Why the West Is Scaling Down Support for Ukraine and Moldova

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Vladimir ROTARI, Victor ENI
By the end of the year, there is an obvious tendency towards a noticeable decrease in the West’s political and financial support for Ukraine and Moldova. RTA experts explore the nature of this phenomenon
Ukraine A recent study conducted by the Kiel Institute for the World Economy revealed a huge drop in financial support to Ukraine from Western countries. The amount of grants in August-October this year fell by almost 90% compared to the same period last year. The total value of new aid packages barely exceeded two billion euros, the lowest since January 2022. Meanwhile, the situation for Kyiv may worsen even more in the coming months, because the financial support programmes from two key sponsors – the US and Germany – are in limbo. The United States has already been forced to sharply reduce the current tranches - the most recent was just $175 million - as previously allocated resources are nearing exhaustion. At the same time, the $61 billion package proposed by President Joseph Biden are not approved by Congress because of the contradictions between Democrats and Republicans over changes in migration laws and the construction of a wall with Mexico. The issue is of principle, because any concessions is fraught with the risk of losing face in front of their voters for both parties. Thus, the US election season, as expected, has become a negative factor in the context of continued sustained support for Ukraine. Even Kyiv’s previously effective “emotional diplomacy” is not helping. The visits of representative delegations from Ukrain to Washington, intended to ensure a bipartisan consent on the issue of further supplying Ukraine, ended in failure. During the last of them, Volodymyr Zelensky’s online speech to American congressmen was even cancelled on an emergency basis. Yesterday, the $100 billion aid programme for Ukraine, Israel and Taiwan predictably failed to pass a vote in the Senate and did not even make it to the House of Representatives. There is still time to pass it before the end of the year, but experts assess the chances for this as very low. Next, there is uncertainty with German aid to Ukraine for 2024 in the amount of 8 billion euros, the fate of which is hanging in the balance given the record hole of 60 billion euros in the German budget. The situation is worsened by the economic recession due to the fall in industrial production. It is a worrying signal for Kyiv, as economic problems in the “EU’s main factory” will generally undermine the prosperity and solvency of the entire Union, and will naturally have a negative impact on further financial assistance from Germany. Thus, our neighbor runs the risk of being severely underfunded for at least several months. Moreover, it is not certain that this problem is of a short-term nature - earlier, American partners have already suggested with an obvious hint to Kyiv that it should consider how it could provide for its own expenditures in the event of a sharp reduction in external financing. However, it is not certain that this is possible at all - the deficit of budget revenues in Ukraine is so high that Western aid pays not only for the war with Russia, but also for most of the state’s social obligations. The Ukrainian authorities have already had to hastily withdraw some funds from local budgets to the national one, but, of course, that won’t make much difference. Cuts in aid is only one of the headaches for Kyiv. At the same time, it is under media attack from the major Western outlets, the aim of which is to shift the blame for the failures in the summer counteroffensive solely on Ukraine itself. General Valerii Zaluzhnyi, the “Western-promoted” commander-in-chief of the Ukrainian Armed Forces, is now accused of making the wrong choice of strategy and tactics, while Volodymyr Zelensky is accused of unrealistic assessments of the situation and conflicts with the military. Publications regularly appear about the difficult situation of the Ukrainian troops, difficulties with mobilization and other problems that have not previously been the focus of attention in the Western media. Expert assessments and official statements about the threat of a Russian victory are increasingly replicated. In addition, Ukraine risks not getting an opening of EU accession talks at the next European Council summit. Hungary continues to take a sharp “against” stance, which neither the Brussels bureaucracy nor French President Emmanuel Macron could change. We should also mention the clearly unfriendly actions of neighboring countries in blockading Ukrainian exports, especially Poland, whose carriers have been obstructing the passage of Ukrainian trucks for weeks (most likely, with government sanction). Kyiv is already claiming that these restrictions will result in losses of almost one per cent of GDP. The future prospects for military support are also unclear. The issue of the “fighter coalition” became particularly complicated, as its key member, the Netherlands, refused to supply weapons after the change of power. Previously, Slovakia took a similar position. US supplies are being reduced for the reasons already described. At the same time, many Ukrainian observers were unpleasantly surprised by the recent transfer by the United States to Morocco of a shipment of 500 Bradley BMPs and 120 Abrams tanks, whereas Ukraine had been provided with much smaller quantities. Moldova Yesterday, the parliament approved in the first reading the draft state budget of Moldova for 2024. The revenues are expected to increase by 1.3% to 66.6 billion lei, while the expenditures