What awaits us in coming year?

A few theses on the possible scenario of events in Ukraine in the coming year.

Let to start with the main thing:

• No one knows the future. There are many scenarios of the future.
• But you can work with the future (analyze its scenarios and the factors that influence them, assess the likelihood of a particular scenario).
• The future can be influenced. More precisely, it can be created. But to do so, you need to be a subject and have a plan to achieve the goals you have set (I should note that we lost the signs of subjectivity by the beginning of 2023).

Now for the scenarios.

In the fall of 2024, I described the main “freezing” scenario.

The scenario starts in the fall of 2024.

“Freezing is beneficial for everyone:

1) The United States benefits first and foremost. The United States has already spent almost $200 billion to help Ukraine.

• Ukraine has survived;
• weakened Russia;
• the U.S. defense industry has received record orders;
• NATO has gained a second life;
• China's economic position is weakened.

The main goals for the United States have been achieved. The loss and fall of Russia are not included in these goals.

But the United States sees the risk of a rapprochement between Russia and China, and continuing the war will only accelerate this track.

Most importantly, the United States sees no prospect of “burning” more money for the war. 

And the only way to stop the “burning” is to freeze it.

2) Beneficial to Europe.

The EU has already spent almost €150 billion on aid and plans to spend another €35 billion.

European politicians are finding it increasingly difficult to explain to their voters where their money is spent.

The negative background here is that Russian agents are spreading news of corruption in Ukraine.

The EU wants to have security in the region, but it doesn't want to keep spending so much money on it.

It also wants to return to trade with Russia, a major market for European goods.

3) Beneficial to China.

The invasion of Ukraine and the protracted war have negated China's plans for the successful development of the One Belt, One Road project, which has lost its primacy among the United States' major trading partners.

The Chinese economy is on the verge of deep problems, and at the same time, China has not completed the rearmament of its army (it planned to do so by 2027).

4) Russia is also interested in “freezing” and liberating the territories of the Kursk region.

The Russian economy is also experiencing deep problems and needs a “breather.”

The cost of the war has already cost it more than $200 billion, not including the effects of sanctions.

The appearance of the North Korean military only confirms the crisis that is unfolding in both the economy and the army.

The main question is in what format and under what conditions the “freeze” will take place.

5) Ukraine.

I will not write that we are interested in “freezing”. We are interested in winning and ending the war.

But war always means resources.

We cannot finance our budget on our own, and our partners help us with this.

The $36 billion is a budget hole that our partners are closing.

We cannot continue the war without our partners.

And if our partners benefit from the freeze, they will simply turn off the tap of financial and military assistance to Ukraine.

***

How and when will the “freeze” take place?

Everyone here wants to have freezing conditions on their own terms:

1. Russia

• It wants to control the territories of Ukraine as much as possible, to demilitarize Ukraine in depth.
• Receive guarantees that Crimea and the occupied territories will not be the subject of further disputes.
• Return of the territories of the Kursk region.
• Preservation of the land corridor to Crimea (to the south of Ukraine).
• He wants to unfreeze frozen assets.
• And, of course, he does not want Ukraine to join NATO.

2. The United States and Europe

1. They want a “freeze” on the contact line.
2. They also want guarantees that the war will not recur and that Europe will be safe.
3. To reduce costs by removing the “headache”. 

They see no prospect of military victory. And they believe that every day the war continues only “burns” resources and creates internal problems for them.

3. China

• China wants to stop the war, lift sanctions, and open the borders of Russia and Europe.
• But it does not want a strong Russia. It needs a weak Russia - a supplier of raw materials that China needs.
• China will need the capabilities of the Russian military-industrial complex to prepare for a major war.

4. Ukraine

• Although Ukraine does not officially articulate its “freezing” plan, the Kursk operation is directly related to it.
• The Kursk region (the part controlled by us) will most likely be exchanged for the occupied territories of Zaporizhzhia and Kherson regions.
• Thus, the “Ukrainian version of the freeze” is the maximum liberation of Kherson and Zaporizhzhia regions.
• Gaining control over the ZNPP.
• Obtaining security guarantees and not repeating the invasion.

