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The ethical dilemma of rebuilding Ukraine after the war

A Marshall Plan will have to defeat the country’s corruption first.

By Ido Vock

BERLIN – Over the next two days, dozens of world leaders will join representatives of international organisations in the Swiss city of Lugano to hash out what a “Marshall Plan” for Ukraine could look like.

The Ukraine Recovery Conference (URC) – which had been scheduled before Russia’s invasion to focus on Ukrainian anti-corruption efforts and the rule of law, but now repurposed to plan the rebuilding of the country after the war – is expected to set out reconstruction needs in terms of destroyed housing, infrastructure, as well as society and the environment. In May, the Kyiv School of Economics estimated the war to have caused damage costing more than $100bn then, with the invasion costing Ukraine’s economy around $600bn, three times its prewar GDP.

The World Bank estimated in April that Ukraine’s economy would shrink by nearly half this year as a result of the war. Russia’s economy, meanwhile, is expected to shrink by up to 15 per cent over the same period.

Ukraine’s chronic corruption is one of the biggest worries about reconstruction. In 2021, Transparency International, a Berlin-based watchdog, ranked Ukraine the third-most corrupt country in Europe, behind only Russia and Azerbaijan. If billions in international funding were to flow to Ukraine after the war, that would present ample opportunities for officials at all levels to skim off their share, enriching corrupt elites while diminishing the effectiveness of aid and investment.

An investment banker with experience of working in post-Soviet countries told me that “financial institutions in countries like Ukraine are generally owned by oligarchs, which raises reputational and operational risks for governments and international organisations.”

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Accordingly, the literature associated with the URC is strongly focused on anti-corruption efforts. The supply of funds is likely to be contingent on continuing reforms and de-oligarchisation programmes. The conference will not be a donor conference but is rather intended to set out the broad principles and priorities for the funding of Ukraine’s reconstruction.

Of course, there are questions about the sense and effectiveness of holding a conference discussing recovery from a war that has not ended. The conference comes after Russia claimed control of the city of Lysychansk, which was Ukraine’s last stronghold in the Luhansk Oblast, one of the two regions on behalf of which Russia claims to have invaded. The apparent defeat in Luhansk illustrates how far the war is from being over. Heavy weapons are flowing to Ukraine, but not enough for Ukrainian forces to – yet – counter Russia’s superior artillery power and hold off its slow but consistent advances. What form Ukraine’s eventual recovery takes will largely depend on how much of the east of the country – by far the worst-affected region – Russia manages to conquer and hold.

This article first appeared in the World Review newsletter. It comes out on Mondays and Fridays; subscribe here.

[See also: Can Ukraine win the war with Russia?]

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