A $750 Billion Reconstruction in 3 Stages for Ukraine, but Whose Financing Raises Questions.
Ukraine is pushing for the use of Russian assets frozen by America and the EU.
Colossal.
This is the word used by the Ukrainian president Volodymyr Zelensky to describe the task that lies ahead to rebuild Ukraine once this war started by the dictator Vladimir Putin is over.
At the Lugano conference held in early July 2022, Zelensky virtually intervened to warn his allies who will be involved in the reconstruction of his country.
At the end of two days of discussions in the Swiss city, the allied countries and international organizations adopted a declaration of principles defining the process and rules that will be applied once the war is over.
The Lugano Declaration details seven priority principles.
The signatories - some 40 states and 15 international organizations - have pledged to make a long-term commitment with a view to European Union (EU) candidate country status. They recognize that Ukraine itself must be in control of its reconstruction.
An essential condition is set for Ukraine
However, there is one essential condition: the functioning of the justice system must be guaranteed and reconstruction will be linked to the continuation of reforms. The prospect of tens of billions of dollars in aid is reviving concerns about corruption, which is endemic in the country. The joint statement, therefore, insists that “the rule of law must be systematically strengthened and corruption eradicated”.
“We will not only fight corruption but make it impossible,” promised Ukrainian Prime Minister Denys Chmyhal at a press briefing, detailing his government's efforts to digitize many procedures to prevent “human interaction” and therefore corruption.
He cited, in particular, the efforts in the construction sector - which will play a central role - or customs operations. The private sector and civil society will be involved in this reconstruction. Despite the war, “there are investment opportunities”, said the President of the Swiss Confederation, Ignazio Cassis, alongside the Ukrainian Prime Minister.
The reconstruction must not only focus on infrastructure and institutions, but on all economic, social, and environmental components. It remains to be seen how much effort will be required once the conflict is over. For the time being, Denys Chmyhal has given an initial estimate: Ukraine will need at least $750 billion to recover from its ruins.
A three-stage reconstruction plan with regional sponsorship
During his speech in Lugano, Denys Chmyhal outlined a three-stage reconstruction plan.
The emergency is to help the population affected by the war before, in a second step, financing thousands of reconstruction projects and, in the long term, preparing a European, green, and digital Ukraine.
One of the proposed mechanisms is the “adoption” by an allied country of a specific region to be more effective. Thus, France would focus its efforts on the region of Chernihiv (North) in particular, said François Delattre, senior French diplomat.
“This region was particularly hard hit by Russian bombing during the first weeks of the war” and it has links with the Ile-de-France region (Paris and its surroundings), he stressed.
According to the same principle, the Kyiv region would be devolved to the United Kingdom. Australia and Denmark are also involved.
The Lugano conference was not a donors' conference where everyone gets a check. However, the Ukrainian Prime Minister gave some ideas for financing the reconstruction plan. He urged the allies to seize the Russian assets frozen under international sanctions and to give them to Ukraine. He estimates that the money is between 300 and 500 billion dollars.
An approach that does not convince the President of the Swiss Confederation, a country favored by Russian oligarchs to invest or shelter their wealth. In his eyes, the property right is “a fundamental right” and the freezing of funds “is not a show”. Two more conferences will follow, one led by the EU in a few months, and another next year in the UK. In 2024, it will be Germany's turn.
Proof, if any were needed, that the task is “colossal” and long-term. The hardest thing will be to find the money to finance this colossal task of rebuilding a country destroyed by the expansionist madness of Vladimir Putin.
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