The international community met in Berlin on Tuesday 25 October to discuss the recovery, reconstruction and modernisation of Ukraine as fighting continues to rage in the country.
German Chancellor Olaf Scholz called for a Marshall Plan, adding that the reconstruction and modernisation of Ukraine “will be a challenge for generations, but also an opportunity for generations to come, if we succeed”.
The needs are enormous. The World Bank puts the cost of the destruction at €350 billion, and in a video address, Ukrainian President Volodymyr Zelensky explained that his country’s deficit for 2023 would amount to €38 billion. Ukrainian Prime Minister Denys Shmyhal added that Ukraine had lost between 35 and 45% of its GDP this year.
As she had already pointed out at the end of the European Council on 21 October (see EUROPE 13048/1), the President of the European Commission, Ursula von der Leyen, estimated that between three and five billion euros per month would be needed for Ukraine in 2023 and that it was difficult to know how much income the country could generate on its own through production and exports. Mr Shmyhal estimated a need of three to four billion per month.
The Commission President explained that her institution was working with Member States on EU support of up to €1.5 billion per month in 2023, or €18 billion for the year. Ukraine is hoping for similar support from the US, according to Mr Shmyhal, who said he was also working with the IMF.
Creation of a coordination platform
To manage the support and reconstruction of Ukraine, the international community and Ukraine will set up a platform for financial coordination and recovery of the country.
“Ukraine will fine-tune its reconstruction plan (...), the international community will continue to prepare the architecture to put in place a governance framework for the assistance we will provide”, Mr Scholz summarised after the conference.
Earlier in the day, he had called for a “transparent and inclusive” donor platform, wishing it to be the “central instrument, a hub” for the coordination of international and European support. Mr Shmyhal hoped that this “well-organised” platform would be in place by the end of the year.
“We need to put the right architecture in place to ensure that support is as broad and inclusive as possible”, added Mrs von der Leyen, warning that cooperation should prevail over competition between donors.
Furthermore, the Commission President said that Ukraine’s reconstruction efforts must be “firmly” embedded in its path towards EU membership. She believed that with the ongoing assistance and rehabilitation, Ukraine will combine “investment and reform to become a dynamic part of Europe’s sustainable and digital future”, with laws and institutions in place to enforce the Rule of law, to fight corruption and to have good governance standards of all partner countries and the EU, and that the country should continue its decentralisation.
Ukrainian leaders have called for a ‘financial Ramstein’, similar to the international contact group that exists at the military level (and whose first meeting took place at the US military base in Ramstein, Germany). “It is very effective for military coordination, we need something like that for finance”, explained the Prime Minister. He hoped that all the answers could be found regarding sources of funding, war risk insurance in Ukraine and funding priorities.
Work on the seizure of frozen assets
The Ukrainians also asked that the assets frozen by the EU be seized and that the money released be used for reconstruction. Asked about this, and in response to a request from the European Council to move forward on this issue, Mrs von der Leyen explained that the Commission was working on the legal preconditions for this. “The will is there, but there is a lot of legal work”, she added, saying the EU respected the Rule of law. According to Mr Shmyhal, the ‘financial Ramstein’ could also look into this issue.
Immediate support to the population
The Prime Minister also recalled that ahead of the reconstruction, his country needed immediate support, with winter approaching, “to (help them) survive the winter”.
This view is shared by the President of the Commission. “Russia is deliberately carrying out targeted attacks on civilian infrastructure with the clear aim of depriving men, women and children of water, electricity and heating as winter approaches. These are pure acts of terror and Russia is trying to paralyse Ukraine. But we won’t let that happen”, she warned.
Also, about 11 million people are displaced within Ukraine and need shelter, heat, water and electricity and their children to go to school, Mrs von der Leyen added. “Therefore, we need to repair houses, schools and infrastructure now”, she promised, as the EU last week announced €62.3 million in emergency shelter equipment and €175 million in additional humanitarian aid for Ukraine and Moldova (see EUROPE 13047/4).
“But we all know that more needs to be done. This rapid rehabilitation phase is essential for life to continue in Ukraine”, Mrs von der Leyen acknowledged. (Original version in French by Camille-Cerise Gessant)