Latest news with #SergiiMarchenko
Bloomberg
2 days ago
- Business
- Bloomberg
Ukraine's Finance Minister Is Holding Out for Secondary Sanctions
Sergii Marchenko is reassuring Ukraine's investors, the G-7 ticket just isn't what it used to be, and a private tutoring boom is stressing students in Singapore. By Save Welcome to the weekend! On July 10, Sotheby's will auction off a black Hermès bag with gold hardware, created in 1984 for a French singer who wanted a purse that fit her lifestyle. Who was that fashion icon? Find out by playing Pointed, the news quiz for risk-takers.
Bloomberg
3 days ago
- Business
- Bloomberg
Ukraine's Finance Minister: ‘War Is Like a Black Box'
Three years into Russia's invasion, Sergii Marchenko is courting donors and reassuring investors to ensure his country can continue fighting. By What does it take to run the finances of a country at war? That question is at the heart of this week's conversation with Ukraine's finance minister, Sergii Marchenko. It comes at a time when Ukraine's leaders continue to navigate a complex relationship with the US, and just a few short months after President Volodymyr Zelenskiy was humiliated in a now infamous White House news conference. Relations have improved since the signing of a minerals deal in April, but uncertainties remain about the US government's attitude toward Ukraine and the longevity of its support. Against this backdrop, Marchenko has to keep many balls in the air. He must help preserve his country's financial infrastructure. He must ensure international donors and allies have confidence in where their money and other support goes. He must ensure the state has enough money to pay soldiers, doctors, teachers — and to buy weapons. And he must encourage investors, even in wartime. I found him stoic but, as you'll read, there is also a quiet fury when he talks about Russia and the money that still flows to it via oil and gas sales. This conversation has been edited for length and clarity. You've been finance minister for the past five years, three of them running a wartime economy. What would you say has been the hardest moment in that time? At the beginning of the war, we had a lot of pressure, a lot of uncertainty. Russian troops were in the outskirts of Kyiv. They occupied a lot of territory. It was like a nightmare for all our families. Your hometown near Kyiv was occupied. 1 Marchenko grew up in the Makariv region to the west of Kyiv, which was within the zone occupied by Russian forces for about six weeks in the spring of 2022. He had no news of his family there until after the Russians pulled back. This Bloomberg piece explains what people lived through in that time. Yes. And your parents were there at the time. My parents were under occupation and, you know, it's like magic that nobody surrendered them [to the Russians]. They were taking people into custody because they were related to politicians. 2 Marchenko's parents could have been in a perilous position if someone in their community had told the Russians that their son was Ukraine's finance minister. Some civilians who tried to evacuate these areas were fired upon, and where Ukrainians could get to the western border of their country, with Poland, many did. I saw this for myself at the time, reporting from the Polish border as trains packed with refugees came in. And you needed to keep the economy running in every sense. You needed the payment systems to keep running. You needed to keep collecting revenue. We relocated our servers and all necessary equipment to the west of Ukraine within one day. 3 Microsoft was among the companies helping the Ukrainian government move services and servers into the cloud, and a team from Marchenko's Finance Ministry went west to set up a secure government communications and operations hub. In Kyiv, the Ministry became Marchenko's home for several weeks. This interview he gave in December 2022 offers more insight into that tumultuous year. But back to your first question. At that time, we were optimistic that our army could protect us. Right now, my mood is different. From the beginning of the year, there was a desire to prepare for a peaceful resolution and, you know, it's created some unnecessary expectation from me as a minister when we are talking about next year's budget. Because you don't know, at the moment, whether to plan for an economy still at war, or for post-war reconstruction? Yes, exactly. Lasting and sustainable peace for Ukraine is something we need. But it's a question of pragmatism. When we're talking about 2026, we lack the necessary commitments to cover our financial gaps. The money available for Ukraine in 2026 is less than it is in 2025. 'I hope that after the war, we find ourselves in a different world, when we can expect significant investment from countries that helped us to survive.' You said this moment is harder than February 2022, when the all-out war began. That is really because of the United States, isn't it? 4 Obviously, this is difficult for the minister — a direct question about the Trump administration's attitude toward Ukraine. Bloomberg Opinion's Marc Champion recently wrote that Trump 'had the resources to ramp up financial and military pressure on Putin until he sat down for genuine peace talks; he just opted not to use them.' No, no. I don't want to blame the United States. It's just a different reality. Right now there is a possibility to get this peace for Ukraine. That extraordinary moment in the White House, the way President Zelenskiy was treated by President Trump and Vice President Vance. When you saw that exchange, 5 what did you think? I don't want to comment on the situation, because it's already history. I wasn't there. I was like a typical listener looking at this video, and