How much would it cost to rebuild Ukraine?

Kviy: Exactly eight months to the day since Russian tanks first entered Ukraine, Moscow’s forces are stepping up their attacks on its neighbour’s energy infrastructure.

Russian shells and drones have also targeted Ukrainian cities for the first time in months, including the capital Kyiv, in retaliation for recent Ukrainian military gains.

As Moscow escalates the conflict, Germany will host two summits in Berlin this week aimed at helping Ukraine quickly rebuild critical infrastructure and ensure the country’s post-war recovery.

The first event on Monday will be a German-Ukrainian economic forum; while the second, on Tuesday, is the Ukraine Recovery Conference hosted by the German government in its role as the current holder of the rotating G7 presidency and European Commission.
Berlin insisted that Tuesday’s event is a summit of experts and not a conference of donors. Representatives of the main economic powers of the G7 and G20 are expected alongside international organizations, civil society and business leaders.

The war bill is increasing day by day
Meanwhile, the gigantic cost of Ukrainian support against Russian forces is multiplying day by day.

At least a third of existing loans and grants pledged by the rest of the world are used to fill a monthly shortfall of about 4 billion euros ($3.94 billion) in the Ukrainian government budget.

The European Union, along with the United States and other countries including Britain and Canada, have already jointly committed 93 billion euros in arms, loans and humanitarian aid to the Kyiv government. between February and early October, according to a count by the Kiel Institute. for the global economy.

With an estimated 30-35% contraction in gross domestic product this year alone, Ukraine is already struggling to pay for war, let alone its existing debt liabilities or its own reconstruction.

The vaunted new Marshall Plan
As Kyiv’s finances deteriorate, German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen have proposed a Marshall Fund for Ukraine. The name refers to the multi-billion dollar program created by Washington after World War II to help rebuild Europe.

In a joint article for the Frankfurter Allgemeine Zeitung newspaper published on Monday, the pair said a “generational effort” to rebuild Ukraine must begin immediately.

“We need to start building destroyed residential buildings, schools, roads, bridges – infrastructure and energy supplies now so the country can get back on its feet quickly,” the two European leaders wrote.

“The shape of the reconstruction will determine which country Ukraine will be in the future. A constitutional state with strong institutions? An agile and modern economy? A vibrant democracy that belongs to Europe?”

In his video podcast on Saturday, Scholz said the international community should engage heavily in Ukraine’s reconstruction to “make it work well” and said countries should pledge financial support during “many, many years” or even “decades.”

Russian damage estimated at $750 billion
Ukrainian Prime Minister Denis Schmyhal told the Frankfurter Allgemeine Zeitung on Sunday that the damage caused by the Russian invasion had already reached “more than 750 billion dollars (762 billion euros)”.

In August, the World Bank, the European Commission and the Ukrainian government estimated the country’s total losses as of June 1 at more than $252 billion, with reconstruction and recovery needs estimated at $348.5 billion.

But that was before Russia escalated its conflict by targeting Ukrainian power plants and cities.

An op-ed in the Washington Post over the weekend estimated the bill could even reach $1 trillion.

Schmyhal called for the release of the $300 billion to $500 billion in Russian assets frozen by Western sanctions in retaliation for the outbreak of war, which could be used for reconstruction.

“We should develop a mechanism to seize Russian assets,” he urged.

Donor countries face the prospect of huge financial commitments to Kyiv as many grapple with their own high levels of debt, soaring inflation and slowing economic growth.

At the same time, they will seek Kyiv cast guarantees that the funds will be used for the intended purpose. After all, the group Transparency International ranked Ukraine as the third most corrupt European country after Russia and Azerbaijan.

The Washington Post op-ed detailed how hundreds of millions of dollars in foreign aid have been embezzled in recent years by Ukraine’s oligarchs, describing how the government has been complicit in allowing them to use Ukraine’s state-owned companies as vending machines. tickets.

The EU must address the shortfall in donations
Corruption fears may explain the EU’s reluctance to commit and distribute funds to the government in Kyiv so far, compared to the US, as noted by Ukraine Support Tracker Kiel.

“The United States is now committing almost twice as much as all EU countries and institutions combined,” wrote Christoph Trebesch, head of the team responsible for compiling the tally.

“This is a meager performance for major European countries, especially as many of their commitments arrive in Ukraine with long delays. The low volume of new commitments from the summer now appears to be continuing consistently. “

Guy Verhofstadt, an MEP from Belgium, also lambasted the EU’s response on Twitter last week, saying “Europe is slow to engage and even slower to keep,” calling the policy ” political amateurism and geopolitical madness”.
European leaders will want to learn from the mistakes of previous post-war reconstruction efforts, including in Afghanistan, Iraq and Bosnia, and are likely to insist that Ukraine present concrete plans to establish the rule of law and reforms necessary to eliminate corruption before it disperses. with billions in reconstruction funds.

About Eleanor Blackburn

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