Rishi Sunak is trying to secure a multibillion-pound package of financial support to help rebuild Ukraine at an international conference taking place in London today.
The two-day Ukraine Recovery Conference is focusing mainly on how the private sector can support Ukraine’s recovery, as the country counts the cost of the destruction of homes, hospitals, roads, rails, seaports and energy supplies following 16 months of war.
Rebuilding Ukraine is a “Herculanean task”, said Suzanne Lynch in Politico. The project is expected to last a decade or more, and is already on track to cost around $411 billion, according to some estimates. That figure “will only increase as the war grinds on”, and is already several times more than the Marshall Plan, which helped rebuild 16 European nations after the Second World War.
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“It’s a huge ask,” Lynch continued, but Europe has much to gain from preventing “a humanitarian and economic disaster on its continent”.
What are the aims of the conference?
In the short term, Ukraine needs $14 billion from international donors just to “get through this year”, said BBC business reporter Jonathan Josephs. The money is urgently needed for social expenditures such as salaries for healthcare workers, as well as for vital infrastructure such as mending roads and the power system. Unless damaged infrastructure is fixed, Ukraine will struggle to export crops including wheat, sunflower and corn, which are a vital source of income, and vital exports for much of the world.
Another key issue at the conference is whether a war insurance scheme can be put into place to encourage private sector investment by protecting such funding from destruction or damage. Some insurance schemes already exist, but “the aim is to offer broader and longer-term insurance arrangements”, according to the London Evening Standard.
In the longer term, Ukraine is seeking up to $40 billion to fund the first part of a “Green Marshall Plan” to rebuild its economy, including developing a coal-free steel industry. President Volodymyr Zelenskyy will also be hoping to send a message to Russia that the West is firmly on his country’s side in the conflict.
Ukraine’s economic recovery “should demonstrate to the world that freedom is invincible”, Zelenskyy said ahead of the conference.
Who is attending?
The promise of so much money being handed out is “inspiring altruistic impulses and entrepreneurial vision, savvy business strategising and rank opportunism”, said The New York Times. As the Ukrainian chamber of commerce has said, the country is now “the world’s largest construction site”.
With private investment seen as vital in rebuilding Ukraine, companies worldwide appear to be eyeing up a “possible multibillion-dollar gold rush”, the paper reported.
More than 400 companies from 38 countries with combined annual revenue of $1.6 trillion are attending the conference, including Virgin, Rolls Royce and BT, alongside more than 100 Ukrainian businesses.
Heads of state, foreign ministers, heads of international organisations, chief executives and civil society representatives are also attending. And other major organisations have already pledged their support.
European Commission President Ursula von der Leyen said yesterday that the EU would provide Ukraine with 50 billion euros for 2024-27. Ukraine is on track to join the EU following the European Council’s decision to grant Ukraine and Moldova membership status last year, so it is in the EU’s interests for Ukraine to be a healthy, stable democracy.
Ukraine also has critical raw materials and could act as the EU’s “energy storage hub”, noted Lynch in Politico.
Opening the conference, Sunak announced that the UK was backing $3 billion of World Bank loan guarantees. The prime minister also committed up to £250 million of new capital for British International Investment, the government’s development finance institution.
What are the complexities involved?
“First things first: the war must stop,” said David Dodwell in the South China Morning Post. Until it does, the bill will keep on rising. The recent blowing up of the giant Nova Kakhovka dam is estimated to have added around $1 billion to the total bill.
Many would like to see seized Russian assets being used to cover some of the costs, but that could take years and is legally complex. “And the aftermath of the First World War is a reminder that punitive reparation costs could pave the way to hostilities down the road,” said Dodwell, executive director of the Hong Kong-APEC Trade Policy Study Group.
In a further compliation, Ukraine’s “patchy record with corruption” has “made the task of convincing businesses to invest more difficult”, said The Times. Last year Ukraine was ranked as more corrupt than India, South Africa and Kazakhstan, finishing in 116th place in the Transparency International corruption perception index.
Without tackling corruption within the country, rebuilding Ukraine is “very likely doomed”, said The Washington Post, “because friendly governments, international lenders and private companies alike will shrink from the task”.
