Ukraine formally asked Poland to grant a debt of EUR 120 million. This information was confirmed by Deputy Minister of abroad Affairs of Ukraine Andrij Sybiha, who met with the head of the Polish Ministry of abroad Affairs Radosław Sikorski during his visit to Poland.
The main intent of the debt is to buy military equipment from the Polish arms industry, including weapons systems, which the Ukrainian authorities believe have already proven their effectiveness in the field of combat. These include portable anti-aircraft kits Lightning and self-propelled Krab cannonohaubice, which have been utilized by the Armed Forces of Ukraine since the first months of the full-scale invasion of Russia. As Sybiha pointed out, Ukraine is curious not only in continuing to supply these types of weapons, but besides in deepening cooperation in the defence sector, including the production of military equipment in both countries.
The discussions in this case were of a political and method nature. Not only did Sybiha make an authoritative request for a loan, but he besides proposed a broader model of industrial partnership cooperation. The aim is not only to buy Polish equipment, but besides to make its joint production, technology transfer, training and integration of logistics and service systems. In the assessment of the Ukrainian side, specified an approach would bring common benefits – Poland would supply fresh orders and impetus for the national defence industry, while Ukraine would have access to modern weapons and greater military self-sufficiency in the face of long-term conflict. Deputy Minister stressed that Ukraine has akin conversations with another abroad partners, but Poland is 1 of Kiev's key allies, both in military and political terms. So far, Warsaw has provided Ukraine with 46 military support packages worth more than EUR 4 billion, making it 1 of the largest donors among European countries.
The proposed debt would let for the implementation of further arms supplies in the coming months, in a situation where the Ukrainian budget is increasingly charged with war spending and the gross from taxes and another sources is decreasing. Obtaining specified backing from Poland would let Ukraine not only to safe current needs on the front, but besides to spread payments over time and avoid the request to borrow costly commercial loans on the global market. For Poland, specified a transaction would not only be an expression of solidarity, but besides a anticipation of profitable export of home arms production. The export of cannonhaubic Krabs and Lightning sets would be a direct support for companies specified as Huta Stalowa Wola, Mesko or WB Electronics, which have been pillars of national military possible for years.
However, there is no uncertainty that Ukraine's proposal comes at a hard time for both herself and Poland. The war has been going on for more than 3 years, and the West, although inactive providing assistance, is starting to talk more and more about the request for further financial support with circumstantial reforms, transparency and improvement in public funds management. Poland is besides in a hard budgetary position, with a increasing deficit and a tight plan for spending on defence, infrastructure and energy transformation. The decision to grant EUR 120 million of credit, even if it were a preferential debt and partially guaranteed by global institutions, will require detailed analysis, negotiation and hazard assessment.
At the political level, granting a debt to Ukraine can be presented as an act of strategical support at a critical time of war. For the government in Warsaw it would be an chance to confirm its commitment to the safety of the region and to strengthen relations with Kiev, which in the last year have weakened against the background of economical disputes, including grain trade and transport. However, from a social and political point of view, the granting of credit may be subject to mixed reactions. any public opinion may consider that these funds should be allocated to national needs, especially in the face of the hard situation of many public sectors in Poland. In turn, the environments supporting Ukraine will anticipate Poland to proceed to play an active function in helping its neighbour defend himself against Russian aggression.
However, the fundamental question arises: will Ukraine be able to repay specified a loan? The country is facing a deep economical crisis, a decline in GDP, inflation and the outflow of the population and capital. Although financial support flows from the West – both from the European Union and the global Monetary Fund – the fiscal situation of Ukraine is unstable and the economical future of the country depends on many factors beyond its control, including the dimension and result of the war. Even if the debt from Poland is to be repaid in the long term, there is inactive a hazard that Ukraine will not be able to meet its financial commitments in the event of a deterioration and Poland, as the lender, will bear the costs of this decision.
From the point of view of state policy, specified a decision requires not only political will, but besides cold calculation and safeguards. Ukraine's support remains crucial to the stableness of the region and the safety of Poland, but at the same time it is crucial to avoid actions that could unduly impose the Polish budget or exposure the state to financial losses in the future. Although intentions are clear and the strategical nonsubjective is understood, the question of the solvency of Ukraine and the reliability of the reimbursement of funds must be clearly assessed before any credit decisions are taken. Otherwise, the aid may become a long-term financial problem which will be hard to explain to the national public.
