Rebuilding Ukraine, with an estimated cost of around $1 trillion, will be an unprecedented undertaking given the massive scale and uncertain environment. Although the reconstruction details are still being determined, the main international donors are likely to be the EU and its Member States, international financial institutions, and the United States. And while large-scale efforts are unlikely to start across all of Ukraine until after a peace agreement is reached, limited recovery projects have already been launched and may be expanded.

Marshall Plan Times Ten

Russia’s war of aggression has generated enormous economic damage in Ukraine, not to mention over 140,000 civilian and military casualties. According to the latest World Bank estimates, the overall damage in Ukraine resulting from the war is already around $425 billion. This consisted of $135 billion in direct damage and $290 billion in disruptions to economic flows and production.

Longer-term, Ukraine foresees around $1 trillion necessary for post-war reconstruction over a ten-year period. Depending on the depth and destruction of the war, however, even this colossal estimate may increase over time. By comparison, the oft-invoked example of the Marshall Plan—America’s historic reconstruction of Western Europe after World War II—was around $100 billion in current dollars spread over four years and across seventeen European countries. Ukraine may require that times ten over ten years and could become the world’s largest reconstruction effort since 1945.

To help meet this need, the international community has begun organizing donors’ conferences of governments and companies interested in supporting and rebuilding Ukraine’s economy. In July 2022, the Ukraine Recovery Conference was held in Lugano, Switzerland, with the participation of five heads of state and government and 58 international delegations (representatives of governments and international organizations). In October 2022, Germany and the European Commission co-hosted in Berlin a conference of experts to develop ideas for Ukraine’s reconstruction.

On June 21-22, 2023, the Ukraine Recovery Conference convened in London with officials from 61 countries, leaders of 33 international organizations, and numerous companies. At the conference, the European Commission unveiled a €50 billion proposal for Ukraine (in grants and loans over three years) as part of its EU budget review, which the Council and Parliament will now need to discuss and decide upon. The EU along with several international financial institutions signed agreements worth over €800 million to mobilize private investment for Ukraine. And over 500 firms signed the Ukraine Business Compact committing to supporting Ukraine’s reconstruction. The next conference will convene again in Berlin in 2024.

In January 2023, the Multi-agency Donor Coordination Platform was established by the EU, G7 countries, and international financial institutions to support Ukraine’s repair, recovery and reconstruction process. The Platform aims to facilitate coordination among international donors to ensure coherence and transparency. Some countries, such as the UK and France, have also appointed special envoys for Ukraine’s reconstruction.

Multiple International Donors

Even before Russia’s full-scale invasion of Ukraine in February 2022, there was already a wide range of international assistance programs in Ukraine—by the European Commission, the European Bank for Reconstruction and Development, the IMF, the World Bank, the United States, as well as individual European governments—each of which had its own conditions and procurement mechanisms.

  • Between 2014 and 2021, the EU provided significant financial and technical assistance to Ukraine: €1.7 billion in grants under the European Neighbourhood Instrument; €5.6 billion under five macro-financial assistance programs in the form of loans; €194 million in humanitarian aid; and €355 million from foreign policy instruments.
  • Similarly, the European Bank for Reconstruction & Development (EBRD) facilitated about $16 billion in investments across Ukraine.
  • In 2015, the IMF approved a four-year loan of $17.5 billion to Ukraine under the Extended Fund Facility, which allows for longer program and repayment periods.
  • Since 2014, the World Bank has been a lead contributor for providing financial support to Ukraine, with annual support of around $1 billion through various loans and guarantees.
  • The United States issued three separate $1 billion sovereign loan guarantees to Ukraine between 2014 and 2016, as well as well provided over $2 billion in development assistance since 2014. The Export-Import Bank of the United States intends to make available up to $3 billion to facilitate procurement of U.S. goods and services for projects in Ukraine, and the U.S. International Development Finance Corporation has investments in Ukraine of around $800 million across over a dozen projects.

Next Steps

Ukraine’s recovery efforts have thus far focused on small-scale repair projects led by the United Nations as part of its humanitarian assistance. For instance, in March 2023, the UN Development Programme (UNDP) committed to an $18 million restoration project on 18 multi-storied apartment buildings in the Kyiv Oblast. UNDP has also signed a $15 million agreement with the EU to repair more than 50 schools across Ukraine, as well as a €5 million agreement with the German government to repair 12 schools. It is possible that other similar initiatives will follow, given UNDP’s estimates that around 1.4 million houses and 3,000 educational institutions have been damaged or destroyed in Ukraine.

More broadly, the UN has already implemented around $1 billion of recovery and development programs in line with the Ukrainian government’s priorities, driven by 24 UN entities and over 3,700 personnel.

*            *            *

Promoting a strong and fast economic recovery in Ukraine will be a strategic geopolitical priority for the international community. Neither Ukraine nor the West can afford to see Ukraine checkmate Russia militarily, but then lose the peace with a stagnant economic recovery. And in turn, for effective reconstruction to take place, it will be vital to foster significant private investment in recovery, which will require economic reform, programs to mitigate investment risk and effective initiatives to curb corruption.

The team at Covington is closely monitoring developments and opportunities in light of the firm’s extensive work on Ukraine matters and our expertise on the elements that will make up a successful economic recovery strategy.

__________________________

Lasse Luecke of Covington & Burling LLP contributed to the preparation of this article.

