Financing of the armed forces of Ukraine under the conditions of the state of martial: the European integration vector

Abstract

In the conditions of Russian aggression, the state of funding of the Armed Forces of Ukraine is important in view of the direct impact on the outcome of hostilities, the future of European countries, and on the further advancement of Ukraine through European integration.
 The basis of the administrative and legal regulation of the financing of the security and defense sector, including the Armed Forces, is: the Military Security Strategy of Ukraine, the National Security Strategy of Ukraine, the Law of Ukraine “On National Security of Ukraine”, annual laws “On the State Budget of Ukraine”.
 As a result of the conducted analysis, it was established that during 2016–2021, budget financing of the Ministry of Defense of Ukraine amounted to 2.1–2.4% of GDP or 2.5–2.9 billion dollars. the USA, while the amount of expenditures for similar purposes in the USA is 600–650 billion dollars, in China – 215–250 billion dollars, in the aggressor country – 70 billion dollars. Only in 2022, the specified volume of expenditures in Ukraine reached 21%, approximately the same amount is planned to be financed in 2024 (1,693 billion UAH).
 Among the main problems in the field of financing the Armed Forces, the following are highlighted: the budget of Ukraine is not a development budget; the amount of budget expenditures depends on charity, humanitarian and international technical assistance; inefficient structure of defense budget expenditures; lack of objective opportunities for growth of own income sources.
 These shortcomings became one of the reasons for Ukraine’s unpreparedness to protect its borders and significant losses during the Russian aggression during 2022-2023. This convinces of the need to comply with the current legislation of Ukraine, which combines the administrative-legal and financial- legal principles of regulation of the sphere of security and defense in Ukraine, including the Armed Forces. It is possible to achieve an increase in the volume of income sources in Ukraine through the modernization of the defense-industrial complex. Transfers from the EU remain important and necessary - this confirms the necessity of the European integration vector for the further development of our Another way to overcome the identified problems is the attraction of direct foreign investments for post-war reconstruction through the removal of regulatory levers. Along with state domestic financing and attracting private capital, Ukraine will need financing of infrastructure projects from relevant EU funds (as public funds), which requires maximum transparency, accountability and control.