№ 7/2022

Fìnansi Ukr. 2022 (7): 70–94https://doi.org/10.33763/finukr2022.07.070

FINANCIAL AND ECONOMIC REGULATION

BALAKIN Robert ¹

¹SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0001-6431-6635

State regulation of critical infrastructure in Ukraine during martial law

Introduction. The conceptual foundations of state regulation of critical infrastructure of Ukraine are laid down in the Concept of creating a state system of critical infrastructure protection (2017). The legal basis for regulating this area is established by the Law of Ukraine “On Critical Infrastructure” (2021).
Problem Statement. Russia's armed aggression has led to a major destruction of Ukraine's national infrastructure. Approaches to state regulation of its facilities have changed, the real possibilities of their financing at the expense of the state budget have narrowed, and the structure of state borrowings has been transformed.
Purpose. To determine the features of state regulation of critical infrastructure of Ukraine in martial law, the main areas of financial support for its postwar recovery, taking into account the experience of member states of the European Union.
Methods. Modern approaches to the analysis of critical infrastructure issues of the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, specialized agencies of the European Commission are used. Methods of theoretical generalization, retrospective analysis, synthesis, grouping, description, comparison are used.
Results. Approaches to state regulation of critical infrastructure facilities in wartime, real possibilities of their financing at the expense of the state budget are revealed. The improvement of the legislation applied in the EU aimed at increasing the sustainability of critical enterprises is analyzed. The main directions of financial support for the restoration and development of critical infrastructure of Ukraine in the postwar period are identified, taking into account the economic and fiscal policy of the EU.
Conclusions. Increasing the role of external official creditors in the structure of government borrowing provides the dynamics of financing the urgent needs of the functioning of national infrastructure and addressing issues of social protection. At the same time grants of direct budget support alone cannot cover the state budget deficit in the medium and long term. Solving the problems of financing the restoration of critical infrastructure is possible by providing partner countries with guarantees to their companies to invest in Ukraine under the conditions of effective anti-crisis management.

Keywords:state regulation, critical infrastructure, state budget, military bonds, Connecting Europe Facility, sanctions, Instrument for Pre-Accession Assistance

JEL: H54, L32

BALAKIN R. . State regulation of critical infrastructure in Ukraine during martial law / R. . BALAKIN // Фінанси України. - 2022. - № 7. - C. 70-94.

Article original in Ukrainian (pp. 70 - 94)