Photo of Daniel Feldman Daniel Feldman

Drawing on his prior positions in government service spanning multiple Administrations, former Ambassador Dan Feldman’s practice focuses on environmental, social, and governance (ESG) counseling, business and human rights (BHR), global public policy, as well as broader international regulatory compliance. He is a member…

Drawing on his prior positions in government service spanning multiple Administrations, former Ambassador Dan Feldman’s practice focuses on environmental, social, and governance (ESG) counseling, business and human rights (BHR), global public policy, as well as broader international regulatory compliance. He is a member of the firm’s Global Problem Solving initiative.

As Chief of Staff and Counselor to Secretary John Kerry when he was appointed the first Special Presidential Envoy for Climate (SPEC) by President Biden, Dan helped drive the U.S. government’s international climate agenda, coordinating high level interagency policy-making, engaging with corporate stakeholders, and contributing to key bilateral and multilateral climate discussions, including the 2021 Leaders’ Summit on Climate and the landmark UN Conference of Parties (COP26) in Glasgow.

Previously, Dan served as deputy and then U.S. Special Representative for Afghanistan and Pakistan at the U.S. Department of State in the Obama Administration, as Director of Multilateral and Humanitarian Affairs at the National Security Council in the Clinton Administration, and as Counsel and Communications Adviser to the U.S. Senate Homeland Security and Governmental Affairs Committee. He also has served as a senior foreign policy and national security advisor to a number of Democratic presidential and Congressional campaigns.

Dan has extensive experience counseling multinational corporations on mitigating risk and maximizing opportunities in the development and implementation of their ESG and sustainability strategies, with a particular background in advising on BHR matters. He was one of the first attorneys in the U.S. to develop a practice in corporate social responsibility, and has been cited by Chambers for his BHR expertise. He assists clients in strategizing about their engagements with a range of key stakeholders, including Members of Congress, executive branch officials, foreign government officials and Embassy representatives, multilateral institutions, trade and industry associations, non-governmental organizations, opinion leaders, and journalists.

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Photo of Daniel L. Spiegel Daniel L. Spiegel

Ambassador Daniel Spiegel is a senior member of the firm’s Public Policy Practice Group. He specializes in advising clients on a wide range of international policy issues related to market access, global problem solving, and crisis management. He was instrumental in the opening…

Ambassador Daniel Spiegel is a senior member of the firm’s Public Policy Practice Group. He specializes in advising clients on a wide range of international policy issues related to market access, global problem solving, and crisis management. He was instrumental in the opening of the firm’s Seoul office where he spent a significant amount of time and remains deeply involved in Covington’s Korea practice.

Dan’s extensive international policy experience enables him to provide domestic and foreign clients with a broad range of legal services, strategic advice, and representation in their relations with both governments and multilateral organizations such as the United Nations, IMF, and the OECD. He is a specialist in the formation of large corporate coalitions to achieve a range of policy objectives. He has also represented sovereign governments from Europe, Latin America, and the Persian Gulf on trade, investment, environmental, and foreign policy matters.

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Photo of Bart Szewczyk Bart Szewczyk

Having served in senior advisory positions in the U.S. government, Bart Szewczyk advises on European and global public policy, particularly on technology, economic sanctions and asset seizure, trade and foreign investment, business and human rights, and environmental, social, and governance issues, as well…

Having served in senior advisory positions in the U.S. government, Bart Szewczyk advises on European and global public policy, particularly on technology, economic sanctions and asset seizure, trade and foreign investment, business and human rights, and environmental, social, and governance issues, as well as conducts international arbitration. He also teaches grand strategy as an Adjunct Professor at Sciences Po in Paris and is a Nonresident Senior Fellow at the German Marshall Fund.

Bart recently worked as Advisor on Global Affairs at the European Commission’s think-tank, where he covered a wide range of foreign policy issues, including international order, defense, geoeconomics, transatlantic relations, Russia and Eastern Europe, Middle East and North Africa, and China and Asia. Previously, between 2014 and 2017, he served as Member of Secretary John Kerry’s Policy Planning Staff at the U.S. Department of State, where he covered Europe, Eurasia, and global economic affairs. From 2016 to 2017, he also concurrently served as Senior Policy Advisor to the U.S. Ambassador to the United Nations, Samantha Power, where he worked on refugee policy. He joined the U.S. government from teaching at Columbia Law School, as one of two academics selected nationwide for the Council on Foreign Relations International Affairs Fellowship. He has also consulted for the World Bank and Rasmussen Global.

Prior to government, Bart was an Associate Research Scholar and Lecturer-in-Law at Columbia Law School, where he worked on international law and U.S. foreign relations law. Before academia, he taught international law and international organizations at George Washington University Law School, and served as a visiting fellow at the EU Institute for Security Studies. He also clerked at the International Court of Justice for Judges Peter Tomka and Christopher Greenwood and at the U.S. Court of Appeals for the Third Circuit for the late Judge Leonard Garth.

Bart holds a Ph.D. from Cambridge University where he studied as a Gates Scholar, a J.D. from Yale Law School, an M.P.A. from Princeton University, and a B.S. in economics (summa cum laude) from The Wharton School at the University of Pennsylvania. He has published in Foreign Affairs, Foreign Policy, Harvard International Law Journal, Columbia Journal of European Law, American Journal of International Law, George Washington Law Review, Survival, and elsewhere. He is the author of three books: Europe’s Grand Strategy: Navigating a New World Order (Palgrave Macmillan 2021); with David McKean, Partners of First Resort: America, Europe, and the Future of the West (Brookings Institution Press 2021); and European Sovereignty, Legitimacy, and Power (Routledge 2021).

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