No country in modern history has devoted 27% of its entire economy to defense. Ukraine’s 2026 budget crosses that threshold while facing a $10 billion funding shortfall, forcing Western taxpayers to fund basic government operations—from healthcare to pensions—because nearly all domestic revenue now flows to the military.

Ukraine’s government submitted this wartime budget to Parliament on 15 September, creating the most acute test yet of Western resolve to sustain Ukraine’s total war footing.

Record defense mobilization exposes Western aid limits

The proposed 4.8 trillion hryvnia ($117 billion) budget allocates 2.8 trillion hryvnias ($68 billion) to defense and security—more than the entire domestic revenue base.

Parliamentary Finance Committee Chairman Danylo Hetmantsev told RBC-Ukraine the gap represents “very big money, a very big and fundamental problem.” He explained that the National Bank and Cabinet base their calculations on assumptions of “slower return of the economy to normal operating conditions and preservation of high security risks.”

This funding crisis continues a multi-year pattern of Ukrainian budget shortfalls. Euromaidan Press reported last week that Ukraine faced a $7 billion defense gap despite surplus civilian aid, while the IMF discovered that Ukraine needs $20 billion more through 2027 than initially estimated.

Defense spending has escalated from previous levels—as Euromaidan Press pointed out, Ukraine already dedicates more of its economy to defense than any other country in modern history.

Social spending tensions emerge

Despite the funding crisis, the budget proposes major social spending increases: 50% teacher salary raises, expanded healthcare coverage, and higher pensions.

He specifically targeted programs like 100,000 hryvnia ($2,430) grants for creative industry entrepreneurs, arguing such spending “looks wild” during wartime. “We shouldn’t pretend we’re at peace,” Hetmantsev said, calling for better prioritization of limited resources.

The tension reflects a fundamental challenge: maintaining civilian morale through continued social services while dedicating nearly all domestic resources to the military. Previous Euromaidan Press analysis showed Ukraine now spends more servicing war debt than supporting elderly and vulnerable citizens.

Dependence on Western generosity deepens

Ukraine’s 2026 budget reveals total reliance on foreign financing for non-military functions. Negotiations continue for nearly half of the 2.08 trillion hryvnias ($50.5 billion) needed externally.

Germany has committed 9 billion euros ($10.6 billion) annually, while Norway has promised 8.5 billion dollars. But gaps remain large enough to threaten basic government operations.

The dependency creates structural vulnerabilities as Western political pressures mount. Aid restrictions compound the problem.

This creates a structural mismatch where civilian programs receive foreign support while military needs must rely entirely on Ukraine’s limited tax base.

War duration planning creates negotiating pressure

The budget includes a new 200 billion hryvnia ($4.9 billion) “defense reserve” allowing rapid redistribution between military branches based on battlefield needs. This reflects government assumptions about continued fighting requiring flexible resource allocation.

The budget framework assumes sustained “high security risks” and only gradual economic normalization—scenarios requiring years of continued international support.

Previous Ukrainian defense budgets have consistently proven insufficient, requiring multiple revisions. The 2024 defense budget increased by $12 billion mid-year.

Parliamentary timeline intensifies funding negotiations

Parliament will not review the budget until late November, with the first reading by 20 October and the final passage by 20 November. This timeline puts immediate pressure on international negotiations to close the $10 billion gap.

Maintaining this record requires securing the funds that are missing during ongoing negotiations with the IMF and European partners.

The 2026 budget represents Ukraine’s starkest financial reality yet: a country dedicating over a quarter of its entire economy to defense while completely dependent on foreign goodwill for basic government functions.

Whether Western partners can sustain this unprecedented level of support will determine the viability of Ukraine’s war effort and its state.

Ukraine’s parliament failed to pass a critical local government oversight law required for EU funding yesterday, potentially jeopardizing access to billions in European financial support as a key reform deadline expired in March.

The Verkhovna Rada rejected draft law №13150 with only 206 votes in favor of the required 226.

The legislation would have established oversight mechanisms for local government decisions and created a registry of municipal acts—requirements embedded in Ukraine’s €50 billion Ukraine Facility agreement with the European Union.

Another missed EU reform target

Ukraine has already missed its 31 March 2025 deadline for implementing this reform. This is part of a broader pattern of legislative delays that risk the country’s access to Europe’s largest financial support package during wartime.

The Ukraine Facility provides quarterly payments based on Ukraine meeting specific milestones, including democratic governance and rule of law requirements.

These bodies would have the authority to demand corrections to illegal decisions and take violators to court when necessary.

Why local oversight matters during war

The European Union structured the Ukraine Facility around strengthening democratic institutions even as Ukraine fights Russia’s invasion. At least 20% of the program’s €5.27 billion in grants must support sub-national authorities, making local government accountability essential for unlocking EU funds.