had some kind of a tragic impression. It definitely was a shock for all. ' Disaster in the Oval Office ' was just one analysis of the conversation. From a reporter's spiky question about Zelenskiy's attire ('Why don't you wear a suit?') through Vance's 'Have you said 'thank you' once this entire meeting?', this is an hour diplomats, policy people and journalists will remember for years to come. There's also the reality of what has happened since. The minerals deal has been signed, and I know your government and the US have said it's good for everyone. But I do want to share with you Bloomberg's analysis of the deal, 6 which says it's less like the Marshall Plan — drafted after World War II for the reconstruction of Western Europe — and more like the Treaty of Versailles after World War I, which got reparations out of Germany. Except in this case, payments will come from the invaded country — Ukraine. I found the analysis I'm referring to useful in preparing for my conversation with Marchenko. It not only covers the metals and commodities included in the deal that was reached in April, but explains how that deal differs from typical US foreign policy. Interesting observation. I don't agree with such a message. At the beginning of this process, the draft of the document was so different. You can mark it as a Versailles Treaty, because it was really very unwelcome for Ukraine. But right now it's a very well-structured agreement. A very good deal. I think that the deal creates a lot of opportunity for future investment in Ukraine. 7 This think-tank analysis underlines the long and complex road ahead for such investment, noting the presence of 'severe security risks — ranging from threats to land access to broader human safety — that can deter private-sector investment. The most resource-rich areas of Ukraine are believed to lie in the country's eastern region, much of the region that is currently under Russian occupation.' And it's already proven that this signing unblocked a lot of policies — some military decisions were made after this signing. So it's definitely helpful. The comparison to the Marshall Plan, though. It is very far from that, isn't it? That was a moment of generosity, of thinking that an ally's prosperity is not a favor, it's the right thing to do. 8 We're in a very different world from that. There's a broader picture of national self-interest, too. As the US State Department's own look back at the Marshall Plan says: 'The United States feared that poverty would reinforce the appeal of communism and fascism. Meanwhile, American businesses had ramped up production for the war effort and held a surplus of goods. Without a European market for US goods, America's economy would suffer.' Well, the Marshall Plan was prepared for a specific aim. The United States wanted to make it possible for Europe to be sustainable as an economy. Of course, it was a significant investment for the United States, and again, I hope that after the war, we find ourselves in a different world, when we can expect significant investment from countries that helped us to survive. How important do you think oil prices might be to the chances of a ceasefire? Russia earns a significant proportion of its revenues from oil and gas. If oil prices stay lower for longer, is that the best chance of a ceasefire? 9 This analysis from April looked at why a slump in oil prices wouldn't break Putin's war machine. 'Government resilience is driven by three factors,' Bloomberg Economics noted. '[A] decade of shifting toward non-oil growth, robust cash reserves in [Russia's] National Wealth Fund and strong non-commodity tax revenue.' Well, it's one of the pressure points on Russia, but I don't think it's the only one. If we had done everything necessary to impose strict sanctions in 2022, we would probably now be talking about reconstruction that had already happened in Ukraine. But there was a reluctance at the beginning of war that provided an opportunity for Russia to circumvent sanctions. 10 We should sanction their fleets. We should sanction the production of oil. We should find a way to sanction countries that help Russia to circumvent sanctions. Secondary sanctions are something we really need. Though the share of European Union gas imports coming from Russia has fallen since the start of the Ukraine war, the country was still a top source of gas for the bloc at the end of last year. Secondary sanctions mean that you put tariffs on countries that buy a lot of goods from Russia. That would penalize countries like India. Is that what you're thinking of? I am not mentioning any specific countries. It's countries that procure Russian oil, gas, equipment, and provide them with technologies. They are providing Russia with the means to wage this war. 'We understand that the only way for us to withstand this is to be more technologically advanced than Russia.' You were born in 1981, so you were about 10 at the time of the collapse of the Soviet Union. I suspect in the past you might have been seen as part of a lucky generation who did not grow up under communism. Do you still have Russian friends? What's happened to your personal relationships with Russians? 