West promises billions more for post-war reconstruction
LONDON — Western nations on Wednesday pledged tens of billions of dollars in new financial aid to rebuild war-torn Ukraine, at a two-day conference of donors held by the British government in the shadow of Kiev counter-offensive against Russia.
The pledges – rolled out by Britain, the United States and the European Union – attempted to temporarily shift the public’s attention from the battlefield to the years of rebuilding Ukraine that will follow after the war. Economists estimate that the rebuilding project could cost anywhere from $400 billion to $1 trillion.
“As we have seen in Bakhmut and Mariupol, Russia will try to destroy what Russia cannot handle,” Britain’s Prime Minister Rishi Sunak said at the opening of the conference. “They want to do the same with Ukraine’s economy.”
President Volodymyr Zelensky of Ukraine spoke to the participants via video link and argued that economic opportunities lay in the ruins of his country. He thanked the donors but begged them to start investing now. “We need to move from vision to agreements, and from agreements to real projects,” he said.
Britain announced a package that includes £240 million ($305 million) in additional direct economic aid and $3 billion in loan guarantees from the World Bank. The loans are intended to encourage an influx of new private investment for the reconstruction of Ukrainian towns and villages destroyed by Russian forces.
The European Union has drawn up an ambitious package that would include €50 billion (about $55 billion) in aid from 2024 to 2027. About €17 billion would come in grants and the rest in the form of low-interest loans. However, the package must be approved by all 27 members of the bloc and it may run into hurdles.
“This plan could become an anchor for all international donors,” said Ursula von der Leyen, the President of the European Commission. “This is what I mean when I say we are with Ukraine as long as it takes.”
The United States announced $1.3 billion in additional economic aid, roughly divided between funds to overhaul Ukraine’s badly damaged energy infrastructure and to modernize ports, railways and border crossings.
“As Russia continues to destroy, we are here to help Ukraine rebuild,” Secretary of State Antony J. Blinken said, noting that the package received bipartisan support in Congress. “Recovery is about laying the foundations for Ukraine to thrive.”
The United States has provided Ukraine with more than $20 billion in economic development aid, Mr Blinken said, as well as $2.1 billion in humanitarian aid. It is also the largest supplier of military aid to the Ukrainian army.
Britain, also one of Ukraine’s largest providers of military aid, is taking advantage of London’s status as a global financial and insurance center to boost foreign investment, partly by trying to reduce risk for investors. The $3 billion loan guarantees run over three years, Mr Sunak said, and are backed by more than 400 companies from 38 countries, including Virgin, Sanofi, Phillips and Hyundai Engineering.
Economists and Ukrainian officials say rebuilding Ukraine’s devastated infrastructure will cost at least $400 billion. That sum is so huge that it has sparked calls for the estimated $300 billion in Russian assets frozen in the European Union, United States, Switzerland and Britain to be used to cover costs.
British and European leaders said they were exploring ways to use Russian resources to ensure reconstruction. Britain this week announced legislation extending sanctions against Russian oligarchs, opening the door for a reallocation of funds in Ukraine.
“It is clear that Russia must pay for the destruction it has caused,” Sunak said.
While fighting continues in southern and eastern Ukraine, analysts said it was important to start planning the post-war reconstruction process to avoid delays that hampered Europe’s post-World War II reconstruction.
“Without any planning, these delays can add up, and they can lead to human misery and to the failure of economies and essentially foreign policy failures,” Howard Shatz, a senior economist at RAND Corporation, told reporters last week. . “So it’s important to start planning now.”