Reconstruction Conference: What post-war Ukraine should look like

At a conference in Switzerland starting today, Ukrainian experts plan to present plans for post-war reconstruction in the country. Little is expected of the announced “Marshall Plan”.

Even before the Russian attack, the two-day conference in Lugano had been scheduled as an annual “reform conference” for Ukraine. But now much more urgent questions arise: How is the tormented country, destroyed in many places, to get back on its feet once there is peace? And who will help him? To this end, representatives of the Ukrainian “National Council for Reconstruction” want to present their ideas to the OECD, the European Bank for Reconstruction and Development, the United Nations as well as government and business representatives from 40 countries.

The country is still in the middle of a fight for its existence: “We have no idea when the war will end, where it will end, what the country will look like then,” says economics expert Andrian Prokip from the Kiev think tank Ukrainian Institute for the Future ” to the point. Nevertheless, the work on reconstruction sketches has been going on since April: At this time, the Ukrainian President Volodymyr Zelenskyj spoke for the first time with ministers and experts from large consulting firms about the drafts they had prepared; the London Center for Economic Policy Research published an essay at the same time.

Its cornerstones: Ukraine should work purposefully towards EU integration and be given a lot of personal responsibility. It should create incentives for the influx of capital and technology from abroad and make climate neutrality the basis of the new infrastructure. And an independent authority close to the EU should oversee and control the measures taken to implement the historic Marshall Plan after the Second World War, just like the “Economic Cooperation Administration”.

“Marshall Plan” is not a magic word in Kyiv

According to the Ukrainian edition of “Forbes”, such an agency has met with little approval in Kyiv – the Ukrainian government would rather hold the reins in its own hands. And otherwise, the promise of a “Marshall Plan” arouses little enthusiasm in the country: “I don’t think anyone would want to apply the Marshall Plan from 70 years ago to Ukraine,” says Hlib Wyschlinsky, managing director of the think tank “Centre for Economic Strategy”. . The conditions in post-war Ukraine are very different from those in Western Europe after the Second World War – which, by the way, the London expert essay assesses differently.

Expert Prokip believes that the term “Marshall Plan,” which evokes positive associations with the economic miracle in Germany, is not a magic word in Ukraine, but just a synonym for a post-war reconstruction program.

How Kyiv imagines this is to be presented in Lugano by a delegation led by Prime Minister Denis Schmyhal and Presidential Office Head Andriy Jermak, who head the National Council for Reconstruction. According to the Ukrainian “Forbes” edition, the document is supposed to be a comprehensive one that deals with both ideas for investment programs and concrete draft laws for reforms that are already to be passed, from the planned EU integration to the interim assessment of the war damage.

Committed money flows slowly

The core questions are not only unanswered on the part of the international partners: What role should the donor countries play in the reconstruction process? Is it controlled from Kyiv or from Brussels? And where should the countries that have promised help get the required sums from? Expert Wyschlinskyj is under no illusions that it will be difficult for the governments of the G7 and EU countries to explain to their population after the Corona crisis and recession why enormous state funds are now supposed to flow into Ukraine for years and decades.

He therefore does not expect preparations to start quickly either: “In a way, expectations were higher in April than now. Because now we see that many assurances are only slowly turning into real money…”

How processes are to be made transparent for all sides and how corruption is to be prevented in the oligarchic Ukrainian economy and politics are “questions of secondary urgency”. A view that the future donor institutions should not share at all. A special report published by the European Court of Auditors in 2021 already came to the conclusion that large-scale corruption – i.e. abuse of power at a high level, in which a few secure advantages at the expense of the general public – “remains a central problem in Ukraine” against which despite EU support, too little is being done.

Ukraine has high hopes for its new status as a candidate for EU membership: Wyschlinskyj, for example, considers it a “very rational way” to approach the country’s reconstruction and EU integration in close cooperation – so that the rebuilt Ukraine can be seamlessly connected to the internal market can be connected. Russian funds confiscated as part of the sanctions could also be used for this, he says – the London experts also suggest this, two of whom are now members of the National Reconstruction Council.

What does a contemporary economy look like?

Energy expert Prokip points out that a vision of what the country should look like is needed. Is it about rebuilding the infrastructure destroyed and plundered by Russia or about building a new, modern economy? “The previous Ukrainian economy is inefficient, energy-hungry and in many branches of industry is still a successor to the Soviet Union, which relied on the export of raw materials,” he says.

In older parts of the population, who stayed behind in the embattled country and are now likely to make up an even larger demographic proportion, a paternalistic mentality also prevails: the state has to provide factories and jobs – at the same time, however, state institutions are also mistrusted and populists are believed, who present themselves as tribunes of the people for their own enrichment. These Ukrainians are unlikely to be open to a reorientation towards the IT and creative industries or to immigrant workers, for example from Asia and Africa.

Workers recruited from abroad as so-called guest workers helped Germany after the Second World War to transform the “economic miracle” into lasting prosperity. Whether Ukraine can do without them is questionable: More than ten percent of the population have fled, and as the war progresses many could start a new life abroad – and then stay there, both economists suspect.

Prokip emphasizes: “Not everyone who could be successful abroad actually goes.” But Vyshlinskyj warns: “We could find ourselves in a situation where money flows into Ukraine after the war, but nobody is there to use it.”