11 I asked this because I have not forgotten what Ukraine's First Lady Olena Zelenska told me when we met in November 2022: that all contact with her Russian friends stopped, suddenly and entirely, that February. In her case, it seemed there had been close relationships, and I think she had expected or hoped that there might be messages acknowledging the invasion of her country, or inquiring about her family's wellbeing. Instead, she said, there was nothing. Despite the fact that we lived in one country, Ukrainians are different from Russians. I have no friends in Russia. I was just once in Moscow, but it was a [layover] to South Korea. I spent maybe three hours there. Ukrainian people have a history of a joint neighborhood. For more than 300 years we were forced to live with [Russians], but we preserved our differences. Our culture is different. Our language is different. Our attitude towards life is different. If you ask me what is the most valuable thing in life, the answer is my family, then probably my city, my village. Then my country. If you ask people in Russia, it's probably the Russian government, Putin, the 9th of May — their celebration of Victory Day. 12 Under Putin, the commemoration of the end of World War II has become imbued with greater nationalism, but when I lived in Moscow in 1992, I saw what the anniversary meant within families. I attended a meal at a friend's apartment, where her grandfather, a veteran, sat at the head of the table wearing his full uniform and medals. It's estimated that 18 million Soviet citizens were killed, 7 million of them civilians. So let's talk then about the impact of the war, the economy of the present, as well as the future. Do you feel in some ways you are at the mercy of Elon Musk? 13 He has suggested he could bring the frontline to a standstill, because Starlink is embedded in every Ukrainian frontline position and at the heart of the war effort. Do you worry about his actions? SpaceX's Starlink systems have been vital for Ukraine since the early months of the war. The terminals were initially donated by Musk, but now they are largely financed by the EU. Ukraine has been searching for alternatives to Starlink, but its nearest rival — Eutelsat — is not directly comparable at present. I don't think that one person, even as influential as Elon Musk, can operate like God. He can't. I don't think he will be able to destroy our capacity to defend ourselves. But it's true, isn't it, that his company is critical to your war effort. It's definitely critical. But, you know, we've learned a lot during the war. We understand that the only way for us to withstand this is to be more technologically advanced than Russia. We installed a lot of equipment. Our military industry right now can provide 30% of our needs. Before the war it was less than 5%, probably. With all due respect to Musk or any other person, we will find a way. Definitely we would suffer if he destroyed our capacity to defend ourselves. But if he wants to really stop this war, it's not the right way. It'll just make us suffer more than we are. Get the Bloomberg Weekend newsletter. Big ideas and open questions in the fascinating places where finance, life and culture meet. Sign Up By continuing, I agree to the Privacy Policy and Terms of Service. And even after the war, Ukraine will continue to be a country of very high defense spending, won't it? I get the impression that that will be needed for long-term security. Definitely. Right now, you're spending about 26% of GDP on the war. 14 What do you envisage it being after the war when you will have even more demands from reconstruction, health care and other vital aspects of a country's life? This was the figure Marchenko himself gave in an interview at the end of 2024. Globally, defense spending surged last year; Bloomberg's Chris Anstey recently examined the idea of ' Military Keynesianism,' i.e. the multiplier effect of such spending on the wider economy. It's a key element of our current discussion with our allies and the coalition of willing countries that are ready to help Ukraine. It would be some sustainable structure to help us maintain the army, to withstand any possible future Russian aggression. There are lots of risks, aren't there? You had those very well-documented problems with corruption, when officials within the defense ministry were among those arrested 15 over a conspiracy to embezzle large sums of money earmarked for weapons. In January 2024, Ukraine's security service said it had uncovered corruption in an arms purchase by the military worth about $40 million. Well, definitely war is like a black box because you can't expect people to be 100% dedicated to protecting your country. It's a different world. People operate in a different reality, and I don't know any other countries that don't have problems with some mismanagement or corruption during war. But it has to be transparent. Otherwise how do you keep the confidence of your international partners? 16 Ukraine's government has tried to reassure allies that it has taken action on this issue. We have a lot of audits and scrutinized processes, which help us provide necessary data, reports and analysis to our partners. We are very reliable, we are very transparent, and we can track all of the dollars that we received in our budget accounts. But we are talking about publicly collected money. When we are talking about procurement of weaponry, ammunitions — there definitely could be a lot of issues related to some ministries and some businesses. Such as? There are a lot of intermediaries, trying to help us to find shells, for instance. You know, there is no market for shells. You can't go to the supermarket and purchase the shells. That's why there are some people, business people — the middlemen — who take their cut. 17 This recent article in the Financial Times revealed the world of 'shadowy procurement,' with 'freewheeling foreign entrepreneurs whose alliances can be purely mercantile.' We need a huge amount of artillery shells, similar to World War II; just for a year, for example, we need more than 4 million artillery shells. The production from all of our partners is so minor that we need to find a way to purchase in other countries. It's not an easy business to wage war, and I am not blaming our ministries or our people. War is