What the Russian invasion has cost Ukraine

A makeshift graveyard for victims of Bucha in Ukraine. In September 2022, 13 more identified remains were laid to rest. Photo: Drop of Light / Shutterstock

This has also diminished its security, energy independence and, as of right now, its sovereign right to choose its own path forward. In the first of a two-part feature looking at what Ukraine has lost and gained during the conflict, New Eastern Europe tracks the costs of the war for Ukraine.

It is not easy to draw conclusions about what a country has lost while war continues to rage all around you, but it is important to try. Many groups, including a think tank at the Kyiv School of Economics, have been doing just that through the “Russia Will Pay” project. The group has released near-weekly reports on the damage to Ukraine’s infrastructure, showing just how quickly the physical cost of war adds up. More difficult to track is the loss of life, as statistics can be unreliable due to the hesitancy of governments and militaries to release real-time information in an effort to manage strategy and morale. Even more difficult are the intangible future losses, though these too must be accounted for. That said, enough information is available to take a preliminary look at how much Russia’s full-scale invasion has cost Ukraine.

Life as we know it

The impact of the war on Ukrainians’ lives has been profound and all-encompassing, but perhaps the most logical place to begin is the loss of life itself. During the eight-year war in Donbas that preceded Russia’s full-scale invasion, the UN estimates that at least 17,000 Ukrainian lives were lost, including 3,000 civilians. In the nearly six months since the full-scale invasion began, that number has skyrocketed. Estimates vary greatly, due in part to competing narratives between the Russian and Ukrainian militaries, but the UN has confirmed at least 5,400 civilian deaths. That number is considered the minimum, as the agency does not include those whose identities cannot yet be confirmed. Ukraine’s Chief of National Police Ihor Klymenko explained the difficulty of identifying bodies in a statement in June.

“To date, about 1,200 bodies of the dead have not been identified,” he said. “This is a long process, rather painstaking, because a lot of bodies are in a state of putrefactive decay.” He went on to explain that the reason for the delay in identifying bodies is related to the need to draw DNA samples from close relatives.

Taking this into account, the Ukrainian government claims a much higher figure regarding the number of Ukrainians killed since February 24th. The government has declared that there have been over 28,500 civilian deaths, including 22,000 in the devastated city of Mariupol alone. The number of military deaths in the war is even more difficult to pinpoint. The Ukrainian government has acknowledged the deaths of 10,000 Ukrainian soldiers, alongside 7,200 missing. Meanwhile, the leadership of the breakaway Donetsk People’s Republic puts that number at over 193,000. Whatever the official number is, it already marks the deadliest military conflict in Europe since the Second World War, with more civilian and military deaths recorded by the day.

The violence has also displaced millions of Ukrainians, prompting Europe’s largest migration crisis since the Second World War. The lives and routines of over a quarter of the Ukrainian population have now been fully disrupted. The UN believes that 12 million Ukrainians have been forced out from their homes, including over five million that have fled the country. The overwhelming majority of the displaced are women and children, as martial law prevents men from leaving Ukraine. This massive, forced migration has completely disrupted the Ukrainian economy, leaving millions of Ukrainians out of work, struggling to attend classes, or in places with little or no family support.

Economics as we know it

The effect of the war on Ukraine’s economy has been dire. The effects can be seen everywhere. This includes the hundreds of billions of US dollars in damage to infrastructure, the hundreds of millions more in resources lost in territories occupied by Russia, a staggering drop in expected GDP, tens of millions of Ukrainians out of work, and inflation that can only be managed through the generosity of Ukraine’s allies and partners. There is simply no part of the Ukrainian economy that has not felt the full force of the war’s impact.

According to the most recent report from KSE’s “Russia Will Pay” project, Ukraine has suffered at least 113.5 billion dollars worth of damage – more than the entire annual GDP of Ukraine (112 billion). The report outlines both damages to infrastructure and losses to the economy. As of August 22nd, the sectors of the Ukrainian economy most affected include industry and business (29.9 billion in losses), agriculture (23.4 billion), commerce (23.3 billion) and transportation infrastructure (18.7 billion). The total effect of the damages means that the World Bank estimates Ukraine’s economy will shrink by a staggering 45.5 per cent this year, with Kyiv suggesting that the country could experience a 50 billion dollar deficit this year.

“I would expect that by the end of the year we will have a global deficit of the state budget somewhere around 50 billion [USD],” Oleg Ustenko, an economic adviser to Ukrainian President Volodymyr Zelenskyy, said on public television in late July. “This is approximately 30 to 35 per cent of our GDP.”

The National Bank of Ukraine does not foresee such a drastic decline in GDP, predicting in its most recent report that the country’s economy will shrink by one-third. Still, the NBU expects inflation to remain above 30 per cent throughout 2022, meaning already high prices for things like food and rent will continue to rise for Ukrainians even as people’s livelihoods are severely impacted. Recognising this, the NBU last month devalued Ukraine’s currency, the hryvnia – by 25 per cent against the dollar – to manage inflation, reduce prices for Ukrainian citizens, and manage the increasing costs of repelling the Russian invasion.