How to combine these options? 

As the military say, “negotiations are conducted on the battlefield”. And escalation of the war is one of the ways to raise the stakes.

• Ukraine wants to strike deep into Russia with Western weapons. 
• Ukraine controls part of Russia's territory. 
• Ukraine already has enough of its own long-range weapons to raise the stakes.

The appearance of North Koreans in the ranks of the Russian army, the receipt of missiles from the DPRK and Iran, and the continuation of massive shelling of Ukraine with missiles and drones are Russia's way of raising the stakes.

The United States is exploring the possibility of lowering oil prices as a tool to “exsanguinate the Russian war economy.” 

It is no coincidence that the Saudi Minister of Energy has threatened to bring oil prices down to $50. 

This is also a rate hike. 

As is the invitation to Ukraine to join NATO, this is also a raising of the stakes.

“And don't think that negotiations are not ongoing today. They are. And the design of the future “frozen peace” is already being discussed.”

I can't say yet what role Ukraine plays in these negotiations. Whether we have a say or not.

The main thing is that the process of “freezing” has already begun.

***

When can we expect the result?

• The U.S. elections are the main determining factor.
• The second is the successes or failures of Russia and Ukraine on the frontline.

We should not expect a “freeze” between the election and the inauguration.

“That is, February is the period of intensification of the process. and it will take at least 3 months. April - May 2025 is a potential period for an official ceasefire.”

Again, this is just a scenario. Which can change greatly under the influence of “black swans”

***

What will happen to Ukraine?

This is the most difficult and painful question. 

The answer depends on a number of important factors:

1. Security guarantees for Ukraine.

• It's not just about “memorandums.” It's about real protection of Ukraine and Europe from a new war.
• This could include Ukraine's accession to NATO (which I doubt very much, I think this idea will be abandoned in exchange for concessions from Russia), or the formation of a local defense alliance (Ukraine, Poland, Latvia, Estonia, Lithuania and the UK) + U.S. ally status (similar to South Korea and Israel).

Additional security guarantees will be:

• closing the sky (both with our own air defense systems and European ones);
• providing orders to the Ukrainian defense industry for the next 5-10 years;
• construction of a network of defense facilities;
• deployment of the U.S. military contingent in Ukraine (similar to South Korea).

2. Economics.

The Ukrainian economy has been destroyed. In the first year of the invasion, we lost 30% of the economy.

Economic recovery will be affected by:

• The amount and quality of capital we can attract (and that our partners will give us);
• technology (commercialization of Ukrainian technologies and transfer of modern technologies of Western countries to Ukraine, including microelectronics production, as an option);
• people. The return of Ukrainians (incentives, not pressure) and a balanced migration policy.

If the West is ready to invest at least 50% of what it spent on the war in Ukraine, Ukraine could receive up to $100 billion a year.

And we are not talking about loans, but about investments

• in infrastructure;
• the defense industry; the
• IT;
• microelectronics
• energy production and storage;
• agriculture and processing;
• machine building and robotics.

3. State governance

And this is where the main factor comes in.

• Without elections, there will be no money.
• Without a change in the country's governance system (abandoning the scoop, zeroing out 70% of state functions that are needed only by officials), there will be no money. Let me remind you that Ukraine ranks 150th in the Index of Economic Freedom. 
• Without a long-term strategy (understandable to investors), there will be no money. Let me remind you that the strategy is the fate of the subjects.
• Without a reboot of the judicial and law enforcement systems, there will be no money.
• Without changing the fiscal system (where Ukraine is an outsider in Europe), there will be no money.

***

We can go on, but speaking of scenarios, without the implementation of the factors described above, Ukraine has no future.

• If there are no changes described, there will be no investment.
• No investment means no economy, no jobs, and no decent living standards
• No economy - no strong defense industry and no strong army.
• No security - no people and no future.

The above is not a dogma, but a discussion of the most likely scenario.

It is important to understand that the coming year is crucial for the future of Ukraine, Europe, and each of us.

Source

About the author. Anatoliy Amelin, co-founder and director of economic programs at the Ukrainian Institute for the Future

The editors do not always share the opinions expressed by the blog authors.