In the midst of a transforming global system of international relations, characterized by growing multipolarity and intensified competition among great powers, Ukraine has a decisive opportunity to rethink its place in the world and become an influential middle power. Achieving this requires a systemic, long-term strategy that combines the development of its own economic and defense capabilities with flexible cooperation with global and regional actors. Ukraine needs to transition from being solely a recipient of aid to forming mutually beneficial economic and security partnerships, creating conditions for attracting foreign capital and presenting investments in Ukraine to the US, EU, Japan, and other key actors as a way to solve their own problems.
We are living in a period of profound transformation in international relations and the global economy. Recent months have seen headlines in both global and Ukrainian publications discussing US President Donald Trump’s perceived retreat from American leadership in the world. However, this didn’t start with Trump’s second term—the US had been gradually losing its Pax Americana due to a series of missteps over the past three decades. These include obvious defeats in Iraq, Afghanistan, Syria, and Libya, as well as the loss of absolute leadership in the global economy. The old world order, based on US hegemony after the Cold War, is fading into history.
The new multipolar system of international relations is still in formation. This process is accompanied by heightened geopolitical competition, regional conflicts, and a re-evaluation of the roles of key international actors. It is precisely this restructuring of international relations that created the opportunity for Russia’s full-scale aggression against our nation. Ukraine will be able to leverage changes in the system of international relations to its advantage and find its place in the new world if it understands the global and regional dynamics of this transformation, as well as the motivations and policies of the key players.
The Donald Trump administration is stepping back from its role as a security guarantor in Europe, planning to gradually reduce its military presence on the continent, showing skepticism towards NATO, and shifting responsibility for supporting Ukraine to the EU, Great Britain, Japan, and Canada. The US views China as its primary threat and is reorienting its forces to confront Beijing. This motivation underpins almost all of the White House’s foreign policy activity in recent months, specifically:
Over the past decades, China has gained a monopoly in a number of key technological areas, such as electric vehicles, batteries, electronics, solar energy, and rare earth metals. It competes on par with the Western world in artificial intelligence, quantum technologies, semiconductors, robotics, and biotechnology. China’s share of global industrial production is 25–30%, the highest among all countries and double that of the US. Beijing controls supply chains, rapidly implements and scales new technologies, and leads in research and development across a range of strategically important fields.
China and its leader, Xi Jinping, aim to reshape the international political system built on Western values and the international economic system underpinned by the dollar. In the Chinese worldview, state sovereignty should be the most important phenomenon, even if the state does not adhere to democratic values and human rights. And it is in such a world that China’s central role will be guaranteed, with global institutions and norms being shaped by Chinese conceptions of the world, politics, and economic development. Beijing is expanding its global influence and promoting its vision of the world through four programs: “Belt and Road Initiative,” “Global Development Initiative,” “Global Security Initiative,” and “Global Civilization Initiative,” along with the concept of a “Community with a Shared Future for Mankind.”
The US, however, cannot unilaterally win in its confrontation with China, so it will maintain a high level of interaction with Europe, even if it no longer plans to pay for Europe’s security. Nonetheless, US tariff pressure on the EU will likely end with a compromise trade agreement. Washington needs Brussels to take its side in the event of an escalation of confrontation with China, particularly by joining pressure on Chinese exports.
Ukraine, by concluding a mineral resources agreement with the US, has the opportunity to attract significant American investments. Kyiv must convince Washington that Ukraine is a key partner in diversifying global supply chains, ensuring logistics between Europe and Asia, and also a military counterbalance to Russia in a region whose economic leaders are completely unprepared for a potential attack.
With the US relinquishing its role as leader of the unified West, the EU faces a number of new challenges, and the resolution of the union’s old problems becomes even more urgent. The issue of Europe’s security is particularly acute due to both rather fair US demands to increase defense spending and outlined prospects of withdrawing American troops from Europe, the US president’s team’s skepticism towards Article 5 of NATO, the shifting of responsibility for Ukraine’s economic, military-technical support, and security guarantees to the EU. All these circumstances compel the EU to seek paths to strategic autonomy.
