Russia’s rise triggers Ukrainian capital outflow, Czech minister says

PRAGUE, Feb 9 (Reuters) – Ukraine’s economy is already feeling the impact of Russia’s military buildup 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 that included a trip to the frontline between state and rebel forces in eastern Ukraine, described the atmosphere there as “depressive “.

Russia has mustered some 100,000 troops near the Ukrainian border, saying it is seeking security guarantees from the West that would veto Kiev’s NATO membership and halt the alliance’s expansion led by the United States. Moscow denies planning an invasion, but some Western officials say an attack could happen within days or weeks.

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

“The (Ukrainian) Prime Minister and the President mentioned that Ukraine is facing a strong outflow of capital, both private and private withdrawing their savings, which can threaten the economic stability of Ukraine quite quickly,” said- he declared.

“For this reason, they don’t like to see the threat exaggerated, although they take it very seriously,” Lipavsky said.

Ukraine has sought to allay fears of an invasion, considered by some Western officials as possible within days or weeks -06.

Ukraine has received economic aid from countries like Germany, whose Chancellor Olaf Scholz said on Monday that Berlin was ready to continue providing funds after already providing around $2 billion to Kyiv.

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

“The economic card, which Russia is using by playing on the situation with the increasing concentration of its army, is putting very strong pressure on Ukraine,” he said. (Reporting by Robert Muller and Jan Lopatka, editing by William Maclean)

Christi C. Elwood