As Ukraine prepares for a difficult winter, parts of the country are struggling to amass funds as Russian strikes continue to derail Ukraine’s economy.
As the war continues to escalate, Russia has increased the scope and frequency of its attacks, targeting civilian infrastructure that is vital to the livelihoods of thousands of Ukrainians.
Tu-95. Image Credit: Creative Commons.
Tu-95 Bomber Russian Air Force. Image Credit: Creative Commons.
With strikes on Ukraine’s energy infrastructure beginning ahead of the upcoming winter, Kyiv faces a major uphill battle as the government seeks ways to keep the lights and heat on while maintaining high defense spending.
Ukraine is currently looking to its European partners to foot the bill while looking for areas to cut the budget.
Putting the Heat on Ukraine’s Domestic Economy
According to Reuters, the Ukrainian city Kryvyi Rih was hit hard in a recent Russian drone/missile attack. The city’s steel plant, which was once the heart and soul of its domestic economy, was hit by multiple ballistic missile attacks, causing the plant to close indefinitely.
Owned by ArcelorMittal, the steel mill is one of the city’s largest employers and operates a large network of mining and steelmaking complexes.
The city’s mayor, Oleksandr Vilkul, is doing everything he can to ensure the city is ready for the coming winter, but attacks on the steel plant have complicated these efforts. “In Kryvyi Rih, the situation is actually worse than anywhere else, apart from the front line itself,” the mayor said. “It’s about survival. Right now, we need to survive.”
The closure of the ArcelorMittal steel plant is a significant blow not only to the people of Kryvyi Rih, but to Ukraine as a whole. Before the war, Ukraine’s steel industry was a source of national pride.
The mills in Kryvyi Rih and Zaporozhzhia accounted for a tenth of Ukraine’s economic output.
Tu-95 Bear Bomber. Image Credit: Creative Commons.
Now the steel mills across the country have ceased production after being hit by several Russian missile attacks.
The prospects of any of these plants returning to full operational capacity before the war ends are grim. The recent attacks mean that the mills “can no longer safely operate,” said Mauro Longobardo, the CEO of ArcelorMittal. “We are discussing the future of the plant with the Government of Ukraine and will focus on preserving the infrastructure, so when peace finally returns, options for restarting production remain available.”
The Gloves Are Coming Off: Brutal Attacks That Are Meant to Destroy
While Russia has targeted Ukrainian civilian and military infrastructure since 2022, something has changed in Russia’s bombing strategy.
Moscow has increased its attacks against dual-use and civilian infrastructure.
Likely influenced by Ukraine’s attacks against Wildberries and other retailer warehouses, the Russians have relentlessly struck Ukrainian warehouses and logistics centers, along with locomotives across the country, in an attempt to strangle Ukraine’s economy.
In Odessa, the Russians have been attacking the city’s port infrastructure along with any Ukraine-bound civilian cargo ships.
As a result, Ukraine’s economy, which was improving after the initial shock in 2022, has stagnated.
In FY2026 Q1, the economy shrank by 0.6%, while it grew by only 0.4% in Q2.
With winter just around the corner and Russian attacks continuing, the country’s economy faces serious short-, medium-, and long-term challenges.
As it prepares for winter, Russia has implemented a new strategy to disrupt life in Kyiv: targeting bridges.
The Russians have recently begun a new campaign to hit bridges across Ukraine’s capital.
Two major bridges in Kyiv, the Pivnichnyi (Northern) Bridge and the Pivdennyi (Southern) Bridge, have already been struck multiple times by Russian drones as Moscow begins its winter strategic bombing campaign.
The two bridges still stand for now, but the damage has severely disrupted traffic and caused major gridlock during peak hours. “To get from the left bank to the right one and back – it’s just hell,” one resident told the BBC.
According to some reports, Russian missiles have already begun hitting heating and energy facilities across the country.
As temperatures drop, these attacks will likely intensify.
Struggling to Balance the Budget
With Russian attacks increasing, Ukraine is struggling to meet its financial requirements to keep the lights on while also fighting a war of attrition against Moscow.
According to reports, Europe has delayed billions of Euros in foreign loans to Kyiv after the Ukrainian government has failed to pass certain tax reforms and anti-corruption laws, demanded by its Western supporters.
Since the war, Western partners have sent nearly $200 billion to Kyiv.
However, delays in key legislation put $29.5 billion at risk at a time when Ukraine desperately needs all the funding it can get.
In the short term, the country needs around $56 billion, $27 billion of which is needed for defense spending.
Over the last four years of fighting, Ukraine’s defense budget has increased dramatically.
Two years ago, a single day of fighting required around $140 million.
Today, a single day of fighting costs $190 million.
Ukraine’s investments in long-range strike capabilities are driving the rising costs.
Although Ukrainian drones like the FP-2 are much cheaper than Western long-range precision missiles, advanced Starlink-enabled systems are making Ukrainian drones more expensive to manufacture, especially in large numbers.
As defense costs rise, Ukraine’s domestic revenue is insufficient to cover them, especially since its agricultural and industrial revenues have taken a sharp dive in the last year.
About the Author: Isaac Seitz
Isaac Seitz, a Defense Columnist, graduated from Patrick Henry College’s Strategic Intelligence and National Security program. He has also studied Russian at Middlebury Language Schools and has worked as an intelligence Analyst in the private sector.