a very untransparent process. Seven million of your fellow Ukrainians have become refugees in these last three years. Do you need them to come back to the country? We would like all of them to be back. 18 We are already thinking about how to incentivize these people to come back because, well, they have their own choice. But definitely the key to our future prosperity, it's people. There is a squeeze on labor in Ukraine linked to the numbers who have left the country, are serving in the military or have been incapacitated or killed in action. In many industries, from coal mines to dairy farms, women have also stepped into new jobs as men have been called up. What do you think it is? Subsidized housing? People need housing. They lost their houses in Bakhmut, in Kharkiv, in Mariupol. It could be policies that provide access to mortgages. And they'll need jobs. Jobs are the most important. Construction will demand a lot of jobs. You know, it's a very complicated issue for us right now because even during the war, we feel the lack of workforce in Ukraine. People are on the front line and definitely a lot of people have left Ukraine. 19 I found it very moving to watch refugees arriving at a Polish train station in March 2022. I asked a Polish couple watching the incoming trains why they were there. They said they had agreed via Facebook to host a Ukrainian woman, but did not know when her train would arrive, or what she looked like — they would recognize her because she'd be carrying her two cats! Just yesterday I met with one of my friends. He's a professional. He left Ukraine before the war. He lives here in London. And he occupies a very senior position in business consulting. So he's a man of the world. I asked him, what can bring him back? He told me that despite the fact he feels good in the United Kingdom, he would come back if there is some kind of opportunity for him. 20 Some Ukrainians in the UK, feel that the jobs they can access are far below their experience level. Many who arrived in 2022 are on three-year visas that are now expiring. Finally, minister, this is the Weekend Interview and I don't know if there is such a thing as a weekend when you are running a wartime economy. Is there something you do, or try and do, to carve out some time, to put your head in a different place? Well, you can't put your head in different place because you should be switched on 24 hours. All of my thoughts right now are to serve my country, to be responsible as a minister. But if you're talking about weekends, I prefer to find some time with my family. In Kyiv, is there such a thing as a normal weekend? Can you take your children to the playground? Of course I can. We can go to the cinema. And at night, what happens when the air raid sirens go off? Well, you know we Ukrainians are well-informed about what particular drones or missiles Russia uses. For example, if it's the hypersonic ballistic missile, it takes probably several minutes to reach its target. You grab your children and go to the corridor. You can't go to the shelter because it takes much more time. [But some] cruise missiles, for example, take hours. So you can be better prepared. You can dress yourself and dress your children and go to the shelter. So there are times you are grabbing your children in the middle of the night. Yes. What does that do to you, when it's been like that for more than three years? Well, you know, I train every day. I like triathlons, not only for my physical condition, but also my mental condition. And this [war] looks like a marathon, or if I may, like an Ironman competition for all Ukrainians. Remind me how long an Ironman is, compared to a marathon? An Ironman is a 3.8-kilometer (2.4-mile) swim, a 180-kilometer cycle and a 42-kilometer run. When you ask me in what particular stage we are right now, we probably have reached two-thirds of our destination, but I don't know exactly how long it takes to reach the finish. Probably we can expect the finish nearby, because of negotiations for a peaceful solution for Ukraine. Probably we should take some additional nutrition, vitamins and be ready to run more. Mishal Husain is Editor at Large for Bloomberg Weekend. She joined Bloomberg from the BBC, where she presented its leading news program Today on BBC Radio 4 for over a decade. More On Bloomberg
The Guardian
21-05-2025
- Business
- The Guardian
German finance minister calls for swift resolution to Trump tariff wars as G7 finance ministers meet in Canada
Update: Date: 2025-05-21T07:49:43.000Z Title: Morning opening: Just stop it Content: Finance ministers of the world's seven largest economies – G7 – are meeting in Banff, Alberta in Canada to discuss their ideas on Ukraine and concerns about disruptions resulting from Donald Trump's unorthodox trade policy. Before the meeting, German finance minister Lars Klingbeil warned that trade disputes with the US should be resolved as soon as possible, as he stressed they were a burden on the economy and job security. Instead of this infighting, G7 should make it clear that it 'will continue to stand firmly by Ukraine's side' and oppose 'the terrible destruction caused by Russian president Vladimir Putin's war,' Klingbeil said. Ukraine will be represented there, with the country's finance minister Sergii Marchenko in attendance. These comments come as Europe scramble to keep pressure on Russia with the latest round of sanctions. Even the Vatican is getting involved with Pope Leo XVI confirming to Giorgia Meloni his willingness to host the next round of negotiations to try to end the war between Russia and Ukraine. I will bring you all key updates from across Europe throughout the day. It's Wednesday, 21 May 2025, it's Jakub Krupa here, and this is Europe Live. Good morning.
