Trillion-dollar reconstruction of Ukraine is back on Europe’s agenda

Trillion-dollar reconstruction of Ukraine is back on Europe’s agenda

Trillion-dollar reconstruction of Ukraine is back on Europe’s agenda
Local residents react near a residential building destroyed by an aerial bomb explosion in the centre of Kharkiv. (AFP)
Short Url

Almost 850 days into the war in Ukraine, a sustainable deal to end the conflict seems as distant a prospect as ever, despite a peace summit in Switzerland last week attended by representatives of about 100 nations.
This is part of the reason why Western leaders, including German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen, also hosted a separate, two-day Ukraine Recovery Conference with President Volodymyr Zelensky last week. Many of those leaders view the international stakes in the rebuilding of Ukraine as being so great that any failures could have profound consequences not only for Ukraine, but also for the broader region and the wider West to boot.
The rebuilding of the nation will resemble what took place in Western Europe after the Second World War, Eastern Europe after the Cold War, and the Western Balkans after the breakup of Yugoslavia. It will cost more than $1 trillion and be the most ambitious post-war reconstruction effort of the 21st century.
Last week in Berlin, the EU announced several new, big financial commitments, building on approximately $100 billion that the 27-member bloc has already provided in financial, humanitarian, emergency, budgetary, and military support to Kyiv.
The announcement included agreements worth $1.6 billion with partner banks to attract private sector investment in Ukraine; the delivery of an additional $2 billion from the EU’s Kyiv aid facility by the end of June; and more than $500 million for urgent repairs to Ukraine’s energy sector through the European Energy Support Fund.
Zelensky told the conference that in the coming months Ukraine will urgently require equipment for heating and repairs to electricity plants that are currently out of action. He said 9 gigawatts of electricity generating capacity has been destroyed, including 80 percent of thermal power and 33 percent of hydroelectric power.
So although the war continues to rage, Western decision-makers are now thinking more intently about reconstruction. At the G7 summit, too, this month Ukraine was top of the agenda. The most eye-catching announcement there was a $50 billion G7 loan to the country, which will use profits from the $300 billion of Russian assets frozen by the West to boost funding for Kyiv.
A number of other security deals were agreed with Kyiv, among which the standout was a 10-year bilateral agreement with the US, viewed by many in the West as a potential stepping stone for Ukraine on the road to joining NATO. It includes commitments to prolonged aid encompassing aspects such as military training, economic assistance, and the sharing of intelligence.
Beyond the questions of money and security, however, lies the issue of Western political strategy toward Ukraine. This is linked to the future enlargement of the EU. 

Until the large-scale fighting ends, much of Ukraine’s massive reconstruction process will remain frozen.

Andrew Hammond

The European integration process began in the 1950s when the six founding members of the bloc — Belgium, France, Germany, Italy, the Netherlands and Luxembourg — sought to prevent the possibility of another large war on the continent. In the decades that followed, the EU steadily expanded, Brexit aside, while espousing the idea that economic and political integration among nations is the best way to promote general prosperity and peace.
This approach paved the way for the creation of the single euro currency in 1999, and the accession in 2004 of 10 new members from formerly Communist Central and Eastern Europe.
In recent years, however, the process for the further enlargement of the EU, and possible admission of nations such as Turkiye and those in the Western Balkans, has been much more challenging than was the case for Central and East European countries 20 years ago. This reflects the so-called “enlargement fatigue” that set in after the 2004 expansion. Following the accession of Romania and Bulgaria in 2007, and the eurozone crisis of 2009-10, Brussels set stricter conditions for reforms in accession states.
After stalling for years, the EU’s enlargement agenda has been revitalized as a result of Russia’s invasion of Ukraine in February 2022, and the European Council has sought to fast-track the membership process for the nation. Von der Leyen said last week in Berlin that accession talks will start at the end of this month, Kyiv having fulfilled the necessary reforms requirements to enable it to become a member of the bloc.
However, while there is much energy behind Ukraine’s bid, French President Emmanuel Macron in particular has warned it could take several decades for Kyiv to become a full member.
While the EU enlargement process might appear unrelated to the rebuilding of Ukraine, they are in fact closely linked in the eyes of many stakeholders. The EU accession process is widely expected to occur in parallel with reconstruction. In part, this is because there is an acknowledgment of the need for wider political and institutional changes in Ukraine, following criticisms prior to the war about several issues including corruption.
Ukraine has developed a National Recovery Plan that sets out the country’s initial road map not only for rebuilding but also transforming the country. It is divided into three phases: immediate needs, medium-term needs, and longer-term needs for a modernization phase stretching into the 2030s.
The first phase of this plan is therefore ongoing, including work by local authorities to clean up damaged areas and restore key facilities destroyed by the war.
A subsequent phase, which might begin immediately after mass hostilities end, will focus more on recovery, including restoration of water supplies and the provision of housing. Only after this can there potentially be a fully fledged restoration of Ukrainian infrastructure and transport systems, which will be the most costly and longest phase of the process.
So while the war might go on significantly longer, the event last week in Berlin, plus the G7 and Swiss conferences, have nonetheless rebooted the reconstruction agenda. However, Ukraine’s immediate-term future is still about survival, amid renewed Russian attacks, and until the large-scale fighting ends much of the massive reconstruction process will remain frozen.

Andrew Hammond is an associate at LSE IDEAS at the London School of Economics.

Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News' point of view