At a coffee bar on the strolling cycle path along the beach of Odesa, a customer finally reports in mid-afternoon. The weather is beautiful, the water calm, the coffee Italian, and peak season at its peak – in other years it would have been packed with Ukrainians, Turks, Americans, Arabs, and yes, Russians. But now it is only the third customer of the day. The beach is also empty, except for the red signs with skulls. Only mines float in the water.
Yet Sergei Velichko works today, making the coffee. His boss keeps the tent open for the employees, he says. ‘That way we earn something. Even if he earns nothing from us. It is the will to pretend as much as possible that life just goes on.’
The war in Ukraine has now been going on for five months, and the country has entered a new phase this summer. After the Russian invasion and the Ukrainian victories around Kyiv, Kharkiv and Mykolaiv, the fronts have more or less stabilized in the east and south. The villages and towns that brace themselves in winter and spring for the arrival of the Russians, such as Odesa, are trying to pick up again, despite the rockets that regularly descend there.
So the sandbags and steel crosses that blocked the way to the center have been removed and people sit on the terraces drinking beer and water pipe in the evenings. On Sunday afternoons, the city is at its most beautiful again, when the women put on their heels and there is dancing in the streets. On Thursday, the residents go to the opera, which had a tank on the platform in March. The curfew doesn’t go into effect until 11am, four hours later than before, and alcohol is allowed again until early evening (after which creative waiters serve the beer hidden in teapots).
But the lines for the food bank are much longer in the morning than in March.
Heroic Resistance
Because even though the Ukrainians have been able to keep the Russian occupiers out of 80 percent of their country, the consequences of the war are being felt everywhere. The loss and pain of friends and relatives who fought, died or fled, but also the concern to keep one’s head above water. The heroic resistance of the first months has turned into an everyday struggle for many Ukrainians to make ends meet.
“We just made it,” says Marina Kharina, a biology teacher in her 20s, as she walks away from a food outlet two blocks from the opera with a bag full of vegetables and rice. ‘We’ll get food here so we can pay the rent. My husband has lost his sales representative job, but I still teach. Especially at a distance, many children are abroad.’
Ukraine is not only in a war, but also in a war economy. The cost of food has risen by 35 percent since last year, according to the National Bank of Ukraine, the cost of fuel by 90 percent. In addition, many people have lost their jobs.
It is difficult to give precise unemployment figures, because so many people have fled. According to the international labor organization ILO, the number of jobs has fallen by 4.8 million, or 30 percent of pre-war employment. In the jobs that still exist, much more is done with the thumbs than in the past, such as by Sergei Velichko in his coffee shop. Economists estimate that the total fall in national income this year will therefore amount to about 35 to 45 percent.
poverty line
And that’s quite a lot, in a country where one in three inhabitants already lived below the poverty line. The average income per capita in Ukraine is about five thousand euros. With a price level that is three to four times lower than in the Netherlands, the purchasing power of an average Ukrainian is about one third of that of a Dutch person.
In the first months, the Ukrainians held out by drawing on reserves and borrowing money. Meanwhile, the bottoms of the piggy banks are coming into view. Landlords are heartbroken and have halved the rent, Kharina says, or, as in Velichko’s case, suspended it altogether. This helps the tenants, but leads to less money in circulation.
The owners of restaurants and eateries along the boulevards and squares of Odesa also have to pay less rent: most only a quarter. The owner of a Turkish doner tent, one of the few that is open, complains about the 60 percent rent he still has to pay, and therefore continues to serve beer and vodka. “I have to get it from somewhere.”
Working is seen as a form of patriotism: with the tax, the government can finance the war. But in a halved economy, not enough is coming in to pay those costs. According to the IMF, Ukraine has a monthly budget deficit of 5 billion euros. In fact, Oleg Ustenko, an adviser to Ukrainian President Volodymyr Zelensky, thinks the country needs an additional $4 billion a month to pay unemployment benefits and repair destroyed homes. Last week, Ukraine narrowly avoided a national bankruptcy as it can no longer make repayments to international creditors. They stroked their hearts at the last minute and give Ukraine until the end of next year.
But not all creditors have mercy. National energy company Naftogaz, which has little income of its own because its Ukrainian customers cannot pay the energy bills and less energy is used by closed companies and refugees living abroad, was unable to pay off its debts this week and is now in danger of going bankrupt. to go. The company also provides 17 percent of government revenues – which threatens to exacerbate treasury problems.
Inflation
The US Treasury Department says it fears that Ukraine is trying to close the gaps by printing money, which will inevitably lead to even more inflation: if there is more money while the number of products and services you can buy with it remains the same, then rising prices.
By the way, not everyone is bothered by this. In front of the ice cream shop Taioe, black beasts from Porsche and BMW are parked on the sidewalk – inside tightly dressed young men and women with sunglasses are eating ice creams that, converted to Dutch purchasing power, would cost 15 euros. Inequality in Ukraine was already huge, and has not gotten any smaller. Of course there are the corrupt millionaires who still let it hang, but there are also ordinary Ukrainians who, for example, earn good money thanks to a job as a programmer for a Western company – work that is still going on.
They are also patriotic. Whoever takes a yellow ball and a blue ball gets one for free.
The problem is also that the export of grain and other goods has virtually come to a standstill, which means that Ukraine receives little international currency. Due to the balance of payments deficit, the exchange rate fell by 25 percent last week.
The total cost of reconstruction was estimated at $750 billion at a summit in Switzerland earlier this month. The G7 and the European Union have pledged 30 billion for this so far.
Velichki, the manager in the coffee shop, has a gloomy outlook for the time being. His boss is considering placing a kind of cage in the water in front of the beach, so that people can enter the sea there without danger. The municipality would like to give permission, but the holiday feeling remains far away. Earlier this month, a swimmer in the Odesa region was killed by an exploding sea mine.
Velichki will send his wife and two-year-old daughter to Germany next week. While he and his family could handle the threat of a Russian invasion, the threat of economic collapse is greater. “Someday things will really go back to normal,” says Velichki, who as a young man cannot leave the country because he can be called up to arms. “But it gets worse before it gets better.”