A top European official has backed a multi-trillion-euro Marshall Plan to rebuild Ukraine, giving the European Union’s lending power what it says should be a global rescue effort.
Werner Hogger, president of the European Investment Bank (EIB), told Reuters that Europe should not be left alone in paying the huge bill, which he predicted could reach trillions of euros.
According to the Marshall Plan, after the end of World War II, the United States provided Europe with financial and technical assistance of about $ 200 billion (as of today) over a period of four years.
Referring to the need for a similar program for Ukraine, Hoger told Reuters that the cost of rebuilding the country had been discussed at recent meetings at the United Nations, the International Monetary Fund and the World Bank in Washington.
“How much will it cost to rebuild, to rebuild Ukraine? “Estimates of the numbers vary … but one thing is quite clear to me: We are not talking about millions, we are talking about trillions,” said Hoger, a former German foreign minister in the days of Helmut Kohl as chancellor.
Hoger’s comments underscore the way in which the European Union is preparing to deal with the ever-increasing impact of war, using the European Investment Bank as a vehicle, which typically finances infrastructure projects such as roads and bridges.
“It’s a challenge for the whole free world to ensure that this support is given,” he said. “Leaders need to make decisions as soon as possible,” Hogger said.
The debate is taking place against the backdrop of the war in Ukraine and an increasingly tense confrontation between Russia and the European Union, which has imposed harsh sanctions on Moscow.
Speaking on Victory Day, Russian President Vladimir Putin told his troops that they were fighting for their homeland, but gave no indication of how long the invasion of Ukraine could last. The Kremlin calls it a “special military operation.”
Ukraine’s Finance Minister Sergiy Martchenko has said his country’s economy is expected to shrink by almost half this year. The country’s central bank estimates that one in three companies has suspended operations, while the United Nations estimates that nearly 6 million people – about 13% of the population – have left Ukraine.
Economic analysts estimate that the cost of rebuilding Ukraine already amounts to 500-600 billion euros, which is three times its pre-war GDP. Hoger forecast predicts that costs are expected to increase dramatically.
The president of the European Investment Bank said that a crucial part of the plan would be to provide guarantees to Kyiv’s large state-funded Western banks as soon as the war was over.
In doing so, they will help Kyiv regain access to global lending markets, as Iraq did after the second Gulf War and the overthrow of Saddam Hussein, in order to accelerate its reconstruction.
“If we want to entice investors to give us their money, then it is necessary to give them guarantees,” Hoger said, referring to guarantees against large losses for investors.
The European Investment Bank has € 1.5 billion in direct financial support for Ukraine, in addition to the assistance it has already provided, should the European Commission agree to the use of this package.
The EIB President admitted that the “great uncertainty” for both Ukraine and investors concerns whether Russian forces will be repulsed decisively.
Werner Hoger said international aid could be used to finance railway infrastructure projects to transport last year’s grain harvest to Ukraine. He noted that part of the financial assistance could be given before the end of the war, e.g. for the repair of bridges in safe areas of the country.