It’s time for a Ukrainian Marshall Plan

Recent Ukrainian success on the battlefield has raised hope that the war sparked by Russia’s invasion may be over sooner than expected, despite President Vladimir Putin’s new threats to escalate it. This means planning for Ukraine’s post-war reconstruction needs to begin now, even if much rebuilding will have to await the end of the fighting. 

Potential donors to reconstruction will meet in Berlin on Oct. 25. The last meeting in July failed to produce a plan. Ukraine cannot afford another failure.

German Chancellor Olaf Scholz has called for a “Marshall Plan” to rebuild war-ravaged Ukraine. The allusion is apt. The needed response to the devastation created by Russia’s invasion of Ukraine is unprecedented in the post-World War II era. It will require a costly effort.

In many ways, organizing Ukrainian relief will be more difficult than the challenge that the Marshall Plan faced. That effort involved just one nation — the United States — funding the recovery of multiple war-torn countries. Rebuilding Ukraine will require corralling funds from multiple donors with just one recipient.

The necessary recovery funding will be massive. Preliminary estimates place the cost of reconstructing damaged Ukrainian infrastructure at more than $100 billion, the World Bank recently estimated $350 billion and Kyiv predicts overall recovery will cost $750 billion. These are daunting numbers. By comparison, the Marshall Plan cost $150 billion in today’s dollars.

This will require grants, loans and private investments from the United States, Europe, Canada, Japan, South Korea and Australia. Bitter experience funding rebuilding efforts in Iraq, Afghanistan and elsewhere suggests raising the necessary Ukraine funds from multiple donors and maintaining their engagement will be a daunting task.

For this reason, it is necessary for America and other donors, including the Ukrainian government itself, to agree now on principles, architecture, financing and accountability.

The United States is currently providing the lion’s share of security assistance. And, as the world’s largest economy and to ensure that its security investment is not all for nothing, it should pledge to financially support reconstruction, although not at the level of its current military assistance. The other G7 members and additional partners should commit to continuing their current security assistance to Ukraine while eventually playing a bigger role than the United States in financing postwar recovery. 

At all times, the Ukraine recovery endeavor must involve the Ukrainian government and civil society. Donors necessarily will set the conditions for the use of their money. But ultimate success will require Ukrainian ownership of the effort through setting their own priorities and monitoring their implementation.

An allied Ukrainian reconstruction effort will require strong leadership. A recovery coordinator should be named, preferably an American with global stature who can mobilize public support for aid while twisting the arms of foot-dragging donors. A task force comprised of major donors should oversee the effort. As time passes, responsibility should increasingly shift to the European Union, which has promised Ukraine membership and thus will increasingly be Brussels’ responsibility.

The West has been quite supportive of Ukrainian relief efforts to date. Washington has committed roughly $8.6 billion in military assistance. The United States had also provided about $9.2 billion and the EU $1.4 billion in humanitarian aid. And the EU has committed $12.3 billion and the U.S. $10.3 billion in direct budgetary financial assistance to keep the Kyiv government functioning. 

More will be needed. A new IMF loan for Ukraine later this year could help stabilize Kyiv’s short-term financial distress. But the nation’s debt burden is 58.7 percent of pre-war GDP this year. Future assistance must come through grants. To date, American aid has largely been through grants. Over time, Europe must ramp up its grants to take on more of the burden in recognition of the EU’s responsibility to help a prospective member. Western governments should also offer private investors “war insurance,” an expanded and heavily subsidized version of the political risk insurance they already offer in other parts of the world, to encourage much-needed private investment in Ukraine. 

Hopes that Russia’s Central Bank and oligarchs’ assets can pay for Ukraine’s rebuilding are premature. The legal uncertainties and political considerations around the seizure of such resources are unlikely to be resolved anytime soon. But the division of Russian assets could be part of an eventual peace settlement. If Moscow wants even some of this money back, it will first have to commit much of it to Ukrainian reconstruction.

Finally, continued Western public support for Ukrainian aid will not be sustainable without accountability. American and European taxpayers will rebel against ongoing assistance if they think the money is being misspent or stolen.

A clear Ukrainian commitment to transparency in all reconstruction projects is needed to send a strong signal to the public in donor countries, as well as to Ukrainians, that corruption will not be tolerated. And donors should appoint an independent inspector general to monitor the assistance program, as Washington eventually did in Afghanistan, to investigate alleged misconduct and publish regular reports on the use of donor funds.

The Marshall Plan began three years after the end of World War II. But discussions about Europe’s post-war needs began before the war ended. Preparation for Ukrainian recovery cannot wait until the war is over. The Ukrainian people deserve no less. America and Europe cannot help them win the war and then fail to help them win the peace. 

Bruce Stokes is a visiting senior fellow at the German Marshall Fund of the United States. Thomas Kleine-Brockhoff is vice-president and executive director of the Berlin office of the German Marshall Fund of the United States. They are two of the authors of “Designing Ukraine’s Recovery in the Spirit of the Marshall Plan.”