Puzzles of an extremely difficult level. The post-war recovery of Ukraine

A shopping mall in Kyiv which was destroyed during a Russian missile strike last March. It is estimated that Ukraine’s reconstruction will cost somewhere between 200 and 500 billion euros. Photo: kibri_ho / Shutterstock

The problem of scale

One of the first questions that many interested stakeholders ask is how much will the post-war reconstruction cost? The fact that the heavy shelling of Ukraine’s critical infrastructure and civilian areas continues makes any estimation outdated once it is announced. Nevertheless, it is somehow necessary to at least attempt to estimate the approximate cost. One such attempt, which in fact received quite decent publicity, is the report by the Centre for Economic Policy Research titled “Blueprint for the Reconstruction of Ukraine”. It was released as early as April 2022 and at that time the rough estimation of the recovery costs was estimated to be between 200 and 500 billion euros.

Next, the World Bank in cooperation with the EU Commission and Ukraine’s government published a joint damage and needs assessment. In this document, the total needs for the reconstruction of the country are estimated to be 349 billion US dollars. The report also points to the top three categories of post-war needs and they include: housing (20 per cent of the reconstruction cost), land decontamination (21 per cent) and transport (21 per cent).  

It did not take long before the estimated recovery costs doubled as compared to these two reports. For example, during the first international conference on the recovery of Ukraine held in Lugano in July 2022, Ukraine’s government assessments regarding these needs spiked to 750 billion dollars. It is noteworthy that Ukraine has presented a recovery plan that envisions a ten-year-long process, where the needs for 2023-25 account for 350 billion dollars. That number, in fact, corresponds with the estimations presented in the World Bank report.

Another big question is how to manage the recovery process. It is commonly argued that Ukraine’s reconstruction will require the establishment of a special international agency much like the Economic Cooperation Administration (ECA), which was responsible for organising the Marshall Plan in Europe after the Second World War. With consideration for Ukraine’s aspiration to obtain EU membership, the issue was already presented to various EU institutions in Brussels. The reaction of the EU Commission came in the form of an eight-page-long communiqué on Ukraine’s relief and reconstruction. The document mentions the Rebuild Ukraine Plan as the foundation for a key high-level facility as part of the reconstruction effort. More importantly, the EU has acknowledged its readiness to be “a major part of the overall efforts from the international community in the rebuilding of Ukraine”. At the same time, the communiqué stresses that the government in Kyiv will have full ownership of the process and states that the National Council for Recovery will be established by Ukraine’s authorities. Lastly, the statement ties the reconstruction process to Ukraine’s EU integration, which certainly matches Kyiv’s ambitions.

Lack of consistency

As stated before, the Ukraine Recovery Conference, which was the first major international gathering focused on Ukraine’s reconstruction, took place in Lugano in July 2022. At this point, Ukraine had already become an official EU candidate (this status was granted to Ukraine and Moldova at the end of June 2022). Those who expected Lugano to bring a road map for the recovery with a clear and understandable institutional set-up were disappointed. Ukraine’s National Recovery Plan prepared by the National Recovery Council has not become such a road map. What yet deserves a point of credit is that Ukraine, together with international partners, was able to start drafting the post-war recovery process already during the first months of the invasion. As expected, at that time there was no agreed vision for Ukraine’s future on the donors’ side.

Lugano thus has exposed the difficulty of bringing the recovery architecture to life. In fact, the Lugano Declaration did not even mention the Rebuild Ukraine facility that the EU proposed in May 2022, showing that high-level decisions are still to be made. Thus, the only thing that the conference in Lugano has contributed is the so-called Lugano Principles. And even these are a kind of rather basic set of values that all stakeholders see as a cornerstone of a successful reconstruction of the country. It is yet far from what we could call a solid plan.

