Yatsenyuk: Despite certain constraints, Ukraine's economy is a wartime economy

Arseniy Yatsenyuk, chairman of the Kyiv Security Forum (KSF) and Ukraine's prime minister from 2014 to 2016, says he is convinced that Ukraine's economy has become a wartime economy during the full-scale Russian invasion.

"Despite certain limitations of our technological and production capabilities, I consider the Ukrainian economy to be a wartime economy," Yatsenyuk told Interfax-Ukraine in an interview.

He noted that, at the macro level, the key parameter that determines whether an economy is a wartime economy is the size of defense financing, either relative to GDP or relative to the total state budget.

"This year we expect – attention – 63% of total state budget expenditures to be for defense. During World War II, European countries' military spending rose to 40–70% of their national income. So we are comparable. In the United States, military expenditures rose from 1.4% of GDP in 1940 to 37% of GDP in 1945, and the federal budget deficit increased from 3% in 1939 to 27.5% in 1943. We expect 63% this year, which is 32% of GDP. So at the macro level I can say very clearly: Ukraine is a classic wartime economy," the Kyiv Security Forum chairman said.

At the micro level, Yatsenyuk recalled that under Ukraine's martial-law legislation there are restrictions on rights and freedoms, starting with the media: "there is a continuous telethon broadcast, but other editorial offices operate; sensitive military information, naturally, just as in Israel, cannot be disclosed." "Second, we have restrictions on the movement of citizens. Third, there are examples of nationalization of property. Property of private companies such as Ukrnafta was nationalized. Fourth, freedom of assembly is understood, although there was an action on Franko Square [rallies calling for the restoration of powers to NABU and SAPO that took place in Kyiv in July]," he said.

Regarding the state defense procurement program, he said Ukraine cannot meet all needs on its own. "We simply don't have the capabilities. We don't assemble F-35 fighters, we don't make Tomahawks. Tauruses, Leopards, and nuclear submarines – we don't produce those. There is another area that has developed well, new means of waging war, although it would be interesting to see the level of localization… Metinvest produces shelters and nets. Private companies produce drones and software. All this is part of the war economy. But there are things we cannot manufacture. In other words, our industry is mobilized to the maximum of its capabilities," Yatsenyuk said.