"/><figcaption>A 19th-century building in Chernihiv built in the Gothic Revival style was destroyed by a Russian missile on May 7, 2022. (Ministry of Internal Affairs of Ukraine/Facebook)</figcaption></figure>



“The building survived shelling by the Bolsheviks in 1918 and 1919 and World War II under the bombs of the German Nazis,” <a href="https://www.facebook.com/laievsky/posts/5316862998347717">wrote</a> Serhiy Laevsky, the director of the history museum in Chernihiv.&nbsp;“The Moscow Nazi horde came and ruined a monument of local history.”



In late April, Ivan Fedorov, the mayor of the occupied city of Melitopol in Zaporizhzhia Oblast, reported another shocking news: Russian invaders stole a “unique and priceless” collection of 2,300-years-old Scythian gold from the local history museum in Melitopol.&nbsp;



Gold artifacts were discovered in massive burial mounds, known as kurgans, by archaeologists in the 1950s. In all, the occupiers stole 198&nbsp;items, including floral ornaments and breastplates, <a href="https://www.facebook.com/CTRC2015/posts/3157292147884147">according</a> to the Crimean Tatar Resource Center.&nbsp;



They also took non-Scythian exhibits, like 48 pieces of historical weaponry from the 17th through the 20th centuries, as well as 76 items made at least 1,500 years ago.



“This is one of the largest and most expensive collections in Ukraine,” said Fedorov.&nbsp;



Poor preparation



While Russian forces are to blame for the destruction of so much of Ukraine's cultural heritage, some Ukrainian experts believe the country hasn't done enough to protect its art and history before the escalation. 



Eight days before Russia's invasion of Ukraine, art historian Konstantin Akinsha was horrified at what might happen to museums if war broke out.



Most museums were not prepared. 



“In a full-scale Russian invasion, practically all significant museum collections would be in danger,” Akinsha <a href="https://www.wsj.com/articles/ukraines-museums-in-the-crosshairs-russia-invastion-kyiv-odessa-vasily-kandinsky-ilya-repin-golden-pectoral-scythian-gold-11645038773">wrote</a> in his column for the Wall Street Journal.&nbsp;



“The majority of museums have miserable budgets and would not even be able to afford the necessary crates,” he said. Underfunding has made the notion of evacuating exhibits to safer facilities under guard even hazier.



Moreover, the Culture Ministry had not prepared any plans for the centralized evacuation of museum exhibits or instructions on how to act during a war, according to Tetyana Rud, chief curator of the Kharkiv Literary Museum.



The decision to save the collections fell on the shoulders of each museum separately.



“Most of the buildings have basements, where many directors heroically spent the first two weeks of the war,” said Yana Barinova, the head of Kyiv City Council’s cultural department.



The highest levels of government made no other publicly-known efforts to preserve the museum collections in the days leading up to the war. Barinova believes the protection of museum collections was not a top priority for the government. 



It was “part of President Volodymyr Zelensky’s efforts to prevent panic,” Akinsha believes.

In 1937, Pablo Picasso, widely acknowledged as one of the greatest painters in history, said after visiting an exhibition in Paris: “I bow down before the artistic miracle...

Russia destroys Ukraine’s historic heritage, steals rare collections from museums

<figure class="wp-block-image size-large"><img src="https://api.kyivindependent.com/storage/2022/05/278832152_7268747553198434_3496890909191458701_n-1024x683.jpg" alt="" class="wp-image-33932"/><figcaption>The first batches of bulletproof vests from Israel and other countries arrived in Lviv IT Cluster in mid-April as part of an ongoing project to equip Ukrainian defenders. (Facebook/Stepan Veselovskyi)</figcaption></figure>



Unlike Ukraine's manufacturing plants, warehouses and stores, many of which lie in ruins, its IT sector has had much better luck. 



The tech industry reacted with lightning speed to the new reality dictated by Russia's all-out war against Ukraine.



Early in the invasion and even before it, companies started to relocate whole teams into safer western Ukrainian regions. Other IT specialists continued to work remotely even in dangerous areas close to the front line.



