EU ties Ukraine funding to tax and shadow‑economy reforms as Kyiv pleads for air defenses
EU officials in a tense New York meeting told Zelensky they want progress against Ukraine’s shadow economy, higher tax revenues and legal alignment with EU rules before more budget support, even as Kyiv warns it’s running short of air defenses ahead of winter.
Ukraine now faces a battle over budgets as well as over territory. In New York, European Union officials used a high‑stakes meeting with President Volodymyr Zelensky to make clear that future budget support will depend on Kyiv tightening up its own economy.
Bloomberg reports that European Commission President Ursula von der Leyen’s talks with Zelensky were tense. EU officials told Ukraine they expect concrete moves to tackle the shadow economy, raise tax revenues and bring Ukrainian laws into line with EU rules before releasing more financial aid. At the same time, von der Leyen said that additional defence support is expected and that budget support will increase, but framed this within those reform demands.
Ukraine argues that its immediate problem is survival under renewed attack. Officials warn that Russia is preparing another mass strike campaign against critical infrastructure as winter approaches, and that Ukraine is short of air‑defence systems and interceptors. They say they need missile batteries and ammunition quickly to defend cities and the power grid, or economic reforms will be overwhelmed by physical destruction and lost tax income.
Ordinary Ukrainians stand at the intersection of these pressures. The war has already eroded incomes and pushed more activity into the informal economy. Efforts to clamp down on off‑the‑books work and raise taxes may improve the state’s finances over time but risk being felt as extra strain at a moment when people are also dealing with air‑raid alerts, blackouts and mobilization.
For Brussels, the argument is partly about political accountability. EU leaders know they will have to justify long‑term support for Ukraine to their own parliaments and voters. Demanding action against the shadow economy and clearer tax rules gives them a way to claim that money is being watched closely and tied to changes on the ground.
The conversation lands on top of Zelensky’s own admission that wartime leadership has been messy. He has said he makes “many mistakes” and that a president must make “hundreds of deals per day,” including uncomfortable ones, and that he wants to be able to walk Ukraine’s streets after the war without being seen as “a piece of shit and not a leader and not a man.” Delivering tough economic reforms while keeping public trust during war will test that goal.
In the coming months, signals to watch will include whether Kyiv drafts and passes laws targeting the shadow economy and tax collection, how quickly Brussels signs off on new macro‑financial packages, whether EU disbursements are slowed or accelerated, and how EU leaders respond if Russian strikes on Ukraine’s grid and industry intensify before reforms have time to take hold.
Sources
- OSINT