Japan Times
21-05-2025
- Business
- Japan Times
Canada seeks to send 'strong message' with Ukraine at G7 finance talks
Canada sought to send a firm message with a Ukrainian minister's presence at the start of a Group of Seven finance leaders gathering Tuesday, where war in Ukraine and economic turmoil from U.S. President Donald Trump's tariffs remain top of mind. In meetings through Thursday, leaders will discuss global economic conditions and seek a common position on Ukraine. Ukrainian Finance Minister Sergii Marchenko's presence "sends a strong message to the world" that members are recommitting to support the country against Russia's invasion, Canadian Finance Minister Francois-Philippe Champagne told reporters Tuesday. "We're also going to talk about what we're going to be doing in terms of reconstruction," he said in a joint news conference with Marchenko. The talks in Canada's western province of Alberta come amid an uncertain approach among the G7 democracies towards Ukraine following Trump's return to power. Once broadly unified, the G7 — Britain, Canada, France, Germany, Italy, Japan and the United States — has been rattled by Trump, who reached out to Russia and slapped tariffs on both allies and competitors. But Champagne said in an interview that he was cautiously optimistic ahead of meetings despite trade turmoil. He stressed that "everyone wins" when trade rules are "fair and predictable," adding that Canada can serve as a bridge among members in a turbulent time. Marchenko said he would seek during the meetings to reiterate Ukraine's position on the need for more pressure on Russia. 'Constructive' spirit While Trump's levies are not formally on the agenda, a Canadian official told reporters that "trade and tariffs will be embedded in the discussion on the global economy." Economists warn tariffs could fuel inflation and weigh on growth, and the effects of U.S. trade policy loom over Treasury Secretary Scott Bessent's engagements. Asked about talks with Bessent, Champagne said Tuesday that despite tension around tariffs, both sides are looking to coordinate actions and tackle concerns including excess industrial capacity, nonmarket practices and financial crimes. "The spirit around the table is constructive," he said. Katsunobu Kato, Finance Minister of Japan, arrives to The Rimrock Resort Hotel during the G7 Finance Ministers and Central Bank Governors' Meeting in Banff, Alberta, Canada, on Monday. | AFP-JIJI A source briefed on U.S. participation expects China's excess industrial capacity to be discussed, with members sharing concerns on the issue. A Japanese official said its finance minister plans for a meeting with Bessent, seeking to address topics like foreign exchange. While the grouping discusses policies and solutions to issues like trade, security and climate change, analysts warned of unpredictability this time amid internal tensions. 'A test' The gathering in picturesque Banff will be "a test or signal" of the G7's ability to agree on a final statement, a French finance ministry official told reporters Tuesday. Although Canada's presidency hopes to issue a communique, this outcome must reflect "a shared understanding of the global economic situation and common goals in addressing the challenges," the official said. "We will not be able to accept language that is completely watered down." The source briefed on U.S. participation said Washington is not inclined to "do a communique just for the sake of doing a communique," noting a consensus should align with Trump administration priorities too. German Finance Minister Lars Klingbeil warned Tuesday that trade disputes with the United States should be resolved as soon as possible. In comments before meeting his counterparts, Klingbeil said tariffs and uncertainties are a burden on the economy and job security. Trump has slapped a blanket 10% tariff on most U.S. trading partners, threatening higher rates on economies including the European Union and sending jitters through the world economy. Officials said they are not expecting trade agreements this week, but said the gathering is another chance to find common ground. But the issue of sanctions on Russia remains uncertain. Trump said Russia and Ukraine would start peace talks after he spoke Monday with Russian President Vladimir Putin, while the EU formally adopted a new round of Russia sanctions Tuesday. A source briefed on U.S. participation maintained that all options remain regarding sanctions, but these should be aimed at outcomes like the peace process.
Yahoo
21-05-2025
- Business
- Yahoo
Newsroom Ready: Canadian finance minister, Ukrainian finance minister meet in Banff at G7 Finance Ministers' summit
Canadian Finance Minister François-Philippe Champagne and Ukrainian Finance Minister Sergii Marchenko address media for the first time at the three-day G7 Finance Ministers' meeting in Banff, Alta. Champagne said it's morally imperative that G7 countries help support the rebuilding of Ukraine. (May 20, 2025)
