What next for Ukraine's economy, the 'Day After'?

Earlier this month, US secretary of state Marco Rubio warned that the world will “soon know” whether Russia is serious about ending the conflict in Ukraine.

The Kremlin’s refusal to halt its bombardments and its ever-growing list of demands certainly question Moscow’s genuine commitment to pursuing peace. 

Putin’s game is an old one — paying lip service to peace negotiations while in reality quickly reneging on even the smallest diplomatic breakthrough.

A case in point: while the White House announced on 25 March that Kyiv and Moscow had reached a tentative deal to “eliminate the use of force” in the Black Sea and halt attacks on energy infrastructure, the Kremlin wasted no time in qualifying this apparent breakthrough, tying its compliance to a sweeping list of demands, including sanctions relief for its financial institutions and agricultural exports, as well as restored SWIFT access.

Donald Trump cannot be trusted to credibly push back against what even he has described as Moscow's feet-dragging.

Rather than rejecting this diplomatic brinkmanship, Trump has concerningly acknowledged “there are five or six conditions,” and that “we are looking at all of them,” offering Putin an open invitation to continue moving the goalposts.

The US’s bowing to Russia’s demands without extracting meaningful concessions or coordination with European allies could rejuvenate the country’s considerably weakened economy and military apparatus.

It could even fuel the conflict’s expansion in Europe, with Moldova, Georgia and the Baltics Putin’s likely next targets. 

Under the circumstances, the ‘Old Continent’ should start drawing up the death certificate of transatlantic relations – at least for the duration of the Trump presidency. As Germany’s next chancellor, Friedrich Merz, recently suggested, the very survival of Nato in its “current form,” is at stake, meaning that Europe must become independent.

Europe is faced with a task of historic proportions: rapidly and massively arming itself to ensure its defence without the US’s security umbrella, while ramping up its support of Ukraine to compensate for America’s shift towards the aggressor’s camp.

London's 'coalition of the willing'

Europe has taken some steps in the right direction, such as the 'Coalition of the Willing' which assembled in London in March — a group of like-minded nations striving to devise a plan to help end the war in Ukraine. While the summit at Lancaster House yielded few tangible outcomes, it marked a step in the right direction.

Ukraine will continue to receive arms, while EU nations will expand domestic weapons production — not only to bolster military strength in support of any potential peace agreement but also to reduce reliance on Washington’s weaponry and enhance their credibility on the global stage.

The flurry of recent events has made the need for this clear: Europe must offer Ukraine mutually-beneficial diplomacy that counterbalances the US’s brazenly transactional, ‘America First’ approach that considers the EU a footnote in geopolitics at best. 

The continent should begin this new era by refusing any so-called ‘peace agreement’ that fails to offer Ukraine meaningful security guarantees, the repatriation of Ukrainian children deported to Russia, substantial compensation for war damages, and the enforcement of justice against Moscow’s various criminals.

Paradoxically, a European stand against such a fundamentally-flawed deal will be made easier by the fact that neither it nor Ukraine have been invited to the negotiating table.

The 'day after'

Europe must go still further, looking beyond enhanced military support for Ukraine to the ‘day after’ a potentially looming peace deal. Indeed, whether as initial deterrence in the context of a long war or a peacekeeping role in the context of security guarantees, European ground troops will make a major contribution to Ukraine’s economic recovery, a principle that European leaders are finally uniting behind.

The Kremlin would likely respond to a Europe-led peacekeeping mission by doubling down on its exploitation of Europe’s anti-Ukraine farmer protests last year

Buoyed by this convergence, Europe must waste no time in establishing a framework for Ukrainian reconstruction, which should notably prioritise projects for the development of its industrial and agricultural sectors. The latter industry is particularly vulnerable, as many farms have been destroyed, fields have been mined or permanently polluted, and agricultural workers have been called upon to join the Ukrainian army.

What’s more, considering its disinformation campaign after French president Emmanual Macron initially floated the idea of European boots on the ground in Ukraine last year, the Kremlin would likely respond to a Europe-led peacekeeping mission by doubling down on its exploitation of Europe’s anti-Ukraine farmer protests last year.

Countering Ukraine agriculture disinformation

At the core of Russia’s propaganda offensive is the claim that Ukrainian agricultural exports are flooding EU markets and undermining the competitiveness of European farmers. In the months ahead, EU governments will have to patiently debunk the Kremlin’s narrative, which, as I have already shown, is largely a fantasy.

In France, for example, Ukrainian chicken accounts for less than one percent of total imports, primarily displacing third-country suppliers rather than harming EU producers.

In fact, 93 percent of the chicken consumed in France comes from within the EU. Similarly, claims targeting Ukrainian grain do not hold up to scrutiny, with its wheat and maize exports to the EU peaking in late 2022 and early 2023, and declining ever since. 

The reality is that European and Ukrainian agriculture are complementary.

Europe has recently increased tariffs on Russian and Belarusian agricultural, including fertilisers and it is in the continent’s best interest to increase its support of Ukrainian agriculture. Indeed, as Ukraine’s agricultural industry develops and modernises, the risk of unfair competition with the bloc’s domestic agriculture will decrease.

As the press has often reported, Russia has paired its misinformation attack against Ukrainian agriculture with its systematic, methodical destruction of Ukraine’s energy network to undermine public morale.

In a sign of defiance, Kyiv has already begun to gradually rebuild its network, notably with the assistance of several European countries and the European Investment Bank (EIB). Crucially, the EU integration of Ukraine’s energy sector offers considerable potential, with Ukraine having the potential to become a major energy supplier for the bloc, contributing majorly to its reindustrialisation and competitiveness drive.

In that context, it’s crucial that Brussels continue preferential trade with Ukraine to show support and provide Ukraine with reliable monetary flows.

However, the EU will reportedly not extend its current preferential trade agreement past 5 June and is considering new rules.

While the European Commission does not plan to reinstate pre-invasion trade rules, it is exploring alternatives under the 2016 Deep and Comprehensive Free Trade Area (DCFTA), including quotas and safeguards for agricultural products. Although any agreement that promises deepened trade is to be welcomed, applying new rules is only injecting unnecessary red tape and confusion at a crucial time for both the EU and Ukraine.

High-tech

Finally, the high-tech sector represents a key area in which Ukraine could have a remarkable comparative advantage, with likely ripple effects in Europe.

Ukraine in fact has one of the best-connected administrations in the world, and we have witnessed the country’s remarkable technological prowess with drones–now capable of hitting strategic Russian targets over 2,000km from Ukrainian territory.

Amid Moscow’s all-out war, the Ukrainian technology sector has not only resisted, but grown to become the world-leading nation in drone innovation — a result notably enabled by its development of other upstream technologies. In a context of increased competition, especially from China, the strengthening of Ukraine’s advanced technologies will contribute to Europe’s strategic autonomy in this field.

From energy and food sovereignty to defence and advanced technology, Ukraine is a nation of the future whose freedom Europe must protect to ensure its own long-term security and resilience—particularly in an emerging world order that could see the United States drift irreversibly away from the historic transatlantic alliance.