Ukraine’s Daunting Choice: Trading Its Land and People for Future Security

Wars are almost always about land. Ukraine’s determined and heroic defense of its sovereign territory against horrific Russian aggression attests to that fact. As we noted in an earlier article in War on the Rocks, restoring Ukraine’s economy is the most crucial element in ensuring the country’s very existence as a viable and secure state going forward. Therefore, it is vital to understand how Ukraine’s economic landscape has been and will be changed as a result of the war, and what this portends for societal well-being, enhanced growth, and national security in the years ahead.

Meanwhile, opinions amongst the commentariat regarding the prospects for peace negotiations to end the conflict implicitly validate or ignore altogether Moscow’s seizure of large parts of Ukraine. But ceding sovereign territory to Russia will be the thorniest issue in any attempt to end the fighting. To this point, even though the number of Ukrainians willing to make negotiated territorial concessions has increased as the war continues, a recent Gallup survey showed that still only about a quarter of those polled were willing to do so.

The situation on the battlefield, where Ukrainian forces are hard pressed to defend their positions, increases the likelihood that Ukraine will not be able to reclaim all of its territory now occupied by Russian troops over the near term. That Ukrainian forces, in a dramatic and unforeseen offensive into Russia’s Kursk region, seized and are still holding a small salient there provided a morale boost but will be a very small counterpoint to the vastly larger Russian occupied areas in Ukraine. With President Donald Trump again in office, changes in the position of the United States in terms of its support for Ukraine are possible, and the pressure on the Ukrainian leadership to accede to demands that it surrender land to the Russians will be intensified. Trump’s recent statement about urging Russian President Vladimir Putin into negotiations to end the war and his directive to his special envoy for Ukraine and Russia, Keith Kellogg, to do the same again gloss over the territorial challenges. If this position does in fact hold, there are two crucial questions that should be posed now: Exactly what areas are we talking about, and what does any such relinquishment of territory mean for Ukraine’s security going forward? Unless the economic facts on the ground are taken fully into account, the outcome of peace talks could render Ukraine a much weaker state and support Putin’s geopolitical agenda.

This Land Is Our Land

By our estimate, Russia currently controls around 17.3 percent of Ukrainian territory. To put this in perspective, if that same figure was applied to the United States, this would be roughly equivalent proportionately to the combined areas of Texas, California, and Colorado. But Putin has made clear that he seeks vast areas in Ukraine beyond the current front lines. Although his stated views regarding Ukraine’s sovereignty have been as extreme as denying the country’s right to exist, Putin now lays claim to all of four regions in southern and eastern Ukraine (Donetsk, Luhansk, Zaporizhzhia, and Kherson oblasts) in addition to Crimea. Indeed, in recent extensive remarks on the possibility of resolving the conflict, Russian Foreign Minister Sergei Lavrov made it absolutely clear that Russia requires the Ukrainians to surrender “Crimea, Donbass, and Novorossiya,” which not coincidentally includes these four oblasts. In a widely condemned “referendum” in the occupied territory in 2022 and again in the Russian presidential election in 2024, Ukrainians in these areas were heavily coerced into voting in favor of accession to Russia and for Putin. This all occurred despite the fact that in these oblasts the Ukrainians continue to stubbornly hold their ground and still control some of the most populated and economically significant parts.

Ukraine internal political units, including the cities of Kyiv and Sevastopol, and position of the frontline as of January 1, 2025 (Map by Timothy Hoheneder)

It’s The Economy That Will Matter Most

Without question, the war has severely degraded Ukraine’s industrial capacity and supporting infrastructure. The latest estimates available from the World Bank’s Rapid Damage and Needs Assessment (RDNA3) showed that as of December 2023 the total damage was $486 billion, a figure that has certainly grown significantly since. Unfortunately for Ukraine, data on Russian attacks from the Violent Incident Information from News Articles project show that four of the most economically important regions at the outbreak of the 2022 war (Kyiv city and Dnipropetrovsk, Kharkiv, and Kyiv oblasts) have been among the most heavily attacked by Russian ground, air, and naval forces owing to their proximity to Russian territory, from where the assaults have been launched.

