Russia build-up triggering Ukraine capital outflow, Czech minister says

PRAGUE — Ukraine’s economy is already feeling the impact of Russia’s military build-up through capital flight and will require stabilization from abroad, Czech Foreign Minister Jan Lipavsky said on Wednesday.

Lipavsky, speaking after a two-day visit to Ukraine which included a trip to the frontline between the state and rebel forces in Ukraine’s east, described the atmosphere there as “depressive.”

Russia has amassed some 100,000 troops near the Ukraine border, saying it seeks security guarantees from the West that would veto Kyiv’s accession to NATO and halt the U.S.-led alliance’s enlargement. Moscow denies planning an invasion but some Western officials say an attack could occur within days or weeks.

Lipavsky told Reuters in an interview that the threat of Russia’s incursion into Ukraine was “present, real and very intense,” and it has had a negative impact on Ukraine’s macroeconomic stability already.

“(Ukraine’s) prime minister and the president mentioned that Ukraine is facing strong capital outflow, both private and people withdrawing their savings, which is something that can quite rapidly threaten Ukraine’s economic stability,” he said.

“Because of this, they don’t like to see the threat being overblown, although they take it very seriously,” Lipavsky said.

Ukraine has sought to calm fears https://www.reuters.com/world/ukraine-foreign-minister-urges-people-ignore-apocalyptic-predictions-2022-02-06 of an invasion, seen by some Western officials as possible within days or weeks https://www.reuters.com/world/europe/russian-attack-ukraine-possible-any-day-diplomacy-still-an-option-white-house-2022-02-06.

Ukraine has been receiving economic help from the likes of Germany, whose Chancellor Olaf Scholz said on Monday that Berlin was prepared to continue to provide funding after already supplying about $2 billion to Kyiv.

Lipavsky said that the help of the international community was “absolutely necessary” for Ukraine.

“The economic card, which Russia has been using by playing the situation up with its army’s growing concentration, is putting very strong pressure on Ukraine,” he said. (Reporting by Robert Muller and Jan Lopatka, Editing by William Maclean)