The results surprised many. In the first quarter of 2022, the industry’s export revenue hit a record $2 billion despite martial law and mobilization, up 25% year-over-year, according to Danylo Hetmantsev, the head of the parliament's finance and taxation committee.&nbsp;



In March, exports of IT services fell by just 4% compared to 2021, “despite the shock of the hottest phase of the war,” he said.&nbsp;



Since they need access to only two things – a laptop and a stable Internet connection – Ukrainian techies turned out to be as efficient at work as they were before the war, according to Natalia Koliadko, head of human resources at EPAM, the largest tech company in Ukraine by the number of employees, 14,000 people.&nbsp;



“We were astonished at how timely our employees completed their projects for clients, sitting in Kharkiv basements and other horrible places,” <a href="https://www.youtube.com/watch?v=RDpMhVt7jmQ&amp;t=913s">said</a> Koliadko.&nbsp;



According to Konstantin Vasyuk, head of the IT Ukraine Association, 77% of IT companies in Ukraine were able to attract new clients and nearly 60% expect that they will grow up to 30%.&nbsp;



He forecasted that in 2022 the industry will pay 20-25% less in taxes, which would still be a hefty $4-5 billion.



“Today, the IT industry is one of the few that support the economy of the state and will help the future recovery,” said Vasyuk.



But experts also predict that the war may yet severely damage Ukraine's IT sector. 



Industry’s new realities



The war caused a massive domestic relocation of tech professionals. As of May, 35,000 IT specialists of the country's 285,000 had moved to Zakarpattia Oblast alone, according to Ulyana Kratko, the IT Expert Lead at Ukraine’s online recruitment service Robota.ua.



The western city of Lviv typically employs 30,000 techies. That number has more than tripled. 



In addition, some IT specialists decided to join the Ukrainian military to defend the country against Russia's invasion.



According to a survey that the IT Ukraine association conducted among 30 companies employing 34,000 techies, almost 700 of their employees joined the Ukrainian army as of mid-April.



Meanwhile, the war put future contracts in the sector at risk.



Currently, every fifth IT company in the country lacks orders from clients due to the war and expects more tax breaks from the government, according to a survey conducted by Robota.ua in April.



While almost 30% of IT companies did not suffer losses due to the war, every 10th company has already lost up to $50,000. According to Kratko, some have lost up to $1 million.&nbsp;



“Over the past month and a half, the company has added perhaps two new clients, four times less than before the war,” said Intellias CEO Vitaly Sedler. “They postponed decisions to enter the Eastern European market and started to&nbsp; reconsider whether to work with Ukrainian companies.”



As a result of the all-out invasion, 2% of all IT companies in Ukraine were forced to close their businesses, the study said.



Still, the falling revenues did not push most companies into mass layoffs or deep wage cuts. Only 6% of IT companies in Ukraine had to cut up to 60% of salaries, while just 4% of companies laid off up to 25% of their staff.



Instead, four big tech companies – Intellias, Genesis, Squad, and Parimatch – have already opened offices in Uzhhorod, the capital of Zakarpattia Oblast, and are looking to hire and grow their teams.



Future risks



In spite of solid performance, the IT sector in Ukraine may be looking at an uncertain future. Experts believe that the relocations will not stop in western Ukraine.



“It’s only the first wave of the relocation, it won’t be the last one,” said Tetiana Laduba, head of Employer Brand Development at Ciklum, one of the largest software developers in Ukraine headquartered in the UK. “The second wave of relocation of IT professionals abroad may also take place."&nbsp;



Currently, men between the ages of 18 and 60 can't leave the country due to martial law. After the war, some IT developers are likely to depart, according to HR specialists. Some are already signing contracts with global IT companies, which will have them relocate as soon as they are allowed to leave the country.



“Competition at this market will only grow,” said&nbsp;Laduba. “And the demand for digital transformation remains high.”



The military threats will have a strong impact, changing people’s plans. In the mid-term perspective, for up to five years, IT professionals will choose the location, not the company.



“People are under stress,” said Laduba, explaining the urge for relocation.