are expected to decrease by 2.2% to 82.2 billion lei. At the same time, the shortage will exceed 15 billion lei, 55% of which will be covered by loans and another 15% by grants. On the whole, the draft seems very frugal both in terms of revenues and expenditures, which should grow at least by the annual inflation rate. One of the main reasons for passing the budget within this framework is the almost threefold reduction of grants from external partners next year, from 6.8 billion lei to 2.4 billion lei. The total amount of budget revenues from abroad will also decrease by 32% (from 25 to 17 billion lei), while the share of credit funds in the budget is obviously growing, which increases the financial burden on the country. It is difficult to imagine how the situation will unfold next year, if this year the government, while implementing the budget, barely manages to make ends meet. And that is only with the help of huge borrowings on the domestic market. Experiencing great difficulties, first of all, due to the decrease in the number of both internal and external sources of income, the Cabinet together with the Parliament seem to have decided to take the worst way and cut the budget for the next year. According to experts, not only the road fund, but also social items have been cut. As early as 2022, when the Action and Solidarity Party started to implement its first annual budget, it became clear that the new management team had neither understanding, experience nor resources to conduct a balanced financial policy of the state. Only international donors, who, having established the Moldova Support Platform, started to pump in a lot of money in order to keep our country afloat. And now, two years later, the external financial aid is seriously reduced, bringing the government back to the harsh reality. No one recalls the results of the October meeting of this platform, as well as the reassuring statements of high European representatives that it would become a permanent mechanism. It seems that our allies, as in the case of Ukraine, have started to scale down the financial flows into the Moldovan budget and want us to live, as they say, on our own money. At the same time, we can notice that the taboo on unflattering stories and statements about the Moldovan authorities is no longer in place. For example, the head of the European Union delegation to Chisinau, Janis Mazeiks, recently recommended the authorities to avoid irrelevant restriction of freedom of expression, commenting on the situation with the closure of TV channels and blocking of websites. In general, the amount of criticism from Western-sponsored media, human rights activists and European politicians towards the ruling party’s “democratic excesses” has increased dramatically. It is quite possible that when drafting the budget for 2024, someone in the government’s backstage was relying on the fact that the launch of negotiations with the European Union would open access to European funds for Moldova, and it would be possible to compensate for the large budget shortage. However, judging by the uncertain comments made by speakers close to the government, as well as by Prime Minister Dorin Recean’s statements, there is a high probability that Brussels will postpone the opening of negotiations with Moldova and Ukraine. And this, together with external financial constraints, will also be more than a worrying signal for our ruling class. What’s next As we can see, there is indeed a tendency, recorded by experts, towards the reduction of financial and political support for Ukraine and Moldova, which last year became recognized favorites of the West. This trend has quite obvious reasons, related, for instance, to internal political processes in the USA and budgetary difficulties in Germany. Nevertheless, would be a superficial view to reduce everything to unfortunate circumstances. A declining interest of the West in Eastern European affairs is already clearly visible, caused both by the decrease of such interest among the population of Western countries and by the diversion of attention to newly activated (Middle East) and potential conflict zones. A noticeable disappointment with the former “champions of European integration” is also playing its role. The failure of the Ukrainian counteroffensive has considerably influenced the situation, minimizing the chances of an early end to the war, and thus reducing the West’s spending on it. On the contrary, Kyiv needs more and more financial and military-technical assistance, which, given the rampant corruption in Ukraine and its own problems, receives less and less understanding from donors. As for Moldova, it seems that Western politicians have already formed an almost firm conviction that the current political structure does not cope with its tasks, discredits pro-European ideas, and therefore there is an objective need to reset the system of state governance. With European and international donors beginning to focus on their domestic problems and the upcoming 2024 electoral cycles, it is unlikely that Kyiv and Chisinau should expect their support levels to return to those of 2022. On the contrary, the next period will surely be a time of austerity and a more critical attitude of their partners, who, due to various circumstances, have to carefully weigh any costs and risks. Another motive in the West’s change of tactics may be a deliberate desire to reduce the speed of the conflict in Ukraine, to rotate local elites and thus prepare this region for possible agreements between the West and Russia on a new security system and the delineation of spheres of influence. Based on current tendencies, they are more than likely to appear in the coming year.