【Text by Anton Nerman, Observer.com Columnist, Translation by Xue Kaihuan】
In August, due to Trump's meetings with Putin and Zelenskyy, the Ukraine conflict seemed to have a glimmer of peace, but this enthusiasm quickly faded, and the future remains unclear.
Domestically, Ukraine still faces many difficulties. Russian forces continue to attack key energy facilities, and natural gas facilities in Odesa Oblast have been bombed multiple times, making Ukraine's energy system even more vulnerable. At the same time, the Kyiv authorities are allocating more budget to the military. In addition, in diplomacy, Ukraine signed some economic cooperation documents with Japan, but the specific implementation is not clear. The contradictions between Ukraine and countries such as India, Hungary, and Slovakia on energy and political issues are becoming increasingly public.
In summary, Ukraine is fighting a war and rebuilding at the same time, and the situation remains very difficult. Ukraine's economy is heavily dependent on foreign aid, and society is also under great pressure.
Japan's "Generous" Aid
On August 4, Japanese Minister of Economy, Trade and Industry Hayashi Yoichi and Ukrainian Deputy Prime Minister Taras Kachka signed a joint declaration on economic cooperation and talent exchange, aiming to further promote cooperation in these areas between the two countries.
The core goal of the document is to assist Japanese companies in collaborating with local Ukrainian enterprises to participate in the reconstruction process in Ukraine. In addition to the overall declaration, both sides signed 29 specific agreements, expanding the scope of cooperation further, adding to the 80 existing cooperation and reconstruction-related documents.
For example, Daia Housing Industry will use modular construction technology to help rebuild housing in Ukraine and plans to achieve local production. Panasonic Holdings is committed to promoting the manufacturing of heat pump equipment. The Japan Export-Import Insurance Agency (NEXI) and the Ukrainian Financial Housing Company (Ukrfinzhytlo) signed a memorandum of understanding to expand the eHouse national housing program. Fujita Co., Ltd. will also participate in establishing a cold chain supply chain to ensure the transportation and storage of refrigerated and frozen products. In addition, both sides discussed the support plan for Ukraine in the 2026-2027 fiscal year with the Japan International Cooperation Agency (JICA).
However, all these agreements remain unpublicized. The authorities did not release detailed information, and Japan does not seem to be actively promoting this meeting. On the official websites of the Japanese Ministry of Economy, Trade and Industry, the latest updates still stay on July 31, and JICA reported an agreement with Vietnam but did not mention Ukraine. Although the signing ceremony took place during the Osaka Expo, the Expo website did not report it at all. Even the specific companies involved, such as Panasonic, Daia Housing, and Fujita, have not released any news reports. This naturally raises questions: why are Japanese officials so low-key?
The primary reason may be that Ukraine is not a top diplomatic priority for Japan. Japanese aid to Ukraine is more out of the need for "international coordination," rather than active strategic investment, showing a characteristic of "residual aid." For example, in the fiscal years 2022-2023 (different from the calendar year), Japan allocated 5.2 billion yen through the United Nations Industrial Development Organization (UNIDO) to Ukraine.
Although 5.2 billion yen sounds like a significant amount, it translates to only about $352.7 million, less than one thousandth of Japan's annual budget expenditure.
Secondly, this meeting lacked substantial content and did not discuss implementation details in depth, nor did it attract the attention of corporate executives. The delegation of the authorities seemed unprepared, and the Prime Minister Svyrydenko did not attend, only Deputy Prime Minister Kachka participated. Since no formal contracts or specific plans were reached, there was no news to release.
The result is that both sides signed only a policy declaration as a symbolic announcement of "agreement reached." Most Japanese people are unaware of this, and only a few people learned about it through scattered reports. Some Japanese netizens have expressed strong criticism about Japan's "casual aid." These voices were picked up by Russian media, trying to interpret Japanese public opinion, although such informal "social surveys" have limited actual value, similar to chatting with a taxi driver.
Nevertheless, this kind of cooperation still has certain significance. Apart from image public relations, Ukraine also strives to ensure that some aid can actually take effect. Whether the aid is efficiently used is another issue.
The benefit of cooperating with Japan lies in its relatively simple operations. Looking back over the past six months, the cooperation mainly includes: providing railway repair equipment through JICA, supplying construction waste recycling devices, delivering 13 small excavators to Kyiv, and providing agricultural machinery equipment to six agricultural colleges.
Future Japanese companies will also establish representative offices in Ukraine, for example, Denzai, a Japanese heavy crane supplier, has already entered under JICA's support. The institution will also assist the famous Japanese catering group Zensho in building a udon and ramen production plant in Ukraine.
