Berlin When it comes to rebuilding Ukraine, the federal government and the EU Commission are backing a fundamental restructuring of the country. At the opening of an expert conference on the reconstruction of Ukraine in Berlin, Chancellor Olaf Scholz said it was not just a matter of restarting bombed-out electricity plants and plugging the huge budget gaps. Above all, it is about creating an “opportunity for future generations”.
At the conference, the G7 of economically strong democracies and the European Union jointly launched a Marshall Plan for the reconstruction of Ukraine. The event led by Scholz and EU Commission President Ursula von der Leyen gave the starting signal for such a program on Tuesday. The plans are based on US aid to Europe after the Second World War.
As the current chairman of the G7 group of states, Scholz has taken over the management of the project and called for an “international effort”. The Ukrainian President Volodymyr Zelensky, who was connected via video from Kyiv, asked for quick help to rebuild the destroyed infrastructure. This cannot be waited until the end of the war.
$38 billion against the deficit
The President named a financial requirement of 38 billion dollars to balance the national deficit in the coming year. The money is needed to pay teachers and doctors and to pay out pensions. The G7 has already pledged further financial aid for 2023.
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In addition to military and humanitarian support, budget support of 20.7 billion US dollars has already flowed this year. A total of $33.3 billion has been committed. By far the largest donor is the USA. According to the Ministry of Finance, Germany is the largest donor within the EU with a share of 1.4 billion euros.
Von der Leyen offered that the EU would cover a third of Ukraine’s budget deficit to keep the country under civil governance. At the same time, she expressed the expectation that the USA and international financial organizations such as the International Monetary Fund (IMF) would participate on a similar scale.
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Because: “Every euro, every dollar, every pound and every yen is not just an investment in Ukraine, but in democratic values worldwide.” billion dollar reconstruction program.
“Foreign reconstruction aid is absolutely tied to fundamental reforms,” Oleksiy Chernyshev, Minister for Regional Development and Special Envoy for EU accession prospects, told the Handelsblatt. “Our country must be completely rebuilt.” Ukraine needs fundamentally new, transparent structures and a judicial reform that gives investors legal certainty. “Otherwise we will only get some aid money, but no urgently needed reconstruction program,” said the minister.
Repairs to the energy infrastructure and residential complexes deliberately destroyed by Russia are now a priority. Because many Ukrainians who fled abroad wanted to return to the areas in the north and east of their homeland that have since been recaptured.
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But to do this, rapid reconstruction measures for power lines, thermal power stations, houses and hospitals are a priority. Chernyschow thanked the federal government and “above all the German people for the great help, we know that it is German taxpayers’ money and we will use it responsibly”.
According to calculations by the World Bank, repairing the damage alone costs almost 350 billion dollars. Transforming Ukraine into an exporter of high-quality industrial and agricultural products as well as renewable energy and green hydrogen will cost $750 billion.
Ursula von der Leyen, President of the European Commission, Denys Schmyhal, Prime Minister of Ukraine and Federal Chancellor Olaf Scholz during the joint press conference.
(Photo: IMAGO/Christian Spicker)
This cannot be achieved through international state commitment alone, but requires a strong commitment from private investors, said Tschernyschow. The framework conditions required for this, such as the rule of law, de-bureaucracy, privatization, digital administration and corresponding tax laws, would be created – or if some of them have been since Zelenski took office in May 2019. “These reforms are necessary for our country and they are the basis for a reconstruction program”. , said the minister.
In addition to Western funds from partner countries, the EU, international donors and private investors, frozen Russian funds should also be used. As an example, Chernyshev cited Moscow’s central bank assets stored in the West. After a victory in Ukraine, consideration should also be given to skimming off Russian export earnings.
Russia will block demands as UN veto power
This had already been done after the Iraqi attack on Kuwait. At that time, the UN Security Council forced Iraq’s oil revenues to flow into a special account and be used largely for reparations. However, Russia has a veto power in the UN and will not agree to a corresponding regulation to the detriment of Moscow.
However, the commission of experts set up to rebuild Ukraine is not only supposed to develop specific plans for the reconstruction of the invaded country, but also financing models. Von der Leyen offered that the EU Commission could set up the commissariat for the planned international reconstruction platform. This platform must be available by the end of the year.
The Polish Prime Minister Mateusz Morawiecki, who also came to Berlin, also demanded that frozen funds from Russian oligarchs also be used for the reconstruction of Ukraine.
More: Ukraine: Reconstruction costs 750 billion dollars