Direct losses from the Russian aggression amount to approximately $750 billion, and together with indirect losses, the amount will reach one trillion dollars. While the currently frozen Russian assets will at best pay off only half of this amount, the rest will have to be recovered from Russia in the form of reparations and compensation. Presidential Advisor on Economic Affairs Oleh Ustenko spoke about the assessment of damage from Russian aggression in a commentary to UNN.
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The economist emphasized that all calculations are not yet final, as the fighting continues and some territories remain occupied.
The total cost of losses that can already be estimated at $750 billion is the so-called direct losses, if we add indirect losses, the total amount of direct and indirect losses will reach about $1 trillion, Ustenko said about the losses that Ukraine is recording as of now.
He clarified that the assets of the Russian central bank have already been frozen at the level of $300-350 billion and the Russian pseudo-elite involved in the beginning of the war against Ukraine, which is $100-150 billion, some of which have already been frozen and some will be frozen in the near future.
"That is, it is not enough for full compensation. This difference between the cost of losses leaves about $500 billion, which will need to be received in order to fully compensate for the losses. These 500 billion dollars that are missing, currently arrested by the Russian Federation, are reparations, payments that should last for a long period of time, but after the war," Ustenko explained.
According to the Presidential Advisor, there are different methodologies for assessing damages. For example, according to the World Bank's methodology, losses are currently estimated at $450 billion, but this amount includes losses that can be clearly confirmed.
"I would draw attention to the fact that these are the so-called verified losses, i.e., what can now be fully confirmed, and this is still for a period of almost more than six months ago. That is, the verified losses that the World Bank is talking about are only a partial estimate," Ustenko explained.
The Presidential Advisor explained that there are now fairly clear estimates of the destroyed assets belonging to the state, as well as social infrastructure. There are also estimates for some private enterprises located in the territory that is not occupied by the enemy and is not in the combat zone. As for the occupied territories, certain methodologies also allow us to estimate approximate losses. Unfortunately, as the hostilities continue, the losses continue to grow.
"As for other categories, either in the area of constant hostilities or in the temporarily occupied territories, the process is more complicated, but there is a methodology that can be used to estimate the current losses. For example, the World Bank's methodology. It shows the losses for a period of time more than six months ago, and it also includes the so-called verified losses, where you can get to the places where you can conduct the relevant analysis. If you look at the amount of all losses, it is $750 billion in direct losses, and if you add indirect losses, it is about $1 trillion. And the value of the seized assets is almost half that," he said.
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The KSE Institute in its report indicates that the amount of direct documented damage to Ukraine's infrastructure due to the full-scale invasion of Russia is estimated at $150.5 billion as of June 2023. In the total amount of direct losses, the largest share is the loss of housing stock - $55.9 billion, including approximately $1 billion in losses from flooding and destruction of residential buildings as a result of the explosion of hydroelectric power plants.
The Kyiv Scientific Research Institute of Forensic Expertise also assesses the damage. Their findings form the basis of Ukraine's application to the International Court of Justice. Both individuals and legal entities whose property has been damaged due to the aggression of the Russian Federation can apply to KFI for an expert assessment. The experts conduct their work based not only on national but also on international standards.
The experts emphasize that real losses include physical destruction or damage to property, as well as the costs associated with its restoration. This includes the cost of repairing or replacing damaged property, the cost of materials, labor, transportation, and any other costs associated with restoring the property. The experts of the Kyiv Scientific Research Institute of Forensic Expertise also estimate the lost profits of enterprises. The damages established by the experts of the Kyiv Scientific Research Institute of Forensic Expertise are reasonable and should be reimbursed by the aggressor in full. Ukraine is working together with international partners to create a mechanism for compensation for damage caused to enterprises as a result of the armed aggression of the Russian Federation. And, as noted by the Kyiv Scientific Research Institute of Forensic Expertise, expert opinions will be used to formulate claims against Russia and bring it to justice in the International Criminal Court, the European Court of Human Rights and the special tribunal after its creation.