Download

Downloads :82

1. Cabinet of Ministers of Ukraine. (2017). About approval of the Concept of creation of the state system of protection of critical infrastructure (Decree No. 1009-r, December 6). Retrieved from zakon.rada.gov.ua/laws/show/1009-2017-%D1%80#n8 [in Ukrainian].
2. President of Ukraine. (2016). On the decision of the National Security and Defense Council of Ukraine of December 29, 2016 “On improving measures to ensure the protection of critical infrastructure (Decree No. 8/2017, January 16). Retrieved from zakon.rada.gov.ua/laws/show/8/2017#n2 [in Ukrainian].
3. Casanov, S., Kudrjashov, V., & Balakin, R. (2019). Supranational fiscal rules and coordination of budgetary policy in the European Union. Finance of Ukraine, 3, 37–55 [in Ukrainian]. doi.org/10.33763/finukr2019.03.037
4. Iefymenko, T. (2020). Financial management transformations and sustainable development of the national economy. Economy of Ukraine, 7, 5–13 [in Ukrainian]. doi.org/10.15407/economyukr.2020.07.005
5. Balakin, R. (2021). Connecting Europe Facility in the system of joint financing of the EU critical infrastructure. Finance of Ukraine, 10, 61–80 [in Ukrainian]. doi.org/10.33763/finukr2021.10.061
6. Verkhovna Rada of Ukraine. (2017). On the basic principles of cybersecurity in Ukraine (October 5, No. 2163-VIII). Retrieved from zakon.rada.gov.ua/laws/show/2163-19#Text [in Ukrainian].
7. European Parliament, & and EU Council. (2016, July 6). Directive (EU) 2016/1148 of the concerning measures a high common level of security of network and information systems across the Union. Retrieved from eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016L1148&rid=1.
OECD. (2020). Recommendation of the Council on the Governance of Infrastructure. Retrieved from legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0460.
8. Verkhovna Rada of Ukraine. (2018). On the national security of Ukraine (Act No. 2469-VIII, June 21). Retrieved from zakon.rada.gov.ua/laws/show/2469-19#Text.
10. Verkhovna Rada of Ukraine. (2021). About critical infrastructure (Act No. 1882-IX, November 16). Retrieved from zakon.rada.gov.ua/laws/show/1882-20#Text [in Ukrainian].
11. OECD. (2019). Good Governance for Critical Infrastructure Resilience, OECD Reviews of Risk Management Policies. Paris OECD: Publishing. doi.org/10.1787/02f0e5a0-en
12. EU Council. (2008, December 8). Directive 2008/114/EC on the identification and designation of European infrastructures and the assessment of the need to improve their protection. Retrieved from eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32008L0114&from=EN.
13. President of Ukraine. (2021). On the introduction of a national sustainability system (Decree No. 479/2021, September 27). Retrieved from www.president.gov.ua/documents/4792021-40181 [in Ukrainian].
14. Proposal for a Directive on resilience of critical entities. Explanatory memorandum. Budgetary implications (COM(2020) 829 final). (2020). Retrieved from eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2020:829:FIN.
15. Board of the National Bank of Ukraine. (2020). On approval of the Regulation on the definition of critical infrastructure in the banking system of Ukraine (Decree No. 151, November 30). Retrieved from zakon.rada.gov.ua/laws/show/v0151500-20#Text [in Ukrainian].
16. Board of the National Bank of Ukraine. (2020). On the purchase of domestic government bonds “Military bonds” during martial law (Decree No. 43, March 8). Retrieved from zakon.rada.gov.ua/laws/show/v0043500-22#Text [in Ukrainian].
17. National Bank of Ukraine. (2022). The National Bank issued the fifth issue of military bonds worth UAH 30 billion. Retrieved from bank.gov.ua/ua/news/all/natsionalniy-bank-zdiysniv-pyatiy-vikup-viyskovih-obligatsiy-na-sumu-30-mlrd-grn [in Ukrainian].
18. Ministry of Finance of Ukraine. (2022). Financing of the State Budget of Ukraine since the beginning of the full-scale war. Retrieved from www.mof.gov.ua/uk/news/ukraines_state_budget_financing_since_the_beginning_of_the_full-scale_war-3435 [in Ukrainian].
19. European Council meeting (2022, June 23 and 24). Conclusions. Retrieved from www.consilium.europa.eu/media/57442/2022-06-2324-euco-conclusions-en.pdf.
20. Communication from the Commission to the Council and the European Parliament. Critical Infrastructure Protection in the fight against terrorism (COM (2004) 702 final). (2004). Retrieved from eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2004:0702:FIN:EN:PDF.
21. Communication from the Commission on a European Programme for Critical Infrastructure Protection. (COM (2006) 786 final). (2006). Retrieved from eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52006DC0786&from=EN.
22. European Commission. (n. d.). EU assistance to Ukraine. Retrieved from ec.europa.eu/info/strategy/priorities-2019-2024/stronger-europe-world/eu-solidarity-ukraine/eu-assistance-ukraine_en.
23. Cabinet of Ministers of Ukraine. (2022). On approval of the Concept of introduction and development of the green bond market in Ukraine (No. 175-r, February 23). Retrieved from www.kmu.gov.ua/npas/pro-shvalennya-koncepciyi-zaprovadzhennya-ta-rozvitku-rinku-zelenih-obligacij-v-ukrayini-175-p [in Ukrainian].
24. World Bank. (2022). Policy priorities for recovery. In World Development Report 2022: Finance for an Equitable Recovery, pp. 247–259. URL: openknowledge.worldbank.org/bitstream/handle/10986/36883/9781464817304_Ch06.pdf.
25. Government portal. (2022, April 6). The Energy Community has set up a Fund to rebuild Ukraine's war-torn energy infrastructure. Retrieved from www.kmu.gov.ua/news/energetichne-spivtovaristvo-stvorilo-fond-dlya-vidnovlennya-v-ukrayini-zrujnovanoyi-vijnoyu-energetichnoyi-infrastrukturi [in Ukrainian].
26. Volodymyr Zelenskyi held a meeting on the development of the Ukrainian economy in wartime. (2022, April 2). Retrieved from www.president.gov.ua/news/volodimir-zelenskij-proviv-naradu-shodo-rozvitku-ukrayinskoy-74037 [in Ukrainian].
27. Kyiv School of Economics. (2022). The total amount of direct documented infrastructure damage is over $ 94 billion. The total economic losses incurred during the war are $ 564-600 billion. Retrieved from kse.ua/ua/about-the-school/news/zagalna-suma-pryamih-zadokumentovanih-zbitkiv-infrastrukturi-skladaye-ponad-94-mlrd/ [in Ukrainian].
28. Svyrydenko, Y. (2022, March 28). Facebook. Retrieved from www.facebook.com/yulia.svyrydenko/posts/7115871461816838 [in Ukrainian].
29. Economic truth. (2022, April 2). The occupiers destroyed the Kremenchug refinery. Retrieved from www.epravda.com.ua/news/2022/04/2/685132/ [in Ukrainian].
30. European Parliament. (2022, April 7). MEPs demand full embargo on Russian imports of oil, coal, nuclear fuel and gas. Retrieved from www.europarl.europa.eu/news/en/press-room/20220401IPR26524/meps-demand-full-embargo-on-russian-imports-of-oil-coal-nuclear-fuel-and-gas.
31. Mazurek, R. (2022, 17 marca). Naimski: Kontrakt z Rosja na gaz wygasa w grudniu. Retrieved from www.rmf24.pl/tylko-w-rmf24/poranna-rozmowa/news-naimski-kontrakt-z-rosja-na-gaz-wygasa-w-grudniu-i-konczymy,nId,5897096#crp_state=1.
32. European truth. (2022, April 7). Estonia will completely stop importing Russian gas by the end of 2022. Retrieved from www.pravda.com.ua/news/2022/04/7/7337898/ [in Ukrainian].
33. European Parliament, & EU Council. (2009, July 13). Directive 2009/73/EC of the concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC. Retrieved from eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A32009L0073.
34. National Commission for State Regulation of Energy and Utilities. (2017). On approval of amendments to some resolutions of the National Commission for Regulation of Economic Competition on the introduction of energy units on the natural gas market (Decree No. 84, January 26). Retrieved from www.nerc.gov.ua/acts/pro-zatverdzhennya-zmin-do-deyakikh-postanov-nkrekp-shchodo-zaprovadzhennya-na-rinku-prirodnogo-gazu-vikoristannya-odinits-energii?id=23448 [in Ukrainian].
35. Warren, M. (2022). War in Ukraine and inflation slow growth in EBRD. EBRD. Retrieved from www.ebrd.com/news/2022/war-in-ukraine-and-inflation-slow-growth-in-ebrd-regions.html.
36. European Council. (2022, March 24). European Council conclusions on the Russian military aggression against Ukraine. Retrieved from www.consilium.europa.eu/en/press/press-releases/2022/03/25/european-council-conclusions-on-the-russian-military-aggression-against-ukraine-24-march-2022/.