E.U. Makes Plans For Rebuilding Ukraine’s Economy

E.U. leaders met in Berlin on October 25th to discuss creating a financial coordination platform to rebuild Ukraine’s economy that has been damaged since the war with Russia began in February 2022. German Chancellor Olaf Scholz compared the rebuilding of Ukraine’s economy to the Marshall Plan where the U.S. gave aid to rebuild the economies of European countries after World War II. The rebuilding of Ukraine’s economy will be important for the country joining the E.U. If Ukraine receives aid after the war, E.U. membership could occur sooner.

The Associated Press reported the E.U. is still planning how to finance the rebuilding of Ukraine’s economy. Although the Russia-Ukraine War has not ended, Olaf Scholz said rebuilding Ukraine’s economy is “a generational task that must begin now.” A financial coordination platform for rebuilding Ukraine’s economy will likely include aid from a number of countries. According to the Brookings Institution, European Commission President Ursula von der Leyen said, “Now it is time to bring the platform to action, together with the international donors,” and “The coordination platform that the international community has been discussing in the past months needs to get off the ground as soon as possible.”

Since the Russia-Ukraine War began, the World Bank estimated there has been $350 billion in damage, while the Ukrainian Government estimated the damage at $750 billion. However, Ukraine has not received that much aid since the war began, and it might be difficult for other countries to increase aid after the war ends. The Hill reported most of Ukraine’s aid came from the U.S. which had given Ukraine $28.1 billion in humanitarian, military, and financial aid. The E.U. has given less aid at $13.7 billion. Although there has been support for giving aid to Ukraine, support for giving aid could decrease if it causes a large increase in taxes, or if aid is not believed to help Ukraine. Also, inflation has increased in most countries, and this could cause there to be less money for rebuilding Ukraine’s economy.

Rebuilding Ukraine’s economy will be expensive. However, it could be easier if more countries support giving Ukraine aid, including every country in the E.U., the U.S., and other G7 countries (Canada, Japan, and the U.K.). If more countries give Ukraine aid, each country will have to donate less aid. This will make it easier for countries to afford to send aid to Ukraine, and if all the countries give Ukraine aid, there might be enough aid to rebuild Ukraine’s economy properly.

In addition to giving aid, the Center for European Policy Analysis explained how the Marshall Plan increased democratization and economic growth in Europe. This would likely happen if the E.U. and G7 helped rebuild Ukraine’s economy, with growth occurring in Ukraine’s energy and agricultural markets. Additionally, aid will also help markets become more integrated with Europe. For these reasons, rebuilding Ukraine’s economy will benefit Europe, which could cause there to be more support for giving aid to Ukraine.

Ukraine applied for E.U. membership in February 2022, and became an E.U. candidate in June. According to the Council on Foreign Relations, it usually takes candidates a long time to join the E.U., and some countries have been candidates for 10 to 20 years. Requirements for E.U. membership include respect for democracy and a functioning market economy. Rebuilding Ukraine’s economy could help the country meet some of the economic requirements for membership. However, the Washington Post reported Ukraine will also have to allow judges on the Constitutional Court to be elected, and limit the influence of oligarchs who control most of the country’s economy before it can join the E.U. This is evidence a lot has to happen for Ukraine to join the E.U., and membership might not occur for a long time even if Ukraine’s economy is rebuilt.

Ukraine’s economy has been damaged in the war with Russia, and rebuilding the economy will be expensive. When the war ends, many countries will have to support rebuilding Ukraine’s economy so the country will receive enough aid. If this occurs, Ukraine will eventually be able to join the E.U., and become a more democratic country with a market economy.