As the months pass, the Ukrainian PR communication machine has lost some of its efficacy, particularly in rallying Western public opinion. Many people are now more preoccupied with issues like forest fires around the Mediterranean during the holiday season than the plight of Ukrainian villages with unpronounceable names reduced to rubble. After months of confusing military operations, political leaders face scrutiny from their citizens, questioning their national priorities compared to those of Ukraine, despite attempts to emphasize the sacrifice made by Ukrainians for their cause.
In response to the pressing need for reconstruction, the Ukraine Reconstruction Conference held in London on June 21-22 primarily focused on the crucial element of funding. Previous donor meetings had concentrated on aid packages and monitoring reforms in Ukraine, but the focus has now shifted to the country’s reconstruction. This monumental task will largely be financed by the EU, leading to the involvement of European Commission President Ursula von der Leyen and EU trade chief Valdis Dombrovskis at the conference. President Zelensky also participated through video, stressing the importance of starting the reconstruction efforts immediately to improve the daily lives of Ukrainians and reignite economic productivity by generating jobs and taxes.
The reconstruction efforts aim to improve living conditions in the devastated areas while also investing in the regions not affected by the war. This investment is expected to act as a driving force for the Ukrainian economy, including supporting the production of arms to continue the war on Ukrainian soil, particularly in the traditional defense and steel industries. Although some reconstruction efforts have already begun, the capacities of NGOs, humanitarian organisations, and initiative groups funded through crowdfunding, remain insufficient to meet the vast needs. As a result, the EU is turning its attention to the private sector and is attempting to provide incentives for investment in Ukraine, alongside support from states and international financial institutions.
Following the Conference, the European Commission adopted the ‘Ukraine Facility Plan,’ a new strategy to finance Ukraine’s reconstruction. This plan will offer up to €50 billion in financial support from 2024 to 2027, comprising €33 billion in loans and €17 billion in grants, with management through a new special instrument called the Ukraine Reserve. Furthermore, the European Commission is in talks with the European Investment Bank to secure EU budget guarantees to fund an additional €100 million in loans for Ukraine.
However, the implementation of the EU processes is often slow, and cooperation between the public and private sectors could face bureaucratic obstacles and moral considerations. Private investors may be hesitant to engage in reconstruction projects without guarantees for the security of their investments in a war-torn country. Additionally, donor countries may face pressure from their own national lobbies, both within the EU member states and in Washington. These complexities apply not only to civilian infrastructures but also to the reconstruction and upgrading of Ukraine’s defense sector, coinciding with the expected increase in European defense spending.
The primary challenge remains securing adequate funding, both from private and public sources. The EU rules prevent the Commission from following the Canadian initiative of a 500 million Ukrainian Sovereign Bond, as it raises divisive questions about common European debt and requires agreements at the national level. The G7, EU and US are advocating for Russia to bear the burden of reconstruction, seeking retribution for its aggression. However, forcing contributions typically requires a clear winner imposing such measures on the defeated party, which is not the case here. Discussions are ongoing about potentially seizing frozen Russian sovereign assets worth an estimated 300 billion (including the frozen Russian Central Bank reserves) to finance Ukraine’s reconstruction, but this approach raises significant legal concerns and worries among the friends of Ukraine about potential financial market instability and the euro’s reserve value.
President Zelensky faces the challenge of obtaining aid to rebuild the country while asserting Ukrainian sovereignty. Striking a balance between donor-imposed conditions and national interests is crucial, given the public’s concerns about ceding control to national oligarchs or foreign entities. Ukrainians are keen on asserting their right to rebuild their country according to their identity, their interests and values. Investors and foreign donors see Ukraine as an opportunity not only for financial gains but also for social and political transformation. International architects are already planning ambitious reconstruction projects for entire cities that could turn Ukraine into a model of sustainable development.
The EU commission insists that the emergency measures, financial plans, and support for reconstruction are interconnected with the broader criteria for EU membership, offering Ukraine an opportunity to integrate European acquis into its reconstruction. However, the EU’s plans have not yet thoroughly addressed the needs of Ukraine’s small entrepreneurs and farmers, an essential aspect for the country’s authorities to avoid creating a situation where reconstruction benefits only the oligarchs and large international corporations cherry-picking sectors in Ukraine. President Zelensky shares his people’ profound significance of ‘sovereignty’, paid for with their sacrifice. This concept surpasses mere belief, especially in a nation that remains hesitant to embrace an externally devised and administered program, as it was the case following the disintegration of the Soviet Union.