Goals for 2024 and defense hub in Ukraine: Initial results of Zelenskyy's visit to U.S.

Meeting with Austin and address at the National Defense University

The visit to the USA commenced with a meeting with Defense Secretary Lloyd Austin and Chairman of the Joint Chiefs of Staff General Charles Brown. During this session, the president discussed global security challenges, the situation on the Ukrainian front, and defense cooperation with the USA.

"I am thankful to the USA for fulfilling our agreements, particularly in strengthening air defense. I appreciate Minister Austin and General Brown for their personal leadership," stated Zelenskyy after the meeting.

Photo: Volodymyr Zelenskyy speaking at the National Defense University (president.gov.ua)

Following this, there was an address at the National Defense University. But prior to that, Lloyd Austin spoke.

"And Mister President, you are living proof that a single person's leadership can help rally an embattled democracy, and inspire the free world, and change the course of history. We are here today for a simple reason. On February 24, 2022, Russia launched an unprovoked, all-out invasion of Ukraine. And over nearly two years of atrocity and aggression, Putin has continued to wage his reckless and lawless war of choice. Mister President, Ukraine's fight for freedom is one of the great causes of our time. And the United States is proud to stand with you. And make no mistake. America's commitment to supporting Ukraine against Russian aggression is unshakeable," he addressed Zelenskyy.

He also emphasized that the USA has allocated over $44 billion in security assistance, while allies in the contact group in the Ramstein format have contributed over $37 billion. Currently, the Russian army is significantly weakened, and the USA, along with partners, is resolute in expanding combat capabilities and assisting in the formation of new forces to counter Russia in the future.

President Zelenskyy, in his speech, warned that Russia's aim isn't just the land, resources, or people of Ukraine. According to him, for Vladimir Putin, Ukraine is merely a step to continue the behavior of the Soviet empire, challenging freedom wherever the Russian czar desires. He also emphasized that Putin must lose.

Furthermore, he outlined Ukraine's goals for 2024: to defeat the adversary as the Berlin Wall was demolished. And for this, he emphasized the need for confidence from the USA, no less than during President Ronald Reagan's time.

"I believe this is our common goal – that the security established after 1989 is fully restored and preserved; that freedom, as then, proves that, “when its boundaries expand in one country, freedom for all people expands”; and that next year, in 2024, the aggression of the current enemy of the free world begins to collapse, just like that wall. And we can make it real," Zelenskyy added.

Talks with the IMF Director, news of the tranche, and the World Bank

Following this, Zelenskyy met with the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva. She announced that the Fund had approved the review of the credit program, allowing Ukraine to receive a tranche of $900 million.

The updated memorandum with the IMF expanded with 12 new structural benchmarks. Specifically, Ukraine committed to introducing a corporate excess profits tax (during the time of war), allowed for the reform of the single tax, pledged not to decrease the retirement age, not to introduce new privileges and special pensions, and also agreed to gradually increase tariffs for gas and electricity.

For more details, read the article "Tranche, reforms, and new conditions: Ukraine-IMF agreements for 2024."

Photo: Meeting with IMF Managing Director Kristalina Georgieva (president.gov.ua)

Zelenskyy thanked Georgieva for the IMF's support and emphasized the importance of Ukraine's financial system security. Georgieva, in turn, acknowledged the country's achievements amid warfare.

"Ukraine shows excellent performance. We forecast Ukraine's GDP growth to reach 4.5% this year. In the third quarter of this year, GDP grew by 9.3% compared to the third quarter of 2022, which is simply incredible. Inflation in November dropped sharply to 5.1%, which is a dream for many countries that are not at war," she added.

During the meeting, they discussed the implementation of a $15.6 billion long-term financing program, methods of Ukraine's external financing in 2024, and the development of a mechanism to use frozen Russian assets for Ukraine's benefit, including as alternative budget support and investments for the country's restoration.

