Improved mood in Washington insufficient to combat winter of ballistic strikes
Sentiment within Washington's ruling circles appears to be gradually shifting in Ukraine's favor. President Volodymyr Zelensky’s July 28 meeting in Washington with U.S. President Donald Trump was the first to unfold amid relatively positive sentiment, and information backdrop. There is bipartisan support for the sanctions bill named after the late U.S. Senator Lindsey Graham; a striking reversal in the rhetoric of MAGA-aligned blogger Laura Loomer; and a stream of favorable frontline news featuring vivid images of Russian refineries and infrastructure ablaze. Yet given Trump's persistent, systemic sympathy toward Russian President Vladimir Putin, this positive atmosphere is just a modest starting point. What Ukraine actually needs is concrete military support, particularly an expanded supply of anti-ballistic-missile systems. On that front, so far there has only been talk, and even that remains fluid.
Zelensky abruptly and unexpectedly dismissed the Svyrydenko Cabinet in July. Multiple theories have circulated about his reasoning, but it was likely a political move to release accumulated public tension and frustration, plus a response to Prime Minister Yulia Svyrydenko's failure to adequately prepare the energy sector for an impending winter of ballistic strikes. The military mobilization issue had also grown acute, made even more urgent by Russia's preparations for a new wave of mass mobilization this autumn, which called for effective action, even as an internal conflict unfolded between the general staff and the Defense Ministry. But the steam-release strategy backfired: Ukrainians concluded that Zelensky was really trying to remove Defense Minister Mykhailo Fedorov — widely associated with the campaign of mid-range strikes on Russian rear infrastructure — so the Cabinet dissolution triggered street protests. Zelensky is unlikely to reinstall Fedorov as defense minister, since Fedorov's views on how the mobilization issue should be resolved likely differ from Zelensky’s. Other factors — some jealousy over Fedorov's popularity, and competition between rival groups for control of drone funding — were likely other factors.
Economic developments are becoming quite challenging. Despite good news on the 2026 harvest, agricultural producers are struggling to export their output, amid intensified strikes on seaport infrastructure. To make matters worse, the European Commission has imposed restrictions starting July 1 on imports of Ukrainian metal products. These developments are weighing on the trade balance outlook, and it’s an open question whether the substantial volumes of committed external funding will be enough to offset the rapidly widening trade deficit. The NBU began tightening monetary policy, raising its policy rate to 15.5% in July. The Hryvnia remains under pressure, though in July was still trading below 45 per dollar. The inflation outlook also looks risky, given intensified tensions in the Strait of Hormuz, and steady hryvnia depreciation pressure. Fortunately, substantial external financing continues to flow in, and the NBU expects gross reserves to rise to $70 billion by year end.
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