Vladislav Savchenko, head of the European Software Engineering Association, sees another worrying trend: There are 20,000 vacancies in the tech sector, which is less than half the number of job seekers, 45,000. Before the war, it used to be the other way around. 



“This is a very bad trend, if we talk about the prospect of 3-6 months,” Savchenko <a href="https://www.bbc.com/ukrainian/features-61241033">said</a> in an interview with BBC News.&nbsp;&nbsp;



Plus, many investors already fear that Ukraine may experience problems with the Internet and that IT specialists may be mobilized if the war escalates.&nbsp;



This could result in billions in losses for the sector in the long run. While it took decades for the Ukrainian IT industry to become world-famous for its tech talent, the country “could lose it in a year, and that's sad,” Savchenko said.

Unlike Ukraine's manufacturing plants, warehouses and stores, many of which lie in ruins, its IT sector has had much better luck. The tech industry reacted with lightning speed...

Ukraine's resilient tech industry doing well in spite of war

<figure class="wp-block-image size-large"><img src="https://api.kyivindependent.com/storage/2022/03/GettyImages-1239530301-1024x694.jpg" alt="" class="wp-image-22308"/><figcaption>Civilians evacuate along humanitarian corridors from the Ukrainian city of Mariupol on March 26, 2022. (Stringer/Anadolu Agency via Getty Images)</figcaption></figure>



After Ukraine ended 2021 with a historically high gross domestic product (GDP) of $195 billion, top officials issued optimistic forecasts for the coming year.



Then the war began, killing all of the country's economic plans.&nbsp;



As of late April, the Russian military has destroyed 30% of Ukraine’s infrastructure, causing $100 billion worth of damage. 



Total losses to the economy, both direct and indirect, have already reached over $560 billion, according to the head of President Volodymyr Zelensky's office, Andriy Yermak.



Russia's full-scale invasion has forced more than five million people to flee Ukraine. Around 60% of small- and medium-sized businesses are currently closed or suspended.



<a href="https://www.worldbank.org/en/region/eca/publication/europe-and-central-asia-economic-update">According </a>to World Bank estimates, Ukraine’s economy will contract by 45% in 2022.&nbsp;



“This is already terrifying,” said Deputy Director at the Center for Economic Strategy <meta charset="utf-8">Maria Repko. “This means that we no longer have a third of our economy.”



According to Ukraine's State Statistics Service, inflation in Ukraine may quadruple to 15-20% by the end of the year.



The blocked ports of the Azov and Black seas killed maritime shipping and cut half of the country’s exports, as well as 90% of grain trade with foreign countries.&nbsp;



As of early May, around 4.5 million tons of grain were stuck at Ukrainian ports, according to Martin Frick, the World Food Programme director in Germany.



“(Logistics) were ruined. Old supply chains through the ports are not working and won’t resume operation in the nearest future,” <a href="https://www.youtube.com/watch?v=15n9Pwrd8xw">said</a> Repko.



In March, Ukraine exported just 5.97 million tons of goods worth $2.7 billion. Imports fell by two-thirds to 1.6 million tons worth $1.8 billion due to an unprecedented decline in consumer demand.



Russia’s invasion is already “sending shockwaves throughout the globe,” according to Kristalina Georgieva, managing director of the International Monetary Fund.



“The economic consequences from the war spread fast and far, to neighbors and beyond,” Georgieva said during her curtain-raiser <a href="https://www.imf.org/en/News/Articles/2022/04/14/sp041422-curtain-raiser-sm2022">speech</a> to the IMF–World Bank Spring Meetings.&nbsp;



Russia’s war will be among the top reasons for the decline in global growth this year and the next, she said. The Fund will downgrade their forecasts for 143 economies, which account for 86% of global GDP.



Budget deficit



Fending off the war has cost big bucks for Ukraine.&nbsp;



According to Danylo Hetmantsev, the head of the Ukrainian parliament's finance and taxation committee, budgetary spending has quadrupled compared to that of peacetime.&nbsp;The monthly budget deficit currently ranges from $5-7 billion, most of which goes to the military and social support.



At the same time, the state's main sources of income are in trouble.&nbsp;Total budget revenues have fallen by 75%.