It can be said that Japan is calculating carefully: they combine the "support for Ukraine" actions that meet American expectations with commercial expansion that benefits Japanese companies, fulfilling international responsibilities while creating new opportunities for their own companies.
This type of cooperation currently does not pose a direct threat to Russia. However, it is worth noting that although Tokyo officially prohibits exporting weapons to conflict countries, it still provides military aid to Ukraine through allies and uses the income from frozen Russian foreign exchange assets to provide a $3 billion loan to Kyiv. These actions undoubtedly do not help normalize Japan-Russia relations.
However, Tokyo seems not to care much about this. From Japan's perspective, maintaining coordination with allies is more important than catering to Moscow, and they are unwilling to "break discipline because of Russia."
Japan always keeps its aid to Ukraine very low-key
Russian Gas Cut-off Service
On the evening of August 6, the Russian Aerospace Forces used the "Sirius" drone to attack the Isaaccha/Olrovka gas metering station (GMS) and the Olrovka No. 1, 2, and 3 compressor stations (CS) in the area of the border between Ukraine and Romania in Odesa Oblast. Previously, this type of drone had also attacked oil depots of the Azerbaijani State Oil Company (SOCAR) in the same oblast.
From a historical perspective, Ukraine once used the Olrovka pipeline to transport natural gas to Southeast Europe and Turkey. But with the completion of the "Turkish Stream" pipeline, Russia no longer relied on this route. Between 2015 and 2016, the Kyiv authorities modernized the compressor stations and gas transmission systems. In 2020, the Kyiv authorities changed the pipeline to reverse flow mode, enabling it to receive natural gas from the EU's south, sourced from Greece (via liquefied natural gas tankers) and Turkey (its gas system connected to Azerbaijan).
Azerbaijan reacted strongly to the attack on the Olrovka facilities: President Aliyev, during a call with Zelenskyy, accused Russia's strike of being a "targeted action." To support Ukraine, Azerbaijan pledged to allocate $2 million for purchasing energy-related humanitarian equipment. Azerbaijani media also cited Aliyev's warning that if "Russia continues its aggressive policies that harm Azerbaijan's interests," Azerbaijan would supply weapons and ammunition to Ukraine.
Russia's strike was clearly intentional, and it is evident that Russia will continue implementing such policies that are not in Azerbaijan's interest. First, after Ukraine refused to extend the transit contract with Gazprom, its gas pipeline system (GTS) no longer enjoyed exemption status. Second, during the occupation of Kursk Oblast, the Ukrainian army seized and destroyed the Sokhronovka gas metering station (GIS). Third, Ukraine created a natural gas crisis in the Transnistria region, and Russia invested a lot of resources to resolve this crisis.
Given this context, Russia cannot accept Kyiv authorities being able to fill their storage facilities more easily or allowing Azerbaijan, which has publicly stated it is cutting ties with Russia and supports Ukraine, to continue profiting. Before deepening its cooperation with Ukraine, Azerbaijan should fully assess the risks rather than hastily demanding Russia to retreat.
Russia's attack on the Olrovka facilities disrupted Ukraine's already delayed underground gas injection plan. By early August, Ukraine's gas storage volume had decreased by 1 billion cubic meters compared to the same period last year. Since August 1, the daily flow of Azerbaijani natural gas through Olrovka was approximately 420,000 cubic meters, and after the air raid, this number dropped to zero.
Currently, the Kyiv authorities not only face financial shortages: Ukraine's state-owned oil and gas company (Naftogaz) has a funding gap of 1 billion euros and encounters actual gas transmission bottlenecks. Ukraine's current underground gas storage level is at its lowest in 12 years, and it still needs to inject 3.2 billion cubic meters of natural gas into the storage before the heating season starts. At the same time, the EU, now a natural gas supplier to Ukraine, has an overall gas storage level of 70%. Portugal's storage rate is 100%, Italy is 82%, France is 78.8%, and Germany is 62.9%.
Overall, Europe indeed has a lot of natural gas reserves, but this has not brought any substantial benefits to Ukraine; Ukraine has not gained any advantages from Europe's natural gas reserves.
Oil and Gas Disputes
On August 11, Ukrainian President Zelenskyy urged India to stop importing oil from Russia during a call with Indian Prime Minister Modi. However, two weeks later, according to an analysis report by Naftorinok Daily Fuels And LPG, Ukraine was actively purchasing fuel from India, and these fuels were produced in refineries owned by the Russian oil company Rosneft. Currently, Romania is the main country supplying Indian light petroleum products to the Ukrainian market, and its fleet of tankers is responsible for transporting diesel across the Danube River.
