Russia - Ukraine after 2 years of conflict: No turning point

February 24 marks two years since Russia launched its special military operation in Ukraine. On the one hand, the parties remain at a stalemate and there is no prospect of peace negotiations. On the other hand, the West is increasing pressure on Russia with sanctions.

Increased tension

The European Union (EU) is expected to announce its 13th package of sanctions against Russia on February 24. Of these, 193 entities and individuals will be banned from traveling or doing business in the old continent. The new sanctions also focus on the Russian military support network, especially the drone manufacturing supply chain. The US also announced that it would impose new sanctions on more than 500 targets in Russia.

On the Ukrainian side, Ukrainian President Volodymyr Zelensky admitted that the country's spring offensive was not as successful as expected and that Russia still controls about 18% of Ukraine's territory. The change in military leadership in Kiev has also had a significant impact on the situation on the battlefield. Concerned about the consequences for regional security if the US withdraws and Ukraine fails, European countries have recently increased aid, pledging to provide more weapons to Kiev. This marks a significant change in Europe's attitude compared to the early days of the conflict, but experts say it is still not enough to help Ukraine turn the tide.

According to Reuters, the French President's Office announced that President Emmanuel Macron will chair an international conference to support Ukraine on February 26. The International Monetary Fund (IMF) announced that it will disburse $880 million to Ukraine in the third tranche of a $15.6 billion four-year aid package approved in 2023. Earlier in February, EU leaders agreed to provide $54 billion in aid to Ukraine through 2027. Meanwhile, the Kiel Institute estimates that the US has spent $66 billion on Ukraine. Republican lawmakers in the US House of Representatives are delaying approval of a new $60 billion aid package for Ukraine.

Russian economy grows

During the second year, Russia made a series of strategic and tactical changes on the battlefield and launched important battles against seemingly impregnable Ukrainian strongholds in the Donbass region such as Bakhmut and Avdiivka. However, there is still no sign of a significant turning point in the situation.

Economically, the IMF forecasts that Russia's gross domestic product (GDP) will grow by 2.6% this year. Meanwhile, oil revenues are rising again and unemployment will be at a historic low. According to Reuters, the reason for Russia's success is the strong and independent role of the Central Bank. Since 2022, the Russian Central Bank has applied large interest rate hikes (currently at 16%) to control inflation.

Meanwhile, Ukraine’s economy will remain broadly stable in 2023 as its Western partners fully meet its funding needs. Falling inflation has allowed the National Bank of Ukraine to cut interest rates and remove some capital controls. However, the outlook for 2024 remains uncertain. With most Western funds still not coming to Ukraine, the country’s central bank is proposing to finance the budget simply by printing more money, but this would likely undermine much of the economic stability. At the same time, the conflict is draining government resources. Military spending has risen to 20% of GDP, with half of the budget devoted to war.

THANH HANG

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