Start planning Ukraine’s reconstruction now

Four months of fighting in Ukraine has brought staggering levels of destruction, from bridges to homes, hospitals and shopping malls. A recent estimate from the head of the European Investment Bank put the cost of rebuilding at more than $1 trillion.
With millions of citizens displaced and the country’s infrastructure in ruins, Ukraine will be unable to support itself for years, possibly decades, to come. An impoverished or dysfunctional state the size and importance of Ukraine on Europe’s border would be vulnerable to future aggression and a source of economic and political instability. Preventing such an outcome will require the democratic world to finance much of the country’s reconstruction, just as the US did in Europe after World War II with the Marshall Plan. Even as the conflict rages, Western governments would be wise to begin that effort now.
With Russia showing little sign of easing its assault on Ukraine’s cities, providing weapons and support to Ukraine’s military remains the West’s priority. Yet delaying civilian reconstruction until the war is over would be a mistake. Significant areas of the country are largely free from fighting; leaving them depressed will only discourage the return of refugees and prolong Ukraine’s dependence on foreign aid. Western support for reconstruction projects will also help the war effort, by allowing the Ukrainian government to focus on providing basic services and keeping its troops supplied.
While it makes little sense to rebuild a structure that will just be shelled again, there is plenty Ukraine’s allies can do now. Building pontoon bridges and other temporary vital infrastructure can help move millions of pounds of grain out of the country. Farmers and agribusinesses need support for planting this year as well as stronger storage facilities, such as the temporary grain silos promised by the Biden administration along the border with Poland.
Where feasible, the reconstruction of residential areas should be accelerated. Prefabricated housing for those internally displaced by the war and for returning refugees is needed to restore some normality. In areas where violence has sufficiently subsided, outside experts can help to de-mine swathes of Ukraine’s land (the agriculture ministry has estimated that 30% of farmland is occupied or unsafe). Large numbers of Ukrainians can’t return to their homes until those areas are secure.
Beyond emergency reconstruction work, foreign governments should help Ukraine lay the foundation for sustainable future growth. That includes diversifying away from fossil fuels, upgrading nuclear facilities, building renewable energy resources, and further integrating into Europe’s electricity transmission grid. It will also mean improved access to financing for small- and medium-sized businesses.
Perhaps the biggest challenge about the reconstruction process will be paying for it. While many governments and international financial institutions will be involved, it makes sense for the EU — which has just made Ukraine a candidate for membership — to lead this process. A few principles should guide it. First, while loans will be part of any aid package, saddling Ukraine with too much debt just risks a crisis down the road. Like the Marshall Plan, Ukraine’s reconstruction should be predominantly funded by grants, on the condition that Ukraine’s government and business match a fraction of the funds. As part of any negotiated settlement to the war, Russia should have to pay some kind of long-term tithe — just as Iraq paid to Kuwait after the first Gulf War — though simply redistributing seized Russian assets is legally dubious and a dangerous precedent.

—Bloomberg