Data shows that in July, Ukraine imported an average of 27,000 tons of Indian diesel per month, accounting for 10.2% of its total diesel imports, an increase of more than five times compared to the same period last year, when Indian fuel accounted for only 1.9% of Ukraine's fuel imports. In August, the share of Indian diesel in the Ukrainian market further rose to 15.5%. At the same time, Slovakia also accounted for about 15% of the Ukrainian diesel market.
It is puzzling that although Ukraine itself is purchasing Indian diesel sourced from Russian oil companies, the Kyiv authorities have decided to ban Hungary and Slovakia from refining Russian crude oil into light oil products and exporting them to Ukraine. Honestly, I am very confused: what are the substantive differences between Indian-processed Russian diesel and the similar products produced in Slovakia?
Under this context, discussing whether the Kyiv authorities are consistent in their words and actions is not meaningful: Zelenskyy may not be aware of the sources of the fuel purchased by Ukrainian traders, and Rosneft may not know the final destinations of its oil products either. The case of Indian oil products fully demonstrates the complexity of real-world economic operations, including numerous trade merchants of varying strengths and the high uncertainty of export regions. If Zelenskyy had a basic understanding of the world economic structure, or if he had more wise advisors around him, he might have been able to perform his duties as a politician more effectively, rather than merely acting as a symbolic "ruler."
In addition to launching physical attacks on the "Friendship" oil pipeline twice within a week, the Kyiv authorities also launched a public relations campaign against Hungary and Slovakia. During a press conference on Ukraine's Independence Day, when asked whether the attack on the oil pipeline would help pressure Hungary to revoke its veto on Ukraine's EU membership, Zelenskyy smiled and replied, "We have always supported friendly relations between Ukraine and Hungary. Whether this 'friendship' can be maintained now depends entirely on Hungary." The well-known "dog" of the President's Office, Foreign Minister Shevchuk, also responded to Hungarian Foreign Minister Sialo's accusations against the authorities, denying that Zelenskyy had issued "serious threats" to Hungary, and emphasizing that Hungary had no right to give orders to Ukraine. He also stated that Hungary's energy security should be ensured by itself, and called on it to "promote energy source diversification like other European countries and reduce dependence on Russia."
Hungary and Slovakia are both uneasy about these statements and attacks, and have jointly protested to the European Commission. Slovakia threatened to stop supplying diesel to Ukraine, and Hungarian Prime Minister Orban even expressed dissatisfaction to Trump. However, as of now, the two countries have not taken any substantial retaliatory measures.
Whether Hungary will decisively cut off the supply of natural gas and electricity to Ukraine is still unclear. Zelenskyy's attitude indicates that he has received support from the EU, which is using Ukraine to pressure Hungary. However, threats that have not been implemented are unlikely to deter the Kyiv authorities. Nevertheless, this does not mean that retaliatory strikes on Ukraine's energy system will not be effective, nor does it mean that the two countries will not retaliate.
Criminal Liability Across Borders
In August, the Ukrainian Ministry of Internal Affairs drafted a bill and formally submitted it to the Verkhovna Rada for consideration by Prime Minister Yulia Svyrydenko. The bill proposes to hold criminal responsibility for illegally crossing the Ukrainian border and violating residence regulations abroad. Unauthorized destruction of border protection facilities (including barbed wire, etc.) will also be held criminally responsible.
Currently, the legal consequences of such behavior are only administrative penalties, especially in cases of crossing the border at non-designated points, which allows some "recidivists" to repeatedly attempt illegal departures, with some cases showing the same person attempting to cross the border up to ten times. The current law also does not impose restrictions on Ukrainian citizens' residency abroad, leading to illegal border crossers being almost completely exempt from extradition once successful.
The Ukrainian Ministry of Internal Affairs pointed out that "current administrative fines are not effective enough to deter offenders," and emphasized that this move aims to "ensure national security and defense interests." Obviously, the Kyiv authorities intend to address these so-called "gaps" in maintaining "national security."
According to the bill, illegal border crossing or attempted acts will face fines ranging from 119,000 to 170,000 hryvnias, or a maximum of three years in prison. For those evading conscription, current or reserve military personnel who violate overseas stay duration regulations, fines will range from 37,000 to 51,000 hryvnias, or three to five years in prison. It is worth noting that this sentence is equivalent to the sentencing for rape, and sexual offenders will also face three to five years in prison.
