Tanks going to Ukraine as the 12th month of the war begins

The Leopard 2 tanks are headed for Ukraine after a lively several days of diplomatic theater involving particularly Germany, the US, Poland, and Ukraine. The Neue Zürcher Zeitung reports:

The [German] goal is to quickly put together two tank battalions with Leopard 2 for Ukraine. That would be around 90 tanks.

In a first step, Germany will provide a company with 14 Leopards of the modern type 2A6 from Bundeswehr stocks, as well as ammunition and support for training and logistics. Defense Minister Boris Pistorius added that the tanks are expected to be delivered by the end of April. He announced that in a second step, presumably more Leopard 2 of the older model 2A4 will be provided. However, this will take some time, he said. (my translation)

The Guardian provides this count of who currently have which Leopard 2 tanks:

The Guardian also takes the view that the internal German politics played out the way SPD Chancellor Olaf Scholz would presumably have hoped:

Reports of the German decision were welcomed in the country by the German government’s three coalition partners and the leading opposition party, and criticised by the far right and far left.

“The announcement that Leopard tanks will also be sent from Germany to Ukraine is very good news,” said Anton Hofreiter, the Green party chair of the Bundestag’s European affairs committee. Kyiv had to be supported “until the Putin regime understands that negotiations are a better option than continuing the war”, Hofreiter told RedaktionsNetzwerk Deutschland.

Florian Hahn, the defence policy spokesperson of the conservative CDU/CSU party bloc that makes up the leading opposition in Germany’s parliament, added: “Chancellor Scholz and the SPD has finally given up its crazy resistance.” (my emphasis)

There’s apparently some rumbling from German arms manufacturers that they will somehow lose business over Germany’s supposed (feigned?) dithering over providing Leopard 2’s to Ukraine. But this may just be lobbying posturing.

Meanwhile, it looks like Ukraine had to make a compromise or two as part of this winter repositioning:

The biggest shake-up of Ukraine's government since Russia's full-scale invasion underlines President Volodymyr Zelenskiy's need to show key Western partners and war-weary Ukrainians that he is serious about tackling corruption and punishing misrule.

The abrupt exit of more than a dozen officials in recent days followed a series of scandals and graft allegations, including one involving the Defence Ministry that had sparked a public outcry despite being denied. ...

Russia's invasion has made the country more reliant than ever on Western support, particularly in the form of military aid, and the international community has made clear it wants to see Ukrainian governance improve.

This will probably not get a lot of comment from people on social media who like to post “Glory to Ukraine!” and predict imminent victory for Our Side if only NATO would do whatever Zelenskyy says. But the quality of governance, political stability, and security on intelligence matters are obviously big concerns of Ukraine’s de facto NATO allies.

Even if the war were to end tomorrow, Ukraine would be in awful shape going forward. And every month the war continues means more destruction in the country, more deaths, and more refugees leaving, many of whom may never live permanently in Ukraine again. A near-term end of the war would leave Ukraine years away from meeting the standards for EU and NATO membership, maybe two decades or more.

Estimates from major economic institutions on reconstruction costs for Ukraine over the last year have varied widely. Not surprising given that the length of the war and the amount of the eventual destruction are very much unknown at the moment. In June 2022, Werner Hoyer, the head of the European Investment Bank (EIB) floated a €1 trillion estimate, noting that Europe would likely have to provide most of the funds.

And because any estimate at this point would have to include some assumption about the length of the war and severity of the damage, various countries, international institutions, and think tanks would also have to be mindful of how those assumptions might be interpreted by various players in the propaganda contests in process.

The US is providing substantial aid and so is the EU. The US will surely expect the EU to bear the main cost of postwar reconstruction. As it is, much of the aid the EU is currently providing is in the form of loans with deferred payments. “Overall, the EU’s strategy is simply a recipe for a future Ukrainian sovereign debt crisis,” writes Eoin Drea.

The reality is that brave, bombarded and economically ravaged Ukraine needs a debt deal to win the coming peace. And if Kyiv is to have a realistic chance of a post-war recovery, this deal should include significant debt restructuring and the transfer of tens of billions of euros in non-repayable grants.

With an inflation rate of 26 percent, interest rates of 25 percent and a one-third decline in Gross Domestic Product (GDP) in 2022, Ukraine is reaching the limits of existing, conventional economic policy.

Soon, Kyiv will have to resort to the printing press to finance daily public services. And as the Germans, the Dutch and others often like to remind Europe, this will lead to economic catastrophe.

Ukraine has already deferred payments until 2024 on up to €20 billion of its debt held by international investors. And while the approximate €6 billion that the country has saved through this action is important, it pales in comparison to its expected budgetary shortfall of approximately €40 billion in 2023 alone.

Ukraine needs a debt write-off — unfortunately, the EU just wants it to keep borrowing. (my emphasis)

Yanis Varoufakis recently speculated on the kind of problems the EU could face with financing reconstruction. It's not going to be easy.