The Ukraine Facility regulation specifically mandates “effective democratic mechanisms and institutions, including a multi-party parliamentary system and the rule of law,” as well as systems “to effectively prevent, detect and correct irregularities, corruption and in particular fraud, all forms of corruption, including high-level corruption, or any other illegal activity ”

Stakes beyond one law

Since March 2024, the EU has expended over €12 billion to Ukraine under the facility, funding teacher salaries, healthcare workers, and essential government operations while the country allocates domestic resources to defense.

The failure comes as Ukraine depends on international financing to cover roughly half its $37.5 billion external funding needs for 2024.

Beyond the Ukraine Facility, the country relies on additional EU support through the European Peace Facility and bilateral aid from member states.

Parliament had initially approved the bill for further development in May, but the final version failed to gain sufficient support nearly four months after the EU’s implementation deadline.

Verkhovna Rada’s finance committee chair Danylo Hetmantsev announced the program on Sunday, building on previous warnings from officials that “the lack of coverage for military risks is a significant obstacle to attracting investors for Ukraine’s reconstruction and economic development,” as former deputy economy minister Oleksiy Sobolev, now Ukraine’s minister of economy, environment, and agriculture, noted last year.

The plan splits coverage into two tracks: direct state compensation for war damage in frontline areas through Ukraine’s Export Credit Agency, and premium subsidies elsewhere to make insurance affordable for businesses and households.

How Ukraine plans to make war-risk insurance work

Frontline zones: The Export Credit Agency will directly compensate damaged property in the highest-risk areas near active combat through a claims-based system.

Safer regions: The government will subsidize insurance premiums across the rest of the country, making commercial coverage affordable for both Ukrainian businesses and foreign investors.

The program still needs legislative amendments to expand the Export Credit Agency’s mandate and a Cabinet decision on budget allocation. Hetmantsev described the costs as “moderate” but provided no specific figures.

“This was a challenging path. Thanks to the Cabinet of Ministers and NBU for constructive cooperation, and I expect final decisions,” he wrote on social media.

Ukraine’s war-risk experiments show promise

Ukraine isn’t building this system from scratch.

Maritime success: The Unity facility, built with Marsh, Lloyd’s, and Ukrainian state banks, drove down war-risk rates for Black Sea shipping and expanded in March 2024 to cover all non-military cargo.

International backing: The World Bank’s MIGA expanded political-risk insurance for Ukraine in 2024, while broker Aon and the US Development Finance Corporation unveiled a $350 million scheme for Ukrainian businesses earlier this year.

Private market entry: A London-backed reinsurance program launched this year, offering property coverage—but only for assets more than 100 kilometers from the front lines. This shows how distance-to-combat still shapes pricing.

What investors have been waiting for

The new system aims to unify these fragmented pilot programs into comprehensive rules that private insurers and international reinsurers can price against. According to Oleksiy Sobolev, the goal is to create “a single pool, clear rules, and ultimately the ability to attract international reinsurers to this market.”

The original concept, developed last autumn by Ukraine’s National Bank, Ministry of Economy, and Ministry of Finance, envisioned financing through mandatory insurance payments and international donor support.

Coverage would protect against physical war damage, with mandatory insurance initially covering mortgaged property and residential construction projects.

The investment math that matters

If Ukraine can deliver predictable budget support and attract international reinsurer participation, the program could shift investment calculations from “uninsurable” to “expensive but manageable”—unlocking bank lending and foreign direct investment far beyond the maritime corridor.

However, the program’s scale and speed will determine whether this becomes a genuine turning point or just another limited pilot in a market still fundamentally priced for war.

Ukraine’s approach builds on proven models—the Unity shipping facility demonstrated that strategic state participation can dramatically reduce private market pricing while attracting commercial capital. The question is whether Ukraine can scale this from ships to the entire economy while the war continues.

For international investors who have spent three years watching Ukrainian opportunities from the sidelines, the program represents the missing piece that could finally make the risk calculable rather than simply unacceptable.

Ukrainian President Zelensky must consider a petition to decriminalize pornography after it reached the required 25,000 signatures, according to data on the official Ukrainian government petitions website.

Pornography production and distribution are illegal in Ukraine, with broad interpretations meaning even sharing nude photos can result in jail time.

Despite being illegal, models on subscription-based site OnlyFans, known for being an adult content platform, must declare their income and pay taxes, as required for all paid content creators.

The decriminalization petition was created by Ukrainian OnlyFans model Svetlana Dvornikova, who argued that "law enforcement should focus on real crimes instead of conducting operations to buy intimate photos."

"Over five years, I've paid more than Hr 40 million ($958,062) in taxes to the state," Dvornikova wrote in the petition.

"But instead of gratitude for this money, the state opened a criminal case against me."

In January 2025, Ukraine's OnlyFans content creators declared more than $7 million in income, paying $1.5 million in personal income and military taxes, though it's unclear what specific content these users create on the platform.