Talks with the President of the World Bank, Ajay Banga, focused on mobilizing international financial assistance and active support in working with donors. They also discussed bolstering the stability of the Ukrainian financial system during wartime and noted the increasing share of the cashless economy.

The issue of resuming mortgage lending was raised. The World Bank will propose means to attract funds from commercial banks into the mortgage market and instruments to mitigate risks, aiming to reduce interest rates on mortgage loans.

Engagements with the U.S. defense and the idea of a hub in Ukraine

The first day of the visit concluded with a meeting with heads of American defense companies, including BAE Systems (producer of BMP Bradley, M113, CV90, Archer self-propelled artillery, and Challenger 2 tanks), Day & Zimmermann (ammunition producer), Boeing, Lockheed (F-16 fighter jet manufacturer), and others.

Zelenskyy discussed the concept of establishing a European defense hub in Ukraine. To realize this, the government is prepared to swiftly make all necessary decisions, streamline bureaucratic procedures, and place orders.

"We are ready to deliver fast, and we have already started doing this, because we have no other way to change the system, because we are at war," stated the president.

Photo: Meeting with U.S. defense company executives (president.gov.ua)

He emphasized that Ukraine is ready and will produce a greater quantity of ammunition and military equipment but requires support from powerful American companies. This entails joint production of artillery ammunition, air defense systems, artillery, and missile systems.

Moreover, Ukraine intends to invite American partners to enter into the shareholding of Ukrainian defense companies, which will be beneficial for all parties involved.

Zelenskyy underscored the importance of a creative and innovative approach in the defense industry, citing projects within the FrankenSAM framework. These projects integrate modern Western and old Soviet technological solutions to protect Ukrainian cities. It was recently announced that these systems would be jointly produced, and the U.S. side will provide necessary technological solutions to Ukraine.

Day two: Meetings with senators and Biden - What to expect for Ukraine

During the first half of the day (in Washington), Zelenskyy's schedule includes meetings with representatives from the Senate and the House of Representatives of the U.S. Congress. It's known that Senate leaders, both Democrat and Republican, Chuck Schumer and Mitch McConnell, respectively, have invited him for discussions. Negotiations with the Speaker of the House, Mike Johnson (Republican Party), are also scheduled.

It's noteworthy that Zelenskyy's visit falls during a decisive week in the Senate. Currently, they are trying to agree on an emergency package of over $110 billion, including funding for military aid to Ukraine for the following year. If senators don't reach an agreement, the issue of American aid will be on hold for at least a few weeks as senators are soon going on Christmas recess. The White House warns that they can allocate military aid to Ukraine only until the end of 2023, after which funds will be depleted.

The problem lies in Ukraine becoming a hostage in the internal political struggle in the U.S. Aid to Ukraine is tied to measures to strengthen anti-immigration policies, which Republicans in the Senate and House of Representatives insist upon.

For several weeks, negotiations have been ongoing without much progress. However, recently it became known that President Joe Biden is ready to discuss significant concessions. This includes enhancing the standard for initial processing of migrant cases, sending them to "safe third countries," and expanding rapid deportation possibilities.

Republicans demand stricter measures: expanding authority to halt asylum processing at the border, mandatory detention, and, if migrant facilities run out of space, employing the "Remain in Mexico' policy.

Political scientist Volodymyr Fesenko is cautious in his predictions. In a comment to RBC-Ukraine, he has stated that unfortunately, the unlocking of billions depends not on Ukraine but on whether Democrats, Republicans, and the White House find a compromise.

"Will they find this compromise in the coming days? Then there will be a chance for aid to be voted on. If they don't find it, unfortunately, there is a high risk that it won't be voted on. Both sides have taken a stand; Republicans demand the border first, and then everything else. Except for the most staunch opponents, they are not against helping Ukraine. Even the Speaker of the House, Mike Johnson, supports it, although he criticized it earlier," he told RBC-Ukraine.

As of 16:00 (Kyiv time), Zelenskyy arrived at the U.S. Congress.