LONDON — Western countries on Wednesday pledged tens of billions of dollars in new financial aid to help rebuild war-torn Ukraine at a two-day pledging conference convened by the British government in the shadow of London Kiev’s counteroffensive against Russia.
The pledges, made by Britain, the United States and the European Union, were aimed initially at shifting public attention away from the battlefield to Ukraine’s years of post-war reconstruction. Economists estimate the reconstruction project could cost between $400 trillion and $1 trillion.
“As we saw in Bakhmut and Mariupol, Russia will want to destroy anything it cannot bear,” British Prime Minister Rishi Sunak said at the opening of the conference. “They want to do the same with the Ukrainian economy.”
In a video conference with participants, Ukrainian President Volodymyr Zelenskyy argued that economic opportunities lay in his country’s ruins. He thanked donors but urged them to start investing now. “We need to move from vision to agreements and from agreements to real projects,” he said.
The UK announced a package that includes an additional £240 million ($305 million) in direct economic aid and $3 billion in World Bank loan guarantees. The loans are intended to stimulate the inflow of new private investment to rebuild Ukrainian cities and towns destroyed by Russian troops.
The European Union has presented an ambitious package that will provide 50 billion euros (about 55 billion US dollars) in aid from 2024 to 2027. About 17 billion euros are to be provided in the form of grants, the rest in the form of low-interest loans. However, the package must be approved by all 27 members of the bloc and could face hurdles.
“This plan could become an anchor for all international donors,” said Ursula von der Leyen, President of the European Commission. “That’s what I mean when I say that we will stay with Ukraine for as long as necessary.”
The United States announced $1.3 billion in additional economic assistance, broadly split between funds to repair Ukraine’s badly damaged energy infrastructure and modernize ports, railroads and border crossings.
“While Russia continues to destroy, we are here to help Ukraine rebuild,” Secretary of State Antony J. Blinken said, noting that the package had bipartisan support in Congress. “Recovery is about laying the groundwork for Ukraine to thrive.”
The United States has provided more than $20 billion in economic development assistance and $2.1 billion in humanitarian assistance to Ukraine, Blinken said. It is also the largest donor of military aid to the Ukrainian army.
Britain, which is also one of Ukraine’s largest military donors, is using London’s status as a global financial and insurance center to boost foreign investment, including by trying to de-risk investors. The $3 billion loan guarantees will span three years, Mr Sunak said, and will be backed by more than 400 companies from 38 countries, including Virgin, Sanofi, Phillips and Hyundai Engineering.
According to economists and Ukrainian officials, rebuilding Ukraine’s devastated infrastructure will cost at least $400 billion. So enormous is this sum that there have been calls for the estimated $300 billion in Russian assets frozen in the European Union, the United States, Switzerland and Britain to be used to cover the costs.
UK and European Union leaders said they were exploring ways to use Russian assets to fund reconstruction. Britain this week announced legislation that would extend sanctions against Russian oligarchs, opening the door for a reallocation of funds in Ukraine.
“It is clear that Russia must pay for the destruction it has caused,” Mr Sunak said.
Although fighting is still raging in southern and eastern Ukraine, analysts said it was important to start planning the post-war reconstruction process to avoid delays like those seen in Europe’s post-WWII reconstruction.
“Without any planning, these delays can increase and lead to human misery and the failure of economies, and essentially foreign policy failure,” Howard Shatz, a senior economist at the RAND Corporation, told reporters last week. “That’s why it’s important to start planning now.”