Europe, which for a long time benefited from the US security umbrella, spending minimal amounts on defense while allocating hundreds of billions to environmental initiatives and social justice programs, is gradually beginning to increase its defense spending. At the same time, the EU has not reached the maximum of its capabilities regarding military-technical support. Kyiv should use Trump’s “shock therapy” to push the EU to provide more military-technical assistance.
Europe’s defense industry, after 30 years of neglect, lack of significant investment in research, absence of large state orders, and green regulation barriers, is only slowly gaining momentum. This process is slowed by bureaucratic problems and the high cost of production in the EU. Only 20-25% of the weapons Ukraine receives from the EU are produced in the union’s countries; the rest are purchased outside of it.
So, given the not-too-rapid recovery of the defense industry in EU countries, the solution should be to strengthen Ukraine’s capabilities. If the EU has funds but lacks production capacity, Ukraine has developed capacities but lacks funds. A solution already exists: the so-called “Danish model,” where donors finance the procurement of weapons from Ukrainian manufacturers, which, among other things, is significantly cheaper than production in the EU.
Creating joint ventures and building factories for European defense companies in Ukraine and Ukrainian companies in Europe is another important area of cooperation, beneficial to both Ukraine through increased defense capabilities and EU countries through cheaper production. Rheinmetall, Czechoslovak Group, and PGZ have already taken this path, with the latter partially relying on Ukrainian labor in Poland.
Ukraine can play an important role in the EU’s emergence as a superpower. Ukraine’s significant military-industrial potential, integrated into European production chains, will help the EU build up its defense capabilities more quickly and effectively.
In addition to security, the EU faces another significant challenge: its economy. In 2008, the EU and the US had equivalent GDPs: $14.2 trillion and $14.8 trillion, respectively. In 2025, the EU’s GDP is expected to be $20 trillion, while the US GDP will be $30 trillion. China’s GDP grew from $4.6 trillion to $19.5 trillion. If these trends continue, the EU will soon become the third economic power in the world. Europe, having focused on ecology, the social state, and social justice, has significantly weakened its industry and slowed down innovation.
Last September, former European Central Bank President and former Italian Prime Minister Mario Draghi presented an action plan to increase the EU’s economic competitiveness, relying on the need to attract significant funds from member states for investment. Mario Draghi calls for investing €800 billion annually (5% of GDP) in the development of key economic sectors and R&D to overcome the innovation gap with the US and China.
The European Commission has presented a plan for the development of Europe’s defense capabilities—REARM Europe—which proposes activating an exceptional financial status that would allow EU countries to increase their military spending without risking fines for violating EU debt limits and to spend an additional €800 billion on defense orders and investments over four years.
As the EU embarks on restoring its economic and defense capabilities, Ukraine should not only rely on economic aid but also offer the Union mutually beneficial cooperation. Ukraine needs the EU, and the EU needs Ukraine. Investments in the Ukrainian economy, which will become part of the Union in the foreseeable future, can accelerate the growth of Europe’s economy as a whole.
Modernizing and reorganizing Ukraine’s significantly neglected industrial sector will cost the EU tens of billions of dollars. However, this will be an investment in the real economy, in expanding the Union’s industrial potential, given Ukraine’s expected accession in the medium term, and the Return on Investment will be quite substantial even at the pan-European level. Moreover, the recipients of funds and executors of works can primarily be European companies, meaning a significant portion of the funds will return to the jurisdiction of the countries that allocate them.
Critical for Ukraine is participation in the new technological order, in knowledge-intensive production and innovative sectors of the economy. The EU is launching its artificial intelligence development projects to compete with OpenAI, Google AI, and DeepSeek, and the Ukrainian IT sector can be involved in this process. In general, the Ukrainian IT sector, aircraft manufacturing, missile, and space industries have significant potential that can be realized with investments and integration with European partners. It is the integration of the Ukrainian economy, its resources, and human capital into the European space that can become a driver of economic growth for the entire EU.