Dividends paid by state-owned enterprises, which previously covered 30% of all revenues, are going down. Other forms of income are also expected to decline. Before the war started, Ukraine's Finance Ministry planned to collect $18 billion of taxes on imported goods, $14 billion in value added tax, and $2.6 billion in excise taxes in 2022.



After one month of all-out war, the country's customs managed to collect only a fifth of the planned revenues – $240 million instead of the expected $1.3 billion.



In addition, the government has allowed businesses to switch to a simplified taxation system, allowing them to pay 2% of turnover instead of all other taxes, including income tax and VAT, among others.



In mid-March, the government dropped fuel VAT from 20% to 7% tax so farmers could buy enough for the season's sowing campaign and to enable the delivery of critical supplies like food and medicine.



The government is already planning to restore some taxes. A bill has been registered in the Verkhovna Rada proposing to raise VAT back up to 20%



According to Hetmantsev, import taxes will return soon as well, as this is already negatively affecting domestic producers who have resumed operations.



“These tax benefits have already reached their goal, filling our market and stores with goods,” he said. “Now we need to move to normal business and tax conditions.”&nbsp;



The Russian military destroyed or damaged many of the country’s 500 largest companies that accounted for 30% of the nation’s GDP.&nbsp;



As of mid-April, the total amount of destroyed assets reached $80 billion.&nbsp;



<figure class="wp-block-gallery columns-1 is-cropped"><ul class="blocks-gallery-grid"><li class="blocks-gallery-item"><figure><img src="https://api.kyivindependent.com/storage/2022/05/Screenshot-2022-04-24-at-15.04.02-1024x379.png" alt="" data-id="30997" data-full-url="https://kyivindependent.com/wp-content/uploads/2022/05/Screenshot-2022-04-24-at-15.04.02.png" data-link="https://kyivindependent.com/?attachment_id=30997" class="wp-image-30997"/></figure></li></ul><figcaption class="blocks-gallery-caption">Charts showing the economic damage of Russia's war. (Center for Economic Strategy)</figcaption></figure>



Although the National Bank decided to cover the March deficit with 2021 profits, the risks of deficit expansion in the future are high, according to Daryna Marchak, head of the center for analysis of public finance at the Kyiv School of Economics.



“Revenues will fall even more. Now the main focus should be on borrowing,” Marchenko said.



If the deficit is covered only via emission of the national currency, as opposed to foreign tranches, it will only lead to an increase in inflation.



According to Repko, Ukraine needs to attract grants, not loans, from international donors. If the government still decides to take loans, they must be long-term, with very low interest rates.



Reviving economy



Rebuilding ruined infrastructure and cities is among Ukraine's top priorities.&nbsp;



In order to achieve this, the country will need up to $1 trillion, according to Alex Nikolsko-Rzhevskyy, Professor of Economics at the U.S. University of Lehigh.



He proposes to use Russian assets as collateral for reconstruction loans.



For Nikolsko-Rzhevskyy, the question is not whether the West can collectively "afford a trillion-dollar bill," but of Russia's obligation to pay for its crimes.



“Only in this way a lesson will be learned and justice will be served,” <a href="https://voxukraine.org/en/marshall-plan-and-reparations/">said</a> Nikolsko-Rzhevskyy.



The Ukrainian government is also working to keep the country's surviving companies afloat.



For this purpose, Ukraine's economy and finance ministries have launched an <a href="http://relocate.prozorro.sale/">online platform</a> to help businesses relocate to safer, western regions. Around 400 of 1,500 enterprises have managed to move their operations to western Ukrainian regions, according to Hetmantsev.



“We are fighting for every hundredth, every thousandth share of GDP that we are now losing,” he said. “This is a saved part of the economy.”

After Ukraine ended 2021 with a historically high gross domestic product (GDP) of $195 billion, top officials issued optimistic forecasts for the coming year. Then the war began,...