What the KSE report does not consider are the resources lost in the occupied territories.  More than a simple land grab, Russia’s invasion could be considered a naked grab for Ukraine’s natural resources. Russia’s grab of Crimea costed Ukraine 80 per cent of its offshore oil and gas deposits, as well as a substantial portion of its port infrastructure. The occupied territories in Eastern Ukraine are some of the most valuable in Europe, with large deposits of coal, iron ore, lithium and titanium worth 12.4 trillion dollars according to Canadian company SecDev. Including the losses dating to the illegal annexation of Crimea, a SecDev report estimates that Russia has occupied territory containing 63 per cent of Ukraine’s coal, 11 per cent of its oil, 20 per cent of its natural gas, 42 per cent of its metals, and one-third of its rare minerals.  Viewed in this context, it is easy to see why Russia has so far focused on Ukraine’s eastern and southern lands.

Geopolitics as we know it

More than just causing the mass destruction of people, land and the economy, Russia’s invasion of Ukraine has struck a blow to the country’s geopolitical status. Russia has occupied up to one-fifth of Ukrainian land, illegally annexed large portions of its Black Sea coast and resources, completely choked off exports by sea, and continues to use access to energy as a weapon. The results have made Ukraine reliant on the goodwill of its international allies and partners as it hopes to earn a full place in western alliances like the European Union and, perhaps, NATO.

In its attempt to turn Ukraine into a rump state, Russia has attempted to capture most or all of its coastline. This has deprived the country of vital naval export routes and turned Ukraine into a resource-deprived, landlocked nation. Ukraine’s once thriving Black Sea shipping lanes have been closed for months, blocked by mines or sunken ships and far too dangerous to traverse. While as much as 70 per cent of Ukraine’s pre-invasion exports and imports came by sea, no ships had sailed until early August following agreements that Ukraine and Russia made with Turkey and the UN. Still, Ukraine’s largest port of Chornomorsk, which handled over one quarter of all Ukrainian grain exports before the invasion, remains blocked by sunken ships. At the same time, ships that choose to brave the dangerous waters will face at least double the insurance costs.

Russia has long used its oil and gas resources as a bargaining chip, or rather a hammer, in negotiations with both Ukraine and Europe. The effects of EU sanctions on the Russian oil and gas industry are now being felt worldwide. Europe has long been reliant on cheap Russian fuel and much of the reason for its affordable price was the direct “Druzhba” pipeline through Ukraine. Kyiv also benefited from this arrangement, collecting over a billion dollars annually in transit fees. Gas flows through Ukraine were first affected in May after Russia captured the Sokhranovka valve in the Luhansk oblast. Transit was further affected in early August following difficulties in receiving payments due to western sanctions on Russia. The loss of gas transit revenue, compounded by the increase in the cost of fuel, represents a double hit for an economy that is already, quite literally, under siege.

Much of Ukraine’s electricity comes from nuclear power, with Ukraine’s 15 reactors accounting for more than half of the country’s pre-war electricity consumption, according to the World Nuclear Association. Russia’s capture in March of the Zaporizhzhia Nuclear Power Plant (NPP), the largest in Europe, marked the first time in history that war had been waged on a nuclear site. Since then, as many as half of Ukraine’s reactors have been knocked offline and fighting continues to rage outside the Zaporizhzhia NPP to the horror of the world. In early August, Energoatom – the agency that manages the plant – accused Russia of attacking the site to both deprive Ukraine of its electricity production as well as link the reactor to the Russian power grid.

“Artillery shelling of the Zaporizhzhia NPP is a terrorist act intended to destroy the plant’s infrastructure, disrupt all of its power lines that feed electricity into Ukraine’s power grid, and cut off power in the south of the country,” the company said on Telegram.

The company specifically accused Russia of targeting the plant’s power lines, which connect the facility to Ukraine’s power grid, in order to provide power to Crimea, which is completely reliant on Ukrainian power – primarily from the occupied Kakhovka Hydroelectric Power Plant in Kherson oblast. In an economy already reeling from inflation, currency devaluation, increased fuel prices and, of course, constant bombing, the loss of Ukraine’s access to affordable energy would be a particularly difficult pill to swallow.

Safety and security as we know it

Of course, you cannot look at the cost of the war for Ukraine without looking at some of the more intangible losses. People now face daily air raid sirens, the constant threat of bombing, and even skittishness when an airplane flies overhead. Overall, the costs to Ukrainians’ safety, security and mental well-being are not yet well documented. While the world was shocked by images from Bucha, Irpin and Mariupol, Ukrainians themselves lived through these horrors. Stories of widespread torture, executions, rapes and looting abound. The war has been horrific and will affect Ukrainians for generations to come. A US study estimates that 12 per cent of American soldiers have Post Traumatic Stress Disorder (PTSD), while over 80 per cent have experienced some symptoms. A study by the Veteran Affairs Research Committee estimates that this costs the US military 232.2 billion dollars a year – more than any other mental health condition. How much will it cost when an entire population tormented by war needs to deal with PTSD?

This article looked at the costs already associated with the war as it approaches the six-month mark. It does not, for example, include any costs for rebuilding the country following the conflict. De-mining, for example, is expected to cost Ukraine at least 70 billion dollars, while repairing destroyed cities and rebuilding demolished bridges, airports and schools is expected to cost trillions more. Returning to a semblance of normalcy, in which Ukrainians can feel free to go about their days without fear or guilt, will take just as much time and effort to rebuild.

Stay tuned for the next issue which will explore what Ukraine has gained from its heroic defence of its sovereignty.

Lee Reaney is a Lviv-based journalist and editor of the publication Lviv Today.

infrastructure, loss, rebuilding, Russian invasion of Ukraine, Ukraine, War