The situation at the military compound is still tragically uncertain. Top strategists – including the Pentagon – are sending mixed signals about the possibility of finally defeating Russia. But one sign of confidence is that the race to rebuild Ukraine has already begun. From Poland to Finland, from Switzerland to France, initiatives follow that see the post-war period as a great economic opportunity for companies in allied countries. A detailed article in The New York Times today summarizes what is happening on the “positive” front of those who are already preparing for the peace to come. The article has a title that conveys the idea: «The Next World Construction Site. The race to rebuild Ukraine has begun.” The cost of the conversion is immense and affordable at the same time. Current estimates are $750 billion. It’s a huge number, but it’s within reach of a concert of nations that include the two largest world economies, namely the United States and the European Union, as well as other rich countries like Japan and South Korea, even if it’s just not the wealth enough to win wars, Ukraine’s allies and supporters concentrate a dominant share of world GDP.
Debate is still ongoing over who should manage the flows of reconstruction aid, which is distinct from humanitarian aid or military supplies. A realistic hypothesis might entrust the control room to a team of multilateral institutions such as the World Bank and the European Bank for Reconstruction and Development (EBRD), the latter having a similar mission when it needed to help Eastern Europe’s transition from communism to a market economy. The audience of private investors and companies interested in getting involved in the redevelopment business has already manifested itself on various occasions. In France, Emmanuel Macron brought together 700 national companies in December for a conference on the opportunities associated with post-war recovery. A similar initiative took place in January at the World Economic Forum in Davos. A reconstruction event is being organized in Warsaw these days (the title is «Rebuild Ukraine», the format is a fair), attended by 300 companies from 22 countries.
The Helsinki Confindustria hosted a webinar the day before yesterday in which representatives of the Zelensky government listened to what Finnish companies can do to rebuild prefabricated sewage and water purification plants and electrical infrastructure. It’s all very concrete, even if it may seem premature given the images we see face-on every day. In order for the reconstruction sites to open, the guns must be silenced and the massacre must end. It is also necessary to find the funds, put them in a special container and create guarantees that they will be well spent. The Zelenskyi government’s anti-corruption measures are essential for this, and other donor countries must follow them. As for where the funds come from, few have the illusion of accessing the assets seized by various Western countries from the Russian oligarchs, the Moscow Central Bank and other Putin-affiliated entities. The fact is that the release, final foreclosure and subsequent use of these funds for Ukraine’s reconstruction face enormous legal obstacles.
In the west we have the rule of law, where even the Russian oligarchs enjoy all the domestic protections. It may seem like one of our weaknesses, but it’s also part of our strengths: it is thanks to the certainties of the rule of law that capital flights from authoritarian regimes go to many Western financial centers (the United States being the leader), not the other way around. In any case, the Biden administration is very skeptical that the reconstruction of Ukraine can be financed with Russian money.
Coming back to my point of departure: is it premature, naïve, ie irrelevant that we start planning for reconstruction today? There are actually several historical precedents where revival plans were devised while fighting was still going on. The most famous of all is the Bretton Woods Conference convened by Franklin Roosevelt in 1944. World War II was far from over, and at that point there was no certainty who would win it. However, it was at Bretton Woods that the foundations were laid for a lasting peace on the economic front, with the creation of institutions such as the Monetary Fund and the World Bank, which would be the cornerstones of a new post-war world order. This foresight raises another issue: whether democracies are better or worse than autocracies at winning wars. A question to which I will provide some (documented) answers in tomorrow’s Global Newsletter.