Therefore, the pressure to establish an international platform that will manage the reconstruction has been transferred to the organisers of the second major event, which took the form of the Berlin International Expert Conference on the Recovery of Ukraine. It was held in October 2022 in Germany’s capital city. However, in the weeks and days before the gathering, it became clear that the expected breakthrough was nowhere near. Thus, the deliveries of the conference can be boiled down to Chancellor Olaf Scholz’s words at the opening of the event, which in a way lowered the profile of the conference. Scholz presented it as an expert and not a donor meeting. Thus, the outcome could not mark any breakthrough and no decision regarding the international platform/agency managing the recovery process was made. Only Ursula von den Leyen reiterated the EU’s readiness to be a part of the process and run the “secretariat” of the international platform of donors.

The post-conference debate, however, pointed out the most important deficits connected to the event, and especially the lack of high-level US representation, which was seen as a telling sign. Another weakness that was noted was the insufficient engagement of NGOs in the discussions, especially those from Ukraine. This stood in contrast with the Lugano conference, where civil society organisations issued their Lugano Manifesto outlining the standpoint of Ukraine’s civil society regarding recovery. Having in mind the role of Ukraine’s civil society in the 2004 Orange Revolution, the 2013-14 Revolution of Dignity and the eight years of war with Russia in Donbas, it is impossible to imagine the country’s reconstruction without the involvement of Ukraine’s citizens. However, more than anything else, the conference organised in Berlin exposed that as of now there is not enough eagerness among western leaders to move the topic of Ukraine’s reconstruction forward quickly.

However, this event has also brought some slight changes in the tone of the international debate about Ukraine. While before the meeting in Lugano, the EU seemed to be willing to become the major institutional resource in the process, the results of the Berlin Conference suggest that the platform of donors might be established by the G7 in partnership with the EU and international financial institutions such as the International Monetary Fund. This setup could evidently bring both opportunities but also some risks. On the one hand, the more global players that are on board, the easier it will be to find financing for the recovery. On the other hand, as stakeholders, all global leaders will be wary of their interests in different parts of the world and the relations they have with countries that are remote from the conflict. The so-called Global South has maintained a generally neutral stance on this war. That is why, we can anticipate some difficulties and a slowdown in building a coalition of the willing that would ensure an effective and speedy recovery for Ukraine.

Finally, there has been a clear mismatch between the West and Ukraine with regards to their priorities. Thus, while the representatives of Ukraine in Berlin focused primarily on the urgent needs that the country has faced in winter and as a result the damage done by Russian missiles to critical infrastructure, western leaders and experts talked about long-term rebuilding efforts, sticking to the principles put together in Lugano. It should be added that Ukraine’s representatives did not avoid talks on principles, even though their attention is more on the current situation.

Closing this gap is a necessary step to continue talks on Ukraine’s recovery. Ukraine’s position is understandable, but perhaps Kyiv needs to reformulate the initial timeframe it presented in the National Recovery Plan, which outlined the urgent/resilience phase as taking place in 2022 and the recovery phase in 2023-25. As we are expecting Russia’s next large-scale offensive in spring 2023 with no end to the war in sight, it is evident now that more time will be needed for each phase of the reconstruction and that the process will go beyond 2025. The initial, perhaps overly positive, vision of the reconstruction presented by Ukraine could send a misleading signal to some western countries, especially those which are not close to the front line and need more time to comprehend the overall situation.

Where are we?

During the conference in Berlin, von den Leyen said that the donor platform for the recovery of Ukraine should come into existence by the end of 2022 or at the beginning of 2023 at the latest. As of the time of writing, no such body has been created yet. The next international conference on the recovery of Ukraine will be held in London in June 2023. By that time, the war will be in a different phase but the overall damage to Ukraine will be larger than it was when the talks on the reconstruction started. Although seemingly so far the international debate on the recovery of Ukraine has brought more frustration than milestones, it should nonetheless be taken as a valid lesson that will help – let us hope – to reinvigorate the debate in the months to come.  

Maciej Makulski is a contributing editor with New Eastern Europe. The views expressed by the author are his own.

reconstruction, Russia's war against Ukraine, Ukraine, War