After nearly three years of a grueling war with Russia, President Volodymyr Zelensky of Ukraine faces a difficult balancing act: extracting more financial resources to sustain the fight without overwhelming a population already straining under the conflict’s economic toll.
That tension was on full display in recent days as Mr. Zelensky signed into law the largest tax increase of the war while simultaneously introducing a state-sponsored program providing financial aid to Ukrainians during the winter.
The government said that every Ukrainian would be eligible to receive a one-off payment of 1,000 Ukrainian hryvnias, about $24 — a modest sum compared to the average monthly salary in Ukraine of roughly $500. But the government has touted the move as a way of demonstrating support for its citizens.
“For many families and at the level of the whole country, this is tangible,” Mr. Zelensky said in his nightly address on Monday, saying that more than 3.2 million Ukrainians had already applied to receive the grant.
Analysts say the program is a calculated effort by Mr. Zelensky to shore up his popularity among a population that is growing tired of the war. That fatigue has been exacerbated by a mobilization drive this year that exposed divides in society and corruption scandals that tarnished the government’s image.
A recent poll by the Kyiv International Institute of Sociology, a private think tank, found that while trust in Mr. Zelensky remained relatively strong at 59 percent, it had nonetheless fallen from 77 percent a year ago.
“It’s a populist move,” Anatoliy Oktysiuk, a political expert at another Ukrainian think tank, Democracy House, said of the grants. He noted that Mr. Zelensky was aiming to appeal particularly to pensioners, a 10-million-strong electorate in Ukraine that often struggles to make ends meet.
To address the country’s postwar future, Mr. Zelensky also established a Ministry of National Unity on Tuesday. One of its main tasks will be to encourage the return of millions of Ukrainians who fled abroad during the fighting, a significant loss for the country’s economy. But whether the ministry will get substantial funding remains unclear, and the government has offered little details of how it would operate.
Allocating payments of 1,000 hryvnias during economic hardships has been something of a tradition in Ukraine, with successive governments employing the measure over the past two decades. Mr. Zelensky himself introduced a similar program in 2021 during the coronavirus pandemic, offering the sum to every citizen who got vaccinated.
The Ukrainian authorities said recipients could use the grant for a range of expenses, including paying utility bills or purchasing food and medicine. They can also donate the money to the Ukrainian Army. Yaroslav Zhelezniak, deputy chairman of the parliamentary committee on finance, tax and customs policy, said that the program would cost 15 billion hryvnias, about $350 million, and would be funded by reallocating money originally earmarked for unemployment and demining programs.
The decision to hand out grants appears, at least in part, intended to soften the blow of the tax rise. That increase, which came into effect on Sunday — the same day the state support program was started — includes raising an income tax dedicated to military expenditures from 1.5 percent to 5 percent.
The government said the tax increase would raise an additional $3.5 billion this year and next year, and that the money would primarily be used to pay the salaries of Ukrainian service members.
But the simultaneous tax increase and grants have sent a contradictory message, critics say. “With one hand they’re taking the money, and with the other they’re giving it back,” Mr. Zhelezniak, a member of the opposition Holos party, said in a phone interview. “It makes no sense.”
Economists have criticized the grant program as an inefficient economic tool, arguing that the small individual payments would have little impact on stimulating the economy and that the total sum would be better allocated to the army.
Yuriy Gaidai, a senior economist at the Center for Economic Strategy, a Kyiv-based research group, said that for the program to have a meaningful social impact, it should have targeted Ukrainians who are struggling financially, such as war-displaced people, pensioners and veterans. A petition echoing similar grievances has garnered over 25,000 signatures, passing the legal threshold that requires a response from the Ukrainian president.
Mr. Oktysiuk, the analyst, said that Mr. Zelensky must already be thinking of his fate in postwar elections and might be concerned that he could lose because “people want fresh faces.” Mr. Oktysiuk and other political commentators have pointed to Gen. Valeriy Zaluzhny, former top commander of the Ukrainian Army whom Mr. Zelensky dismissed in February, as a strong potential challenger.
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