Ukrainian government officials can now put a number on how much the country has lost in infrastructure alone so far: Over $100 billion, according to a Twitter post by Ukrainian Prime Minister Denys Shmyhal. The total cost of recovery, which must also account for the road infrastructure and the millions of internally displaced persons, was estimated to be $750 billion, according to Ukrainian officials.
But where will the funding for rebuilding come from?
“Who should pay for the renewal plan, which is already being valued at $750 billion? We believe that the key source of recovery must be the confiscated assets of Russia and Russian oligarchs. It was the Russian government who unleashed this bloody war, they caused this massive destruction and they must be held accountable for it. Frozen Russian assets, according to various estimates, amount to $300-$500 billion. Some countries have already initiated processes of not just freezing, but also confiscating these assets,” Prime Minister Shmyhal said at the Ukraine Recovery Conference, which took place in Lugano, Switzerland, last week.
At the two-day conference (hosted on July 4 and 5) the European Investment Bank—in charge of lending for the European Union—announced the formation of the EU-Ukraine Gateway Trust Fund, which will provide one funding source. The summit event was attended by representatives from over 40 countries, including the United States. At the conference Ukraine presented a reconstruction plan with three key phases: The first addresses the current needs of Ukrainians; the second is planned to take place after the war—when Ukraine will begin projects to quickly repair its damaged infrastructure—and the third will focus on the long term transformation of Ukraine.
EIB Vice-President Teresa Czerwińska said in press statement following the conference: “The EIB very much welcomes Ukraine’s first comprehensive recovery plan presented today at the Ukraine Recovery Conference in Lugano. We stand ready to offer our technical and financial expertise in the further elaboration of Ukraine’s recovery strategy and to help the country to exit the emergency mode and start rebuilding its infrastructure. We are committed to working closely with Ukraine, with the European Commission, and with our partner financial institutions, to do whatever we can to support Ukraine’s recovery and its journey towards EU Membership. For this purpose, we propose to set up a new instrument, called EU-Ukraine Gateway Trust Fund, to catalyse private and public investments in this direction.”
The EIB funding is expected to total about $101.8 billion (100 billion euros), starting with an initial $20.4 billion in contributions from EU countries and the EU budget in the form of grants, loans, and guarantees. Reuters obtained a document stating that the guarantees would have a multiplier effect, bringing the total to nearly $102 billion. It will go toward rebuilding bridges, revamping energy, water and sewage infrastructure, and creating housing for refugees.
The EU-Ukraine Gateway Trust Fund has the potential to revitalize the Ukrainian economy. In addition to funding reconstruction efforts laid out by Ukrainian officials and the EU’s Ukraine Reconstruction Platform the money could support Ukraine’s pathway to becoming a member of the European Union.
The New York Times reported Britain said would provide more than $1 billion for World Bank loans and guarantee World Bank loans for a further half-billion dollars. Britain also committed to aid Ukraine in landmine clearance and rebuilding energy infrastructure.
As the conference came to a close yesterday, around 40 countries along with global organizations such as the European Investment Bank and the Organization for Economic Co-operation and Development (OECD) signed the Lugano Declaration, committing to support Ukraine in its path to recovery. The document outlines the guiding principles of Ukraine’s recovery process, which included democratic participation, transparency, and sustainability.
Prime Minister Shmyhal said following the close of the conference: “I am grateful to the European Union and its European Investment Bank for standing together with Ukraine and providing consistent financial support. I believe that together we will be able to create all conditions for the implementation of the most ambitious Recovery Plan of our time, the full and rapid rebuilding of Ukraine after this war. We welcome that the conference in Lugano demonstrated the unwavering support of key stakeholders, including the EIB, and also gave us a platform to discuss such an important issue as rebuilding a better Ukraine.”