Russia’s war may halve Ukraine's economy, increasing budget deficit by billions

<figure class="wp-block-image size-large is-resized"><img src="https://api.kyivindependent.com/storage/2022/01/48831370952_d61a09a08e_k-1-1024x683.jpg" alt="" class="wp-image-7220" width="840" height="560"/><figcaption>A man prints out banknotes of the Ukrainian national currency hryvnia at Ukraine's National Bank banknote factory on Oct. 1, 2019 in Kyiv. (Yelyzaveta Serhiienko / Press office NBU)</figcaption></figure>



As Russia was preparing to invade Ukraine, experts feared that the Ukrainian banking system would collapse in the event of an all-out war.



The closure of Ukraine's main banks, cashless ATMs, and free fall of the national currency were expected by many.



Yet, the Ukrainian banking system proved the opposite, remaining functional two months into Russia's ongoing war.



“For everyone, it is just a miracle how Ukraine was able to keep the banking system alive and make it work during the war,” Ruslan Chernyi, the chief editor of Financial Club news outlet, told the Kyiv Independent.



He estimated that around 70% of bank branches continue to operate across the country. The rest cannot work due to their proximity to the war zones in the east and south. People can easily use online banking apps and non-cash payments without limits.&nbsp;



Banks do not have liquidity problems, according to Yevhen Dubogryz, an expert at the nonprofit CASE Ukraine think tank. Only four out of a total of 69 banks currently face significant liquidity risks, while another three have slightly higher risks due to the majority of their portfolio focusing on retail lending or operations in war-torn regions.



And for the next six months, no changes are expected in this aspect.



"Banks have enough resources to keep cash outflow even in the worst-case scenarios," said Dubogryz during an&nbsp;<a target="_blank" href="https://www.facebook.com/cost.ukraine/videos/1035673987331684" rel="noreferrer noopener">online</a>&nbsp;webinar.



In March, Ukraine’s international reserves grew by 2% to $28.1 billion, mainly due to the tranches from the International Monetary Fund, the World Bank, and the EU.



And the tendency may persist.



“The dynamics of filling the reserves should be the same,” Pervin Dadashova, director of the central bank’s financial stability department, told the Kyiv Independent.



At the same time, the chances of restoring the pre-war scale of earnings in the banking sector are decreasing daily.



“If the war continues at a similar pace, the banks will start to close at some point,” said Chernyi.&nbsp;



Right decisions&nbsp;



Two key factors played a vital role in Ukraine’s “banking miracle” – effective central bank policies and a major clean-up of the system launched after the 2014 economic crisis, which too was sparked by Russia's illegal occupation of Crimea and invasion of the Donbas.



Nearly 100 insolvent Ukrainian banks were liquidated, while some were nationalized, like the country's largest PrivatBank, previously owned by oligarchs Ihor Kolomoisky and Hennady Boholyubov.



The Covid-19 pandemic also helped Ukraine's banking sector, speeding up digitalization and normalizing remote work, according to Dadashova.&nbsp;



On Feb. 24, when Russia started an all-out invasion, the National Bank had a concrete plan on how to act.



The Bank immediately froze the exchange rate of the national currency – 29.25 hryvnias for one U.S. dollar. It also banned the online purchase and sale of foreign currency by banks to individuals.



“It became clear very fast that there would be no foreign exchange earnings coming to Ukraine. It would affect the stability of the (financial) market,” said Dadashova.



On April 14, the central bank eased the ban and allowed banks to sale foreign currency in cash to people. The move was made to reduce illegal exchange points across the country and secure exchange operations for citizens.



Additionally, quick refinancing and a ban on foreign exchange transactions eased pressure on the hryvnia, according to the&nbsp;<a target="_blank" href="https://ces.org.ua/wp-content/uploads/2022/04/UKR_%D0%95%D0%BA%D0%BE%D0%BD%D0%BE%D0%BC%D1%96%D0%BA%D0%B0-%D0%A3%D0%BA%D1%80%D0%B0%D1%97%D0%BD%D0%B8-%D0%BF%D1%96%D0%B4-%D1%87%D0%B0%D1%81-%D0%B2%D1%96%D0%B9%D0%BD%D0%B8.pdf?fbclid=IwAR1AGXs7v7ucqiR1Fm4A30MSsJjryRpADrTbkqX78XMkZf3MNcYHW9G4mi8" rel="noreferrer noopener">report</a>&nbsp;by the Center for Economic Strategies.



