Preparing for resistance through 2025 and beyond
Many publications about a potential peace deal have appeared in Western media, sometimes with claims that Ukraine might accept territorial concessions. It's hard to determine who is signaling what with these articles, but from Kyiv, much of this seems out of touch — similar to in 2022, when Western pundits speculated how quickly Kyiv would fall if Russia invaded. The Kremlin is pressing the frontline, sacrificing thousands of soldiers for modest territorial gains. We've seen multiple signs of how costly this tactic is for Moscow, in terms of recruiting soldiers and military equipment losses. However, it seems Western decisionmakers are extrapolating Russia's advances, and assuming this momentum will continue unless a deal is reached -- which is precisely the image Moscow wants to create, in order to enter negotiations from a position of dominance.
The situation in Ukraine is certainly tough, after two and a half years of war. The population is disoriented, realizing the West is afraid of Russia’s military defeat. While Western military and financial support enables Ukraine to resist Russian aggression, the supply of military equipment is limited — enough for defense, but not for a decisive blow. As it becomes clearer that Western leaders are focused only on exhausting Russia, decisions from Ukraine's leadership have become more pragmatic. Territorial concessions are not politically feasible for Ukrainians, even after all the hardships we've endured, and President Volodymyr Zelenskiy knows this well, despite needing to appear as a peace-seeker to Western leaders to secure their support. Ukrainians also aren’t persuaded by the narratives Western officials are promoting, such as regime change in Moscow or ‘painful’ interim compromises, because we know too well who the Russians are. As a result, the militarization of Ukrainian society is accelerating, and we are preparing for long-term resistance, aware that Western support, already limited, may decline further.
The economy remains afloat, thanks to foreign aid. With €12 billion committed for 2025 under the Ukraine Facility, and €35 billion from frozen Russian reserves, Ukraine has a sustainable financial plan for 2025-2026. Inflation is predictably accelerating (+0.6% m/m and +7.5% y/y in August), driven by rising food prices and energy costs. The 2024 crop outlook has worsened, due to droughts. Industry has slipped (-0.3% y/y in June) due to electricity shortages, while consumption is booming, with retail trade growing 15.2% y/y in June, supported by foreign aid.
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