Zelensky Announces Game-Changing Grants to Lift the Spirits of War-Weary Ukrainians – Here’s What You Need to Know

President Volodymyr Zelensky announced that citizens will receive a one-time payment of $24 this winter, a measure seemingly aimed at easing the impact of a tax increase introduced to support the war effort.

By Sheenu Gupta On Dec 5, 2024 Share with new partner:

After nearly three years of a relentless and devastating war with Russia, Ukrainian President Volodymyr Zelensky finds himself navigating a delicate situation: securing additional financial resources to continue the fight while avoiding pushing the already burdened population too far. This balancing act was starkly evident in recent days, as Zelensky enacted the largest tax increase of the ongoing war, a move that aims to generate more funds for Ukraine’s defense efforts. At the same time, he introduced a state-sponsored initiative to provide financial assistance to Ukrainians during the harsh winter months.

Under the new program, every Ukrainian citizen is eligible for a one-time payment of 1,000 Ukrainian hryvnias, which amounts to about $24. While this sum is modest compared to the average monthly salary of roughly $500, the government has positioned the payment as a tangible expression of support for the population, especially during these difficult times. In his nightly address, Zelensky emphasized that for many families, and for the country as a whole, this assistance is meaningful. He also noted that over 3.2 million Ukrainians had already applied for the grant.

Political analysts view this initiative as a strategic move by Zelensky to maintain or even bolster his popularity among a population that is increasingly weary of the prolonged war. Public fatigue has been growing, particularly after a mobilization effort earlier in the year, which highlighted social divides and sparked corruption scandals that have further damaged the government’s reputation. In this context, Zelensky’s program serves as both a gesture of solidarity and a political maneuver to address the economic strain while reassuring the public of the government’s commitment to its citizens.

A recent survey by the Kyiv International Institute of Sociology, a private research organization, revealed that while President Zelensky’s trust rating remains relatively high at 59 percent, it has dropped significantly from 77 percent a year ago. Political analyst Anatoliy Oktysiuk, from the Ukrainian think tank Democracy House, described the financial aid program as a populist tactic, aimed especially at appealing to pensioners—a group of around 10 million people in Ukraine who often face financial difficulties.

In addition to this move, President Zelensky announced the creation of a Ministry of National Unity on Tuesday, tasked with addressing Ukraine’s post-war recovery. One of the ministry’s key objectives will be to encourage the return of millions of Ukrainians who fled the country during the conflict, a loss that has severely impacted the economy. However, it remains uncertain whether the new ministry will receive adequate funding, and there have been few details about how it will function.

The practice of distributing one-time payments of 1,000 hryvnias during times of economic hardship is not new in Ukraine. Previous governments have implemented similar measures over the past two decades. In fact, Zelensky himself introduced a comparable program in 2021 during the COVID-19 pandemic, offering the same amount to every citizen who got vaccinated.

Ukrainian authorities have stated that the one-time grant can be used for various expenses, such as paying utility bills, purchasing food and medicine, or even donating to the Ukrainian Army. Yaroslav Zhelezniak, deputy chairman of the parliamentary committee on finance, tax, and customs policy, explained that the program would cost approximately 15 billion hryvnias (about $350 million). This amount will be funded by reallocating funds originally intended for unemployment and demining programs.

The introduction of these grants seems to be a way to ease the impact of a recent tax increase. The tax hike, which took effect on Sunday—the same day the state support program was launched—raises the income tax rate for military expenses from 1.5 percent to 5 percent.

The Ukrainian government has stated that the recent tax increase is expected to raise an additional $3.5 billion over this year and the next. The funds will primarily be used to pay the salaries of Ukrainian military personnel. However, critics argue that the combination of a tax hike and the introduction of the financial aid grants sends a confusing and contradictory message to the public. Yaroslav Zhelezniak, a member of the opposition Holos party, expressed frustration over the move, stating, “With one hand they’re taking the money, and with the other they’re giving it back. It makes no sense.”

Economists have also criticized the grant program, questioning its effectiveness as an economic tool. They argue that the small individual payments are unlikely to make a meaningful impact on stimulating the economy, and the total amount of money would be better spent directly supporting Ukraine’s military efforts. Yuriy Gaidai, a senior economist at the Center for Economic Strategy, a Kyiv-based think tank, suggested that if the government wanted to have a more significant social impact, the program should have targeted Ukrainians facing severe financial hardship, such as displaced persons, pensioners, and veterans. A petition voicing similar concerns has gained over 25,000 signatures, meeting the legal requirement for a response from President Zelensky.

Political analysts have speculated that Zelensky’s actions may be influenced by his political future, especially with the prospect of postwar elections on the horizon. Some believe that Zelensky is worried about losing support, as there is a growing desire among the population for “fresh faces” in leadership. In this context, figures like General Valeriy Zaluzhny, the former commander of the Ukrainian Army who was dismissed by Zelensky in February, are being considered as potential challengers to the president in future elections. This has led some analysts to suggest that Zelensky is making strategic moves to maintain his popularity and political relevance in the face of growing discontent.