New mobilization law: shifting towards a militarized society
Ukraine is implementing new mobilization rules. The recruiting rules in 2022 were very lenient for a full-scale war of attrition. In the early days of the Russian invasion, Ukrainians mobilized voluntarily, and volunteers comprised the core of the army that defeated the Russians in 2022. However, as the aggression persisted and military aid from the West was delayed, the flow of volunteers dried up, while the mobilization rules remained quite loose.
The issue of fresh forces became critical in 2023, but President Volodymyr Zelenskiy was reluctant to address it for too long, and the democratic procedure for approving the new law took quite some time. This process did improve the law by removing unconstitutional provisions and loopholes, but valuable time was lost. It was only in April 2024 that a new mobilization law was approved. Initially, the new law did not seem too stringent, but subsequent amendments to various legislation and regulations have created a comprehensive recruitment system.
In short, all men of military age (including those abroad) must register in electronic registers by mid-July. If they do not comply, a system of burdensome penalties will be enforced, and repeated non-compliance will result in criminal prosecution. We will still need to see how this system works, but it appears that there will be no way to avoid compliance without serious consequences, regardless of whether a person resides in Ukraine or abroad. This offers a high chance of generating a flow of fresh recruits by the end of summer, addressing the issue of a shortage of men at the frontline. On the other hand, it creates a serious challenge for society in adapting to this new reality, especially once the penalties start being enforced in mid-summer. We cannot predict how things will develop, but if this challenge is met smoothly, we could see substantially renewed societal relations in Ukraine by the end of the year.
The Russian forces in May renewed active assaults to the north of Kharkiv, deploying approximately 50,000 troops toward this initiative. Although this number is insufficient to overtake the city, the operation seemingly aims to stretch the already-thinned Ukrainian forces before the arrival of new recruits. The concentration of Russian forces was observed long before May, but the Ukrainian Army was unable to attack the group with long-range Western weapons, due to the ban on using Western weapons on Russian soil.
This limitation forced Ukrainian forces to wait until the Russians crossed the border to engage them. A more serious problem with the ban on using Western weapons on Russian territory was the regular bombing of Kharkiv with guided aerial bombs. The situation escalated when the Russians deliberately targeted a construction hypermarket, resulting in dozens of civilian casualties—a demonstrative action to intimidate the inhabitants of Kharkiv. This terrorist act prompted Western partners to reconsider their approach to the ban, ultimately allowing the use of Western-supplied weapons at close range on Russian territory, including for targeting jets that drop guided aerial bombs.
Economic numbers look good so far, but the relatively positive picture is likely to change soon. Since June, electricity tariffs have increased by 63%, which will push consumer inflation up. A tax increase is on the agenda, since the Ministry of Finance did not budget for active military actions in H2 2024 -- yet there is no end to the fighting in sight. The hryvnia is gradually losing its value due to the easing steps of the NBU, coupled with substantial FX liberalization. The current account deficit continues to widen, and the projected 12% drop in grain crops for 2024 offers little hope for Ukraine’s trade balance to recover in the mid-term future. Against this backdrop, the Ministry of Finance is discussing debt restructuring with creditors, who want Ukraine to start paying interest from 2024. It should be rather obvious that no renewal of debt payments is possible, probably not for the next couple of years.
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