Rebuilding Ukraine, with an estimated cost of around $1 trillion, will be an unprecedented undertaking given the massive scale and uncertain environment. Although the reconstruction details are still being determined, the main international donors are likely to be the EU and its Member States, international financial institutions, and the United States. And while large-scale efforts are unlikely to start across all of Ukraine until after a peace agreement is reached, limited recovery projects have already been launched and may be expanded.
Marshall Plan Times Ten
Russia’s war of aggression has generated enormous economic damage in Ukraine, not to mention over 140,000 civilian and military casualties. According to the latest World Bank estimates, the overall damage in Ukraine resulting from the war is already around $425 billion. This consisted of $135 billion in direct damage and $290 billion in disruptions to economic flows and production.
Longer-term, Ukraine foresees around $1 trillion necessary for post-war reconstruction over a ten-year period. Depending on the depth and destruction of the war, however, even this colossal estimate may increase over time. By comparison, the oft-invoked example of the Marshall Plan—America’s historic reconstruction of Western Europe after World War II—was around $100 billion in current dollars spread over four years and across seventeen European countries. Ukraine may require that times ten over ten years and could become the world’s largest reconstruction effort since 1945.
To help meet this need, the international community has begun organizing donors’ conferences of governments and companies interested in supporting and rebuilding Ukraine’s economy. In July 2022, the Ukraine Recovery Conference was held in Lugano, Switzerland, with the participation of five heads of state and government and 58 international delegations (representatives of governments and international organizations). In October 2022, Germany and the European Commission co-hosted in Berlin a conference of experts to develop ideas for Ukraine’s reconstruction.
On June 21-22, 2023, the Ukraine Recovery Conference convened in London with officials from 61 countries, leaders of 33 international organizations, and numerous companies. At the conference, the European Commission unveiled a €50 billion proposal for Ukraine (in grants and loans over three years) as part of its EU budget review, which the Council and Parliament will now need to discuss and decide upon. The EU along with several international financial institutions signed agreements worth over €800 million to mobilize private investment for Ukraine. And over 500 firms signed the Ukraine Business Compact committing to supporting Ukraine’s reconstruction. The next conference will convene again in Berlin in 2024.