Now Ukraine Gets the Power to Overcome Putin

Europe Confronts the Kremlin

When it rains, it often pours.

As soon as I hit the publish button, I am going home to pour myself a glass of whiskey. This is the best news I have written since November 2022. There were a few in the middle. But none of them will scale up to the events that unfolded in Brussels, Belgium few hours ago.

After prolonged and tense negotiations with Viktor Orban, the Prime Minister of Hungary and a close associate of President Vladimir Putin, European Union leaders reached an agreement today to establish a 50-billion-euro fund for Ukraine.

In December, Mr. Orban obstructed the initial proposal to establish the fund for Ukraine. In response, the EU established a committee to scrutinize the approximately €22 billion in EU cohesion funds allocated for Hungary. Orban subsequently diluted his opposition by insisting on an annual veto opportunity for the distribution of funds to Ukraine, employing this as a tactic to impede aid and retain the ability to block future funds.

Developments were evidently unfolding behind the scenes, but a significant number of EU leaders had grown weary of Mr. Orban. They eventually decided to take him on.

In my opinion, the EU appeared ready to eliminate Hungary’s veto power, if Mr. Orban continued to obstruct the creation of the Ukraine fund.

Before entering the summit, Polish Prime Minister Donald Tusk made it very clear that Mr. Orban faces a choice:

“There is no problem with so-called Ukraine fatigue. We have Orban fatigue right now in Brussels.

This is for Mister Orban to decide. If Hungary is part of our community, or not.”

The Impact on the Economy

Ukraine has entered a conservation mode, with Western reports highlighting a disagreement between President Zelensky and Commander Zaluzhny regarding mobilization. The commander advocated for mobilizing half a million soldiers, enabling Ukraine to match the Russian troop density one-to-one. President Zelensky, however, rejected the plan, citing concerns over the associated mobilization costs.

This is the outcome when the investment climate is enveloped in a haze of uncertainty.

President Biden has been gradually fading into the background. American aid, unfortunately, hasn’t proven as dependable as needed, and Europe’s attempts to fund Ukraine faced continuous vetoes from Mr. Orban each time it was proposed.

As a CEO, how can you make informed investment decisions without clarity on the length of your funding runway? It forces you to delay critical choices, slow down processes, take risks by waiting it out, and unfortunately, relinquish current opportunities to your competitors.

The economic resilience of Ukraine plays an important role in countering the Kremlin’s war. The $50 billion fund established by the European Union will not only stabilize Ukraine’s budget for the current year but also provide a foundation for stability in the foreseeable future. The aid, “to be dispensed in the form of loans and grants over the next four years, would both cover immediate needs and allow Ukraine to plan its long-term budget”.

Ukrainians, opening restaurants and businesses amidst the constant threat of an Iskander missile breaking through their roofs any day, won’t perceive it as a futile struggle. Instead, they’ll find inspiration to launch their ventures, sensing a shared fight with Europe rather than feeling abandoned in the middle of a battle.

Soldiers on the frontline won’t endure the stress of uncertain futures anymore; they have clarity now.

Beyond the financial aspect, this is a powerful message to the people of Ukraine. The European Union’s decision not only provides monetary support but instills confidence in Ukraine’s ability to persevere, fosters faith in their potential for victory, and helps them hope for a future.

February 1, 2024 will be a huge moment in history.

While it might be tempting to downplay this as a minor event in the context of a prolonged war, the headlines from major Western publications already reflect such sentiments. However, it’s crucial to recognize that today’s developments will wield a significant impact on our collective future.

The sheer extent of Mr. Orban’s efforts to obstruct funds for Ukraine underscores the significance the Kremlin places on halting aid.

Speaking at a meeting of the Valdai Discussion Club, a Moscow-based think tank, in the Black Sea resort of Sochi, Putin said that Ukraine was being propped up “thanks to multi-billion donations that come each month”.

“If one just stops, it will all die in a week,” Putin said.

“The same applies to the defence system. Just imagine the aid stops tomorrow. It will live for only a week when they run out of ammo,” he said.

• Vladimir Putin agrees on the importance of aid.
• This is the single largest aid package announced by the West to help Ukraine economically.
• Mr. Orban almost got himself kicked out of the EU to stop the aid.

Yet, ultimately, the Putin-Orban alliance fell short of its goal. Europe’s unity remained unbroken. Orban’s tactics of blackmail were exposed, stripping him of his power. The EU adeptly learned how to corner Putin’s supporters in the midst of it all.

When you talk to a bully, never negotiate. Give him your terms. He can either accept it or take a hike.

This isn’t just a single blow to the Kremlin; it’s a double strike. With a lone vote, the EU relegated Putin’s ally to a mere spectator while concurrently fortifying Ukraine’s economy. If managed effectively, Ukraine shouldn’t require an extended period. A consistent flow of funds over the next 12 months should prove more than sufficient.

Putin’s war apparatus is prepared for an extended conflict, with increased production capacity, chosen allies, and a streamlined system for daily mobilization. However, the same cannot be said for the economy. A rising worker shortage, soaring wages, and biting inflation pose challenges. Despite these economic hurdles, state funds persist in flowing into the economy. The economic runway to sustain the war is rapidly contracting. The impending economic reality will inevitably impact the war machine. Ukraine could significantly hasten the convergence of these two critical aspects.

What next?

Successively, the problems Putin sowed in the Western world are being addressed one by one, and in many respects, this can be seen as a positive development. Putin’s actions unmasked the true nature of Russia, exposed Iran, brought to light the strategies of Victor Orban, laid bare the far left and the MAGA group in the United States, and demonstrated the perceived unreliability of the United States. Importantly, his maneuvers prompted Europe to assert its independence and find its own footing.

He cornered Europe, hoping for internal fractures, but they’ve done the opposite — growing stronger.

Europe’s energy independence is evident through diversified procurement, and it no longer relies solely on the United States for protection. In 2025, they are projected to produce more artillery shells than the United States for the first time in history. Brexit fractured trust between Great Britain and Europe. However, Putin’s invasion of Ukraine has surprisingly drawn Britain and Europe closer than ever before. Prior to the Ukraine war, right-wing movements were gaining momentum in Europe; now, we witness regular marches against far right movements.

Vladimir Putin has stirred a sleeping giant. The cost he must bear for awakening this giant is set to steadily rise from this point onward.

Over and out.