The appeal from London on June 21 to support the reconstruction of Ukraine. Kiev’s Western allies – leaders and representatives from more than 60 countries – meet in the UK on Wednesday and Thursday to mobilize institutional and private actors to fix Ukraine’s crumbling economy. The country, which was among the poorest in Europe before the conflict began, has been ravaged by the Russian offensive for more than a year and its GDP has fallen by 29.1% in 2022.
“Together with our allies, we will maintain our support for Ukraine’s defense and counteroffensive. We will stand by Ukraine for as long as necessary until they win the war.” British Prime Minister Rishi Sunak said on Wednesday..
The main countries supporting Kiev financially also made several announcements: The UK announced a new package $3 billion in financial assistance to Ukraine In 2024-2027, the United States will allocate $1.3 billion in additional aid to the Ukrainian economy. On Tuesday, European Commission President Ursula von der Leyen also called on EU member states to extend the EU’s multiannual budget negotiated in 2020 by €50 billion to help Ukraine until 2027.
While thanking Ukraine’s partners “for their support,” Volodymyr Zelenskyy said wrote on Twitter that “the recovery of Ukraine will be.”[it] more predictable through global unity and solidarity.”
These new investments aim to help the country’s economic recovery, which according to Jean-François Robin, research director at Natixis, represents a huge challenge: “It’s a huge economic challenge. Several sectors need to be rebuilt: infrastructure (roads, bridges, ports, railways). ), residential and non-residential buildings (schools, hospitals), the metallurgical industry, agriculture… Almost 30% of the country was destroyed.”
Top contributors from US and EU
If Ukraine’s needs are estimated at $14 billion in 2023, the broader recovery of the country’s economy in the decade 2023-2033 will cost around $411 billion, according to a study published on March 23 by the World Bank UN, the EU and the Ukrainian government.
The sectors requiring the most public and private investment are transportation ($92.1 billion), housing ($68.6 billion), energy ($47 billion), and social protection (41, 8 billion US dollars).
However, the total is expected to increase as the conflict unfolds, as evidenced by the recent destruction of the Kakhovka Dam, which Ukrainian authorities said caused an estimated damage of more than $1.3 billion.
Without waiting for the next decade, several countries are already working on the country’s recovery: the United States is the largest, with almost $27 billion in financial aid (but almost $78 billion including military and humanitarian aid), according to the Kiel Institute Donors of Ukraine Economic research institute based in Germany. Close behind is the European Union, which has already given Kiev more than $33 billion in financial aid (almost $39 billion from all aid combined).
“The amounts mentioned are significant and many countries will want to participate in this reconstruction because economic opportunities are also at stake,” notes Jean-François Robin.
Russia ‘will have to bear the cost of reconstruction’
International bodies are also digging into their pockets: the World Bank has released more than 20 billion dollars in the form of loans or donations so far, and in March the International Monetary Fund (IMF) granted financial aid totaling 15.6 billion euros for the next four years.
This IMF plan, with a long-term value of $115 billion, aims to “support gradual economic recovery while laying the conditions for long-term growth in the context of post-conflict reconstruction and on the road to EU accession.” to the international body.
In addition to all these financial efforts, Kiev’s allies also want to make Russia pay for it in the long term. “To be clear: Russia caused the destruction of Ukraine. And Russia will end up bearing the cost of rebuilding Ukraine,” US Secretary of State Antony Blinken said in London on Wednesday.
Private actors are also involved in the reconstruction project: the investment fund BlackRock and the first American bank JP Morgan are particularly supporting the Ukrainian government in “building a reconstruction bank”. [pour] “We are channeling capital into reconstruction projects that could attract hundreds of billions of dollars in private investment,” according to the Financial Times.
The London conference also enabled the official launch of the Business Compact. This initiative invites companies around the world – more than 400 at the launch of the platform, including Apple, IBM Ukraine and Sanofi – to join major global financial institutions in committing to “show their support for the reconstruction of Ukraine”.
long-term support
Talking about rebuilding Ukraine may seem premature when the country is still the scene of armed and deadly conflict. How can the economy recover under these circumstances?
For the diplomat Gérard Araud, a distinction must be made between the south-east of Ukraine and the rest of the country: “At the front, the destruction will continue as long as the fighting continues, so we are not addressing workers and a population at one strong.” bombed place to come. While in the rest of the country, which is facing local missile attacks, rebuilding is a priority, especially where public services are at stake: the distribution of water, gas and electricity. ..”
That is exactly what the United States is doing by seeking immediate investments in Ukraine. The latest announcement, announced on Wednesday, aims to rebuild the country’s energy infrastructure ($520 million will be released) as well as “modernize” the railroad, ports, borders and “all essential infrastructure.” that connects the country to Europe”. [657 millions de dollars]’ Antony Blinken explained.
Beyond concrete engagement on the ground, Kiev’s allies also want to send a message of unity to Moscow by assuring him of their lasting commitment to the country’s reconstruction. “It’s a way of saying, ‘Our engagement with Ukraine is a long-term engagement,'” explains the former French ambassador to the United States. “This is happening in two forms: reconstruction with eventual EU accession and military engagement with the prospect of Ukraine joining NATO.”
This sharing of common values between Ukraine and its “partners” was also underscored in a tweet by Volodymyr Zelenskyy on Wednesday, in which he wrote: “Ukraine has…”[vait] It has managed to unite the EU more than ever before. It is in fact a unit of values that is reflected in many political decisions […]. Ukraine has activated all this power of solidarity that the EU was created for.”
The engagement of the US, the EU or the UK can ultimately be seen as “a declaration of determination and a reaffirmation of European values in the eyes of public opinion and in the eyes of the world”, according to Gérard Araud. And finally: “This is a way of saying that their support is not only military, but also human support in the reconstruction of Ukraine.”