Throughout this process, Prime Minister Svyrydenko said she was fulfilling her duties, stating that what she did was part of her job, so she felt guiltless.
Defining the act of fleeing Ukraine as a criminal offense has predictable consequences:
First, the cost of illegal border crossing will significantly increase, and the risk of escaping to the outside will also sharply rise: those who are caught will no longer just be fined, but face criminal conviction and eventually be forced to sign a service contract with the Ukrainian army. This means that fugitives may resist border guards more fiercely, and border guards will regard them as criminals rather than ordinary lawbreakers.
Second, once the Kyiv authorities clearly define the legal conditions for residing abroad, law enforcement agencies can initiate standard criminal proceedings and request extradition from the countries where the illegal border crossers are located. At that time, everything will depend on the political decisions of the European Union countries. Some Ukrainians may thus be forced to continue migrating within the EU to avoid the risk of extradition.
Each EU country will face a political choice: whether to send these refugees back to Ukraine, letting them fight for "protecting Europe from Russian threats," or allow them to stay and contribute to the EU economy. According to this logic, social welfare for refugees in the EU may be further reduced, ultimately resulting in only two options: "work or leave," and for Ukrainian men, it is more likely "work or fight" (men returning to Ukraine will almost certainly be conscripted).
Third, fines will become a supplementary source of revenue for the authorities and may come with corresponding execution indicators. Obviously, this law could also be abused as a tool for making money or seeking revenge, such as reporting neighbors or acquaintances for violating overseas residency rules to retaliate against others, or officials using fines as a pretext for corruption.
What is particularly ironic about this entire incident is that Svyrydenko herself is exempt from conscription due to her gender, and her brother went to study in the UK after the war broke out and has not returned to Ukraine since.
As this is a government bill, it has a high probability of passing, and the authorities may try to bundle it with another draft law that allows males under 22 to leave the country. However, the Rada has received a bill submitted jointly by Chairman of the Law Enforcement Committee Zavietnychev and other "People's Servant" party MPs, proposing to allow males aged 18 to 24 to travel abroad. It is currently difficult to predict what form these bills will finally take and when they will pass.
In summary, Ukraine in the post-Maidan era is forming a new economic model. This model is built on three pillars: external economic aid, "human trafficking" (obtaining human resources through mobilization measures), and gray and black industries. This is the true picture of Ukraine's deindustrialized economy.
Other News
In the UK, most of the budget used to help Ukrainian refugees is spent on paying local government employees' salaries and funding cooperative organizations. The UK government's total budget for Ukrainian refugees is 1 billion pounds, of which 327 million pounds remained unused even three years after the Russia-Ukraine conflict, still "on the account." Only 22 million pounds were used to provide temporary housing for Ukrainians. This not only indicates the extremely inefficient bureaucracy of the UK government but also shows the low priority given to the issue of Ukrainian refugees. The fate of Ukrainian refugees is entrusted to AI, which decides who can stay in the UK and who must leave.
Almost half of Ukrainian IT professionals (48%) are considering leaving the country. Among those who have already left, 37% do not plan to return, 20% hope to return, and 42% have not made a decision yet. These data indicate that any claims by the Kyiv authorities about the IT industry possibly contributing to economic growth are completely wrong.
In state-owned enterprises in Ukraine, seven out of ten enterprises with more than 50% state ownership are either unprofitable or complete shell companies that cannot operate normally. The chairman of the Verkhovna Rada Tax Committee, Daniil Getmancev, believes that the state has no extra resources to continue driving these enterprises, and they need to find new owners, i.e., privatization. Governor of the National Bank, Andrei Pyshnen, revealed that the Ukrainian gas bank and Sense Bank (the Ukrainian subsidiary of the former Alpha Bank) will be the first banks to be privatized.
Ukrainian law enforcement agencies stated that a supply chain for Russian homeopathic (a medical method of "treating with poison") drugs to territories controlled by the Kyiv authorities has been blocked. This supply chain was orchestrated by a member of the Russian Academy of Medical Sciences and the owner of a Russian pharmaceutical group. As early as the early 21st century, this person established a "nearly identical" subsidiary in Ukraine through individuals under his control. After 2014, to circumvent sanctions, the group set up production bases in "a European country bordering Russia."
In this incident, the effectiveness of homeopathy or the wording of the Ukrainian law enforcement agencies' (accusations) is irrelevant. It actually indicates that trade between the two warring countries is still ongoing, albeit through third countries. At the same time, however, the Kyiv authorities' position is that there should be no contact between Russia and Ukraine.
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