In addition, each bank, as part of the country’s critical infrastructure, had a list of essential workers who couldn't be conscripted for military service for the next six months.



“The banks proved to be stable and reacted quickly,” said Chernyi, adding that most banks were able to move their staff and documentation to safer locations. “They made sure the banks kept working.” 



The National Bank put a lot of pressure on banks to operate via cashless payments, excluding a number of risks, as the possible attacks on the banks' premises.&nbsp;



Moving into cloud technologies has helped banks save time and money, for example, when they had to move their servers to a new place.



Despite ongoing cyberattacks, Dadashova says banks did not lose any critical data about their assets and the number of loans issued.



Threat to business



However, the situation is obviously far from ideal, with problems pilling up as the war progresses.



<a target="_blank" href="https://uspp.ua/news/ostanni-novyny/2019/na-bazi-uspp-stvoriuietsia-antykryzovyi-shtab-dopomohy-biznesu-promyslovosti" rel="noreferrer noopener">According</a>&nbsp;to the Ukrainian Union of Entrepreneurs, up to 70% of businesses have already stopped operating. This dramatically increased the level of non-performing loans. Currently, the non-payments on loans range from 40% to 80% in different banks, according to Chernyi.



On the other hand, as banks revenues plummeted, banks began to cut back on lending to businesses.



Agricultural companies complained in early March about not having access to loans they required to purchase the seeds for the sowing campaign, according to Andriy Dykun, head of the All-Ukrainian Agricultural Council.



On March 17, President Volodymyr Zelensky announced a zero interest rate for loans of up to $2 million for businesses under the government's 5-7-9% lending program for the period of martial law.



However, after a month, enterprises, especially small and medium-sized, are complaining en masse. They still can’t take loans, according to Economy Minister Yulia Svyridenko.



“Banks are reluctant to respond to emerging problems,” she said in an <a href="https://forbes.ua/inside/krediti-pid-0-ne-zapratsyuvali-yak-tsogo-khotiv-zelenskiy-a-biznes-zvinuvachue-banki-v-sabotazhi-yak-uryad-khoche-zmusiti-ikh-davati-bilshe-groshey-12042022-5389">interview</a> with Forbes.



While almost 1,400 loans <a href="https://www.kmu.gov.ua/news/minfin-za-period-2102-11042022-pidpriyemci-otrimali-1391-kredit-na-395-mlrd-grn-u-mezhah-programi-dostupni-krediti-5-7-9">totaling</a> $127 million had been issued to enterprises under the program as of mid-April, most of them were focused on three sectors – agrarian, food production, and pharmaceuticals – as they were prioritized by the state.



According to Svyridenko, banks have even unofficially divided Ukraine into several colored zones of “investment security.”



The red zone, for instance, means zero chances for business to get a loan due to the proximity of the front line, while the green one will indicate a relatively safe region, like western Ukraine.



At the same time, although many banks have introduced payment holidays for both individuals and businesses, and the law now bans any penalties, the risk that banks could be on the verge of bankruptcy is high.



Defaults and the inability to repay debts may continue even after the war ends. “At least half of the banks may be liquidated after the war,” said Chernyi.



However, the National Bank’s top officials are trying to calm those expecting turmoil.



“It’s not right to say there's a high risk of a mass withdrawal of banks from the market due to the war,” said Dadashova, stating that the National Bank is ready to overcome the potential crisis.



“Everyone is in the same boat and everyone is interested in the same goal," she says, adding that a healthy banking sector is vital for the recovery of the country's economy.&nbsp;

As Russia was preparing to invade Ukraine, experts feared that the Ukrainian banking system would collapse in the event of an all-out war. The closure of Ukraine's main...

Ukraine’s 'banking miracle': How its banking system keeps operating amid invasion

Natalia Datskevych is a business reporter at the Kyiv Independent. Before joining the team, she worked as business reporter for the Kyiv Post. She studied economic theory at Kyiv National Economic University and holds a Ph.D in economic science.

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