Ukraine missile alerts cost businesses $45m per hour

Missile alerts are costing Ukraine an estimated $45 million for every hour they bring business to a halt, according to the country’s economy minister, as Kyiv searches for ways to keep the economy running under an intensifying Russian bombardment. Russia has increasingly targeted the infrastructure underpinning Ukraine’s economy, striking industrial sites, warehouses, logistics hubs, and datacentres.

Oleksandr Kravchenko, the minister for economy and the environment, described Russia’s actions as an effort to “destroy pretty much the entire economy.” He noted the rapid development and use of jet-powered drones by Russia, which have pounded Kyiv in recent weeks, forcing large parts of the economy into repeated standstills as workers are sent to shelters, with sirens lasting up to 10 hours a day.

To mitigate these economic costs, the government introduced a new two-tier warning system. A “red” alert signifies a missile threat, requiring people to seek shelter, while a “yellow” warning is used for drone threats, allowing many businesses to remain open. Kravchenko stated that more than half of businesses continue to operate during yellow alerts. However, a yellow alert does not guarantee safety, as evidenced by a recent incident where a Russian drone struck the National Academy of Sciences in central Kyiv during a yellow alert, killing two people while staff were still inside.

Kravchenko estimated that Russian attacks this year alone have caused $10 billion in damage to fixed assets, targeting steel plants, warehouses, logistics infrastructure, and datacentres. Russia's blockade of Ukraine’s Black Sea ports has also significantly impacted exports. The minister expressed confidence in the government's preparedness for what could be the "hardest, the harshest winter" of the war, despite anticipated pressure on energy supplies and infrastructure.

The government is discussing allowing more private companies to purchase Ukraine’s air-defence system to protect against future strikes, though Kravchenko cautioned that complete protection from Russian missiles and drones is impossible. The ongoing damage adds to severe strains on state finances. President Volodymyr Zelenskyy recently estimated Ukraine’s remaining budget shortfall for the year at $27 billion, a figure that has raised questions among some European governments despite an agreed EU loan package. Kravchenko stated the shortfall has since been narrowed to $20 billion through spending cuts and domestic reserves, and Kyiv is seeking additional support from the EU, Japan, Canada, and the UK.

Kravchenko dismissed suggestions that the shortfall was due to mismanagement or corruption, or excessive spending by former defence minister Mykhailo Fedorov. He attributed the gap to weaker-than-expected state revenues and the rising cost of the war, emphasizing the need for more air-defence systems and accelerated drone development. High-profile corruption scandals have also affected trust in the government. A recent poll indicated that corruption in government is the most cited concern among Ukrainians. Kravchenko acknowledged progress in tackling corruption but admitted to a persistent perception problem. He expressed concern about increasing fatigue in Europe regarding support for Ukraine, citing the rise of skeptical parties in France and Germany.