Historically, a traditional phenomenon for any system of international relations is the gradual shift of economic productivity from already developed states to developing countries. The demographic indicators of developed states are falling, unable to support economic growth, and Japan is one of the biggest victims of this trend. Tokyo is responding by directing significant investments throughout the Indo-Pacific region. Japan possesses the world’s third-largest financial assets, estimated at approximately $12 trillion, even surpassing China in terms of investments in ASEAN countries. Ukraine should gradually transition from merely receiving economic and humanitarian aid packages to a new level of interaction with this state, offering itself as an alternative direction for investments.
Japan has repeatedly expressed its interest in Ukraine’s reconstruction process, providing financial assistance and cooperating in technology. One potential tool for attracting Japanese investments to Ukraine is the Japan International Cooperation Agency (JICA), which has already expressed readiness to take over some projects previously implemented under USAID’s umbrella. JICA has an impressive portfolio of projects in East and South Asia and Africa, particularly in the areas of logistics and energy infrastructure.
Ukraine’s prospects are not limited to attracting investments; its advantageous geographical location allows the country to offer itself as a logistics hub between the EU and Japanese markets. In the context of a potential reduction in exports to the US due to the Trump administration’s tariff policy, Japan can redirect exports of some high-tech products to Europe. A shorter logistics arm through the ports of Greater Odesa will allow for a significant increase in trade with Europe without substantial costs, simultaneously accelerating Ukraine’s economy.
To secure a worthy place in the new world order, Ukraine should aim for a gradual transformation of relations with key foreign policy partners—moving from a recipient model, where the state solely receives economic, humanitarian, or military-technical aid, to a mutually beneficial cooperation model. It is necessary to position itself as a reliable economic and security partner with whom significant and long-term projects can be implemented. Of course, conditions must be created for attracting foreign capital, deregulation and de-shadowing of the economy must be carried out, a good business climate must be maintained, and the judicial system, tax system, and customs must be reformed. If we want a successful, economically developed country, then in these volatile times of threats and opportunities, we must do everything to change this paradigm of Ukrainian foreign policy and the perception of Ukraine abroad.
Transformational processes in the modern international system are leading to an increased importance of so-called middle powers—countries capable of effectively realizing their power potential at least on a regional scale, possessing cumulative resources (those that have added value at a specific point in time and directly convert into strong positions), and a clear understanding of their own foreign policy goals and ambitions.
In conditions of uncertainty regarding the future configuration of relations between the US, China, Russia, and the EU, traditional neorealist strategies of joining the stronger (bandwagoning) or building coalitions against it (outer balancing) create considerable risks for middle powers, given the decline in autonomy. Instead, an alternative is to combine the development of self-sufficient defense capabilities (inner balancing) with a hedging strategy, which implies limited cooperation with all possible poles without a strategic orientation towards partnership or confrontation with one of them. Such formats emphasize the importance of establishing horizontal ties between middle actors—a means of leveling the asymmetry and unpredictability of vertical contacts.
For Ukraine, which is in a state of war with one of the contenders for the status of a pole in the international system, the situation is uniquely complex, as it narrows the possibilities for a full-fledged hedging policy and critically deepens the asymmetry of relations with stronger partners, primarily the US. However, cautious optimism is inspired by Ukraine’s successful progress in defense capabilities, as well as the prospect of achieving a greater role in the region through interaction with Turkey and other important players in Eastern and Northern Europe, including the United Kingdom.
To establish Ukraine as a middle power on the international arena—the vision of the Kyiv Institute for National Interest—a long-term and systemic strategy is of need. One that combines the development of its own defense and economy with flexible bilateral diplomacy and the use of multilateral platforms to promote its interests.
To achieve this vision, the team of the Kyiv Institute for National Interest aims to create high-quality analytics and substantiated recommendations that will contribute to the realization of Ukraine’s national interests, the interests of Ukrainian society and business. In particular, to analyze global and regional trends and develop recommendations and ideas that will contribute to Ukraine’s establishment as an influential and successful middle power that realizes its potential in a new, complex, but also opportunity-filled world.
No posts found!
© 2025 ALL RIGHTS ARE RESERVED
