Ukraine strikes an oil refinery in Russia’s Rostov region that services the military. Ukraine is winning the economic war against Russia, according to The Economist. Putin proposes “high-tech duel” with the West in which Russia would strike Kyiv with the Oreshnik missile.
Ukraine strikes oil refinery in Russia’s Rostov region that services the military
Ukraine hit the Novoshakhtinsk oil refinery in Russia’s Rostov region in an overnight attack on Thursday, the General Staff of the Armed Forces of Ukraine said in a statement. The site is the only one operating in the region and is used to meet the needs of the Russian army, it added. The operation was carried out by Ukraine’s Navy, Security Service, and other branches of the military.
The refinery produces up to 7.5 million tons of oil products annually, specializing in the production of fuel oil, furnace, marine and diesel fuel, and straight-run gasoline.
The attack caused a fire to a crude oil refining facility. The scale of damage is being assessed, the message reads.
“Ukraine’s defense forces are making all efforts to undermine Russia’s military and economic potential in order to make it stop its armed aggression against Ukraine. [These efforts] are to be continued,” Ukraine’s General Staff said.
Ukraine is winning the economic war against Russia, according to The Economist
Ukraine’s economy at large has reinvented itself to navigate wartime realities, a recent article by The Economist says. It remains one-quarter smaller than in 2021. Yet for the first time since 2022, the start of the all-out invasion, it is healthier than its enemy’s in some key respects.
Ukraine’s central bank forecasts GDP to grow by 4% in 2024 and 4.3% in 2025. The currency is stable and interest rates, at 13.5%, remain near their lowest in 30 months. Contrast that with Russia, where rates should soon hit 23% to arrest the rouble’s fall, banks look fragile and GDP is set to grow by just 0.5-1.5% in 2025.
But Ukraine faces strong headwinds: the uptick of war, the downtick of domestic resources, and Donald Trump.
In July 2023 Russia refused to renew the grain deal. Ukraine responded by opening its own maritime corridor, securing it through a remarkable campaign of sea deterrence by drones and missiles. That allowed it to resume shipments of not just grain but also metals and minerals, its second-biggest export.
These measures, together with Western aid, have prevented Russia from robbing Ukraine of the resources and morale it needs to keep fighting. Now a third phase is beginning, during which the country’s economy faces its biggest threats yet: acute shortages of power, men and money.
In December it expanded its electricity-import capacity from the EU by almost a quarter, to 2.1GW.
Many food producers ferment residues from their operations into biogas that they use on-site. A lot of farmers also have diesel generators. Mid-sized firms often have natural-gas plants, which they sometimes pair with wind and solar power. Industrial firms use all these, together with imports, to avoid catastrophic outages.
Coping strategies and ongoing repairs will contain the country’s average power deficit to 6% of total demand in 2025 and 3% in 2026, says Andriy Pyshnyi, the governor of Ukraine’s central bank.
The second problem—and the thorniest—is the lack of labour. Since 2022 mobilisation, migration and war have caused the workforce to shrink by over a fifth, to 13m people. Demand is strong: the number of job openings has reached 65,000 a week, up from 7,000 during the first weeks of the war—but the average opening attracts only 1.3 applications, compared with two in 2021.
The economy and defence ministries are locked in a tug of war over mobilisation: where to strike the right balance for the country’s future. Ukraine’s civilian leadership has so far declined the maximalist demands of military leaders, to the detriment of the front line.
Now even industries deemed critical can protect only half of their workers from the front line.
It does not help that money is scarce—the third problem. Small farms and firms struggle to borrow enough to finance their operations. Financing long-term capital spending is virtually impossible.
The soaring costs of doing business have hit profits. Companies with domestic customers are passing through some of the increases, pushing up inflation. Exporters, which compete in global markets, do not have that option.
The government, too, is spending much more money than it pockets. In 2025 its budget deficit is projected to near 20% of GDP. In principle nearly all of it—$38bn—will be financed from external sources.
In June the G7 agreed to a $50bn debt package for Ukraine, to be repaid from interest generated by Russia’s €260bn-worth ($273bn) of sovereign assets frozen in the West. In early December America transferred its $20bn share to a World Bank fund that Ukraine can use for non-military purposes, though Mr Trump could try to make it harder for Ukraine to access the money.
Ukraine can probably survive without American funds in 2025 anyway. Together with an €18bn tranche the EU agreed to provide under a previous programme, contributions from other G7 members would plug the gap left by Uncle Sam, says Dimitar Bogov of the European Bank for Reconstruction and Development.
Ukraine also has healthy foreign-exchange reserves. These are projected to grow to $43bn—five months’ worth of imports—by the end of 2024. Were America to pull out, however, Ukraine could run out of road in 2026.
Putin proposes “high-tech duel” with West in which Russia would strike Kyiv with Oreshnik missile
Speaking during a press conference combined with a call-in show Thursday, Russian leader Vladimir Putin urged the West and Ukraine to determine a site in Kyiv that Russia will hit with the Oreshnik missile in a “technological experiment.”
In response to alleged expert discussions in the West that the Oreshnik could be easily intercepted, Putin said Western experts should challenge Russia “to conduct some kind of technological experiment, a high-tech duel of the 21st century. Let them identify a strike target, say in Kyiv, concentrate all their air defense and missile defense forces there, and we will strike there with the ‘Oreshnik’ and see what happens. We are ready for such an experiment.”
“It would be useful both for us and for the American side,” he added.
On November 21, Russia fired an Oreshnik intermediate-range ballistic missile at the city of Dnipro in response to the U.S. and UK’s allowing Kyiv to strike Russian territory with advanced Western weapons. The missile carried a conventional warhead, while the strike caused minor damage.
Ukraine’s defense intelligence maintains that the missile is a new ballistic missile known as Kedr. On November 28, Putin threatened that Russia may use the Oreshnik to attack “decision-making centers” in Kyiv.