Attacks by region of Ukraine through 31 December 2024 using data from the Violent Incident Information from News Articles (VIINA) Project (Map by Timothy Hoheneder)

If there is a bright spot for Ukraine amidst this tragedy it is that the country’s economy has proven more resilient than one would think given the dreadful circumstances. After suffering a 30 percent decline in 2022, the World Bank and the European Bank for Reconstruction and Development estimate that the Ukrainian economy will actually grow in the low single digits in 2024 and 2025, despite the devastation wrought upon the country’s electrical power grid and supply lines. Of particular note in this regard is the vitality shown in small and medium enterprises, the expansion of which has been especially remarkable and bodes well for the future.

Our current research suggests that significant shifts in the spatial distribution of the Ukrainian economy towards central and western regions of the country, which was already underway before 2022, is a key element in the sustainment and even, in some cases, growth of production and provision of services nationally. Data on the regional distribution of small businesses, licenses granted to individual entrepreneurs, and the issuance of new mortgage loans all show pronounced growth in these areas. Foreign direct investment likewise has been directed towards regions further removed from the war zone in the western and central regions and thus more difficult for the Russians to strike with drones and aircraft guided bombs. For obvious reasons, the location of such investments in Ukraine’s national defense sector, such as the German firm Rheinmetall’s new plants, is not specified, but presumably they are deep in the interior.

It is clear that serious obstacles remain in restoring Ukraine’s economy despite ongoing efforts to rebalance some sectors away from the immediate conflict zone. Russian attacks on and seizure of key industrial plants and resource extraction sites that are place-bound are especially problematic. The closure of the coking coal mine at Pokrovsk and threats against the large lithium mine at Shevchenko, both in the Donetsk region, have negative effects on industries elsewhere in the country that depend on those inputs and on exports of the products thereof. Exports, which were growing significantly prior to the war and reorienting away from Russia and towards the European Union, have suffered major declines since March 2022. But regions in the central and western parts of the country have increased their share of national exports, another indication that the economy is moving westward.

Now Comes the Hard Part

Certainly other key issues will be involved in peace talks, such as NATO membership and other security guarantees, repatriation of civilians and prisoners of war, and reparations. Although in November 2022 the U.N. General Assembly voted to hold Russia responsible for paying reparations to Ukraine for war damage, requiring Moscow to actually pay from its assets abroad for the reconstruction of Ukraine’s economy will be very difficult over the near term and is likely a non-starter. In this light the compelling need for massive international financial assistance and more investment is obvious, with both dependent on an end to the fighting.

To be clear, in our view seeking a negotiated settlement in no way minimizes the heroic actions of Ukraine’s military, its stoic civilian population, the well-documented and horrific war crimes committed by the Russian armed forces, the extensive damage done to social infrastructure, and the displacement of millions of its citizens. As we have argued, despite Russia’s longstanding refusal to honor their mutual borders, Ukraine’s undoubted international legal right to retain its territorial sovereignty antebellum is indisputable. But planning and executing economic development projects in the most favorably situated areas with a view to maximizing and securing future growth will, over the longer term, be Ukraine’s ultimate weapon in achieving its rightful place as a free and democratic country aligning ever more closely with Europe and being capable of defending itself against future Russian aggression.

Ralph Clem is emeritus professor of geography and senior fellow in the Steven J. Green School of International and Public Affairs at Florida International University.

Erik Herron is the Eberly Family distinguished professor of political science at West Virginia University.

Timothy Hoheneder is a doctoral student in earth sciences at the University of New Hampshire.

Khrystyna Pelchar is a doctoral student in political science and history at West Virginia University.

Image: Yan Boechat via Wikimedia Commons.