In defense of Ukraine, money and credit are as crucial as guns and ammunition. A robust economy with widespread purchasing power is vital for both national prosperity and security. A solid financial system and sustainable growth are necessary in peacetime and wartime alike.
"And here is your lump of coal and a knuckle sandwich"
Putin's war against Ukraine has strained to the breaking point the country's financial resources needed for defense, domestic needs, loan repayments, and future economic recovery. While many countries, institutions, and individuals have responded generously to the crisis — recognizing Ukraine’s war as the struggle of freedom against tyranny — ongoing foreign assistance is dwindling. Domestic financing and tax revenue are also diminishing as Putin’s aggression persists.
The question remains: Where will Ukraine find the funds to win the war and rebuild? Foreign aid in the form of grants and loans is urgently required but is not a long-term solution. Relying heavily on external financing for government operations, especially defense, poses risks to national sovereignty and self-determination. What Putin aims to achieve militarily, others might achieve by force of finance.
Individuals or nations, it's the same
Simply creating more money backed by government debt, a self-enslaving formula followed by many nations including the US, will accelerate Ukraine’s impending financial collapse. Any defense or reconstruction strategy must be economically sound, with a solid financial plan that minimizes reliance on foreign aid except for immediate needs in the short term.
A proposed “Just Third Way” three-phase financing strategy, "Total Financial Mobilization" (TFM), aims to use existing funding sources more efficiently and identify new ones to end the war in Ukraine promptly, sustainably and equitably. This strategy also outlines a post-war plan to retire war debt, eliminate non-productive government debt, and rebuild Ukraine's economy on a stable foundation.
· PHASE 1: In the short term, TFM seeks to fund Ukraine's defense efforts through all legitimate means, leveraging multilateral funding agencies for non-military purposes and prioritizing domestic funds for defense. However, this approach is insufficient for mid-to long-term needs, including the monumental costs of rebuilding and repaying national debts.
· PHASE 2: The mid-term goal of TFM involves reforming the financial system to support defense financing and stimulate economic growth. Multilateral funding could serve as a temporary measure until internal financing options, bolstered by effective internal controls, can be established. This approach would enhance Ukraine's creditworthiness and facilitate securing short-term loans, grants, and guarantees from multilateral agencies until the nation achieves financial independence.
· PHASE 3: Long-term objectives include rebuilding and democratizing Ukraine's economy using self-liquidating "pure credit" financing methods, ensuring direct ownership of economic growth by all Ukrainian citizens. Foreign financing of Ukraine’s government debt would generally be limited to loan guarantees, not direct funding, while encouraging oligarchs to invest in foreign loans to transform external obligations into domestic investments.
Promoting private-sector growth would involve enabling every Ukrainian citizen to invest in existing and future productive assets without using existing savings or reducing current income or benefits. This would be through expanded commercial bank credit, backed by the central bank. Profits generated by these investments would repay the loans, distributing economic power to every citizen and increasing individual incomes. Precedents have demonstrated the feasibility of this approach, supporting a comprehensive "economic democratization" plan with monetary and tax reforms.
This strategy aims to address Ukraine's immediate and future financial challenges in a sustainable, democratic manner, ensuring political and economic stability and growth beyond the current crisis.
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