There’s a complex and sensitive topic that those of us familiar with the operations of the Ukrainian Armed Forces are all familiar with and that is the issue of soldiers’ salaries. Soldiers in Ukraine are being paid approximately US$3,300 per month, net, for so-called “combat deployment” which basically means being situated on the front line amongst the network of trenches and other ad hoc encampments either in the Donbas, the Zaporizhzhia region or along the north/west/right bank of the Dnipro River and in particular in the vicinity of Kherson. This is an absolute fortune in Ukrainian terms, a country in which the mean monthly salary might be EUR500 or less, and certainly far less in the public sector. It calls into question why the salary is so high and it turns out that there is a logic to it but the logic is not playing out as expected. Soldiers’ salaries work for the front line alone, assuming as a working figure some 500,000 troops on the front line and in active combat deployment positions at any one time, at some US$20 billion a year which is a massive proportion of Ukraine’s GDP which stands at about US$130 billion a year and is funded in substantial part by US and EU taxpayers because Ukraine is economically moribund. Why are soldiers being paid so much money? Incidentally, members of the International Legion - foreigners who sign up to fight in the Ukrainian Armed Forces - are paid the same which is why they do it: it’s well paid.
The reason for paying soldiers so well, at least in principle, is to bypass what is perceived (no doubt correctly) as a highly corrupt and inefficient government bureaucracy in Ukraine, in particular in the Ministry of Defence and in particular in relation to procurement which has in the past been notoriously wasteful in Ukraine. The theory behind paying soldiers so well is that they are then responsible for buying their own equipment beyond basic summer and winter military uniforms. This creates a private market in military equipment, and any city of any size has several military hardware stores selling everything from superior clothing through to food, heating equipment, sleeping bags, guns, ammunition, roll mats, tents, waterproof clothing and everything else a soldier might need to survive on the front line. In this way, so the theory goes, buying equipment directly from the private market bypasses government procurement processes and corruption presumed to be innate in that system and enables soldiers to achieve the equipment they need for combat operations in a market economy environment and competitive prices. That is the theory. But it doesn’t work.
The reasons it doesn’t work are manifold and complex, but a lot of them come down to cultural issues and inexperience of the soldiers involved. Ukrainians have never had access to such large amounts of money and they have little to no experience of managing pools of assets over the medium to long term or, to put things another way, “saving for a rainy day”. They have no concept of this in their culture, which by reason of their Soviet history and in particular the economics of scarcity meant that whenever they get money or find goods available their instinct is to spend it straight away and enjoy it. This explains why Kramatorsk has a number of shops selling fur coats: soldiers from the front line are buying their girlfriends expensive fur coats with their inflated wages rather than using those wages for the purposes for which they were intended which are to buy weapons, equipment and clothing necessary to survive trench warfare. Some of this is youthful exuberance and inexperience. But there is something else behind it, because the average age of a Ukrainian soldier in combat deployment is 43, which is very old for a fighting army, particularly in a country where the mean age of death for Ukrainian men is in their 60’s (pre-war).
In short, Ukrainian soldiers, with a grim determination, go to war expecting to die and therefore they do not make rational provision to maximise their prospects of survival which would be to spend their salaries on protective equipment and high quality weapons and ammunition that increase their prospects of survival and effectiveness on the battlefield. Instead they save the large salaries they are earning for their families to enjoy after their inevitable deaths, so they imagine, also knowing that their families will receive pay-outs upon their deaths and therefore some good can come of war in knowing that they will die but their families will benefit. In this way Ukrainian soldiers are not acting rationally to protect themselves and the market economy system put in place is not functioning efficiently to protect them. Alternatively those soldiers are spending their salaries on fripperies such as fur coats for their girlfriends, or on prostitutes, which is perhaps understandable given the hardships of war but not rational economic behaviour either.
Hence the market economy system put in place to bypass government procurement mechanisms is not working and also it entails a degradation in the effectiveness of the Ukrainian Armed Forces as an effective fighting force. Because Ukrainian soldiers fighting on the front line are expecting to die, they go into battle with a carefree attitude and with the utmost bravery and indeed they do die in far too high numbers and that is because they do not carry the equipment that will reduce the proportion of them who die and because they do not care for their own lives. Therefore the private market competition model of supplying Ukrainian soldiers is not efficient either from the perspective of the soldiers or from that of the effectiveness of the Ukrainian Armed Forces as a whole. You want your soldiers to survive, because experienced living soldiers are far more valuable than inexperienced soldiers and the high death rates mean that the Ukrainian Armed Forces are not as comprehensively battle-hardened as they might be. Were this to change, Ukraine’s massive military might become one of NATO’s most powerful weapons.
Hence we cannot evade the problem of massive corruption in government procurement procedures and we must face it head on. Ukrainian soldiers’ salaries for combat deployment must be reduced; they must be given high quality equipment; and they must not be allowed to sell it (as often also happens with government-issued military equipment). They must be given training on the importance of survival in order to be an effective fighting force, and a dramatic paradigm shift in cultural thinking is needed about the value of life if Ukraine is to proceed with her programme of Euro-Atlantic integration.