Ukrainian MP Yaroslav Zhelezniak, who has initiated bills to legalize pornography, calculated that from 2020 to 2022, 5,000 Ukrainians earned $123 million on OnlyFans.

"Porn today is mostly online platforms, and those who earn on these platforms officially pay taxes. That's millions of dollars going to the armed forces," Zhelezniak said on his YouTube channel.

The latest bill to legalize pornography was registered in November 2024 and supported by parliament's law enforcement committee in December, but hasn't been brought to a vote yet.

The bill proposes decriminalizing only the creation and storage of pornographic content by consenting adults.

Criminal liability would still apply for revenge porn, deepfake porn, extreme porn, child pornography, and distribution to minors.

"We're simply changing Article 301 of the Criminal Code so that adults who film and distribute intimate videos aren't thrown in prison for 3-5 years," Zhelezniak wrote on his Telegram channel.

"Currently, under Article 301, you can be punished even for storing nude photos on your personal phone."

In July 2022, a similar petition to legalize pornography reached the required number of signatures. It didn't lead to changes, and Zelensky responded by citing existing laws about "protecting public morality."

Russia seizes Ukraine’s most valuable lithium deposits, but US minerals deal not at risk, investor says

Russian troops have taken over the site of one of Ukraine’s most valuable lithium deposits near the village of Shevchenko, Donetsk Oblast, as Russia ramps up its summer offensive. While Ukrainian troops control territories near the site, the deposit is now under Russian occupation, Roman Pohorilyi, founder of open-source

The Kyiv IndependentDominic Culverwell

Ukraine's parliament on June 17 approved President Volodymyr Zelensky's nomination of 35-year-old Ruslan Kravchenko as the country's new prosecutor general, making him the youngest person to ever hold the post.

Kravchenko, a former military prosecutor and most recently head of Ukraine's tax service, replaces Andrii Kostin, who stepped down in October 2024 following a scandal involving fraudulent disability claims by dozens of prosecutors in Khmelnytskyi Oblast.

Lawmakers supported Kravchenko's appointment with 273 votes in favor, according to Yaroslav Zheleznyak, an MP from the Holos party.

A native of Sievierodonetsk in eastern Ukraine, Kravchenko served as a military prosecutor in Crimea before leaving the peninsula after Russia's annexation in 2014. He was one of the prosecutors in the case of fugitive President Viktor Yanukovych.

Kravchenko will now lead the Prosecutor General's Office amid war, reforms, and heightened scrutiny of law enforcement bodies' work. His predecessor, Kostin, resigned after the media revealed that at least 50 prosecutors had allegedly received disability status fraudulently — a scandal that sparked widespread criticism.

The Prosecutor General's Office has played a central role in documenting Russian war crimes and enforcing anti-corruption efforts, especially since Russia's full-scale invasion began in February 2022.

Zelensky welcomes G7 support as summit delivers no strong breakthrough for Ukraine

President Volodymyr Zelensky said on June 17 that the G7 summit had produced concrete results for Ukraine, including increased military support, new tranches of aid using frozen Russian assets, and additional sanctions targeting the sources of Russia’s war effort.

The Kyiv IndependentOlena Goncharova

President Volodymyr Zelensky proposed to the Verkhovna Rada the appointment of Ruslan Kravchenko as Ukraine's next Prosecutor General, Parliament Speaker Ruslan Stefanchuk said on June 16.

Kravchenko, 35, currently heads the State Tax Service and is expected to be formally introduced to lawmakers during a faction meeting of Zelensky's Servant of the People party on June 17. A vote on his confirmation is expected the same day, according to lawmaker Yaroslav Zheleznyak.

The nomination ends a six-month vacancy at the top of Ukraine's prosecution service, following the resignation of Andriy Kostin in October 2024. First Deputy Prosecutor General Oleksiy Khomenko has served in an acting capacity since.

Kostin resigned amid a scandal involving prosecutors illegally obtaining disability status, which was discussed during a National Security and Defense Council meeting chaired by Zelensky.

Kostin later admitted to "many shameful facts of abuse" within the prosecutor's office.

Kravchenko, a native of Sievierodonetsk in Luhansk Oblast, has held several senior roles in law enforcement and regional government. He previously served as head of the Kyiv Regional Military Administration and led the Bucha District Prosecutor's Office.

He is best known for serving as the lead prosecutor in the treason case against exiled pro-Kremlin former President Viktor Yanukovych, who was convicted of aiding and abetting Russia's war against Ukraine.

If confirmed, Kravchenko will take over an office tasked with overseeing wartime prosecutions, including war crimes investigations and anti-corruption efforts linked to Ukraine's ongoing reforms.

Satellite images show expansion at 5 Russian nuclear sites near Europe

One of the most notable developments is in Kaliningrad, where the suspected nuclear weapons storage site has undergone significant reconstruction.

The Kyiv IndependentTim Zadorozhnyy