Who will pay to put Ukraine back together again? - Financespiders

Who will pay to put Ukraine back together again? - Financespiders

The remains of Borodyanka’s music school have been cleared into several piles of twisted metal. Completely destroyed in fighting between Russian and Ukrainian forces, the rest of what is left of the building is now neatly raked dust.

Municipal workers have done a remarkable job of cleaning up the debris since Russian forces withdrew from the area at the end of March. But there is no hiding the devastation in Borodyanka, the most badly damaged of the towns northwest of Kyiv, which bore the brunt of Moscow’s failed attempt to take the capital after the invasion began on February 24.

The music school is on Central Street, where advancing Russian tanks met ferocious resistance from Ukrainian forces. On the same road, the post office, municipal administration building, district administration office, police headquarters, a cultural center,r, and several apartment blocks have all been destroyed.

In a classroom across town that serves as his makeshift office, Georgy Yerko, the deputy district mayor, consults his list: 397 buildings including nine high-rise residential blocks obliterated, 888 damaged, and 17,000 square meters of windows shattered.

Asked whether he can put a price on the losses, he shakes his head, pointing out that even in houses untouched by bombs or bullets, the pipes may have burst due to lack of heat. But he knows who should carry the cost: Russia.

“The side that destroys should be the side that pays,” Yerko says.

Although shocking, the losses in Borodyanka, which before the war had a population of 13,000, are a tiny fraction of those inflicted on the country by Russia’s invasion. Mariupol, the south-eastern port city that has been mostly leveled in a Russian siege, had a population 40 times larger.

Even as the destruction continues, the western governments that have backed Ukraine in the war are beginning to weigh up the costs and planning that will be needed for a postwar reconstruction effort that will rival anything seen since the second world war.

The project, officials warn, is going to be immensely complex and costly, running into hundreds of billions of euros, and it will have to go far beyond simply rebuilding bridges and municipal buildings.

It will entail the wholesale reconstruction of Ukraine’s private sector and reforms to an economy that, after suffering from eight years of simmering conflict, is in line for a 45 per cent crash in output this year.

The fate of postwar reconstruction will hinge on some of the existential questions about Ukraine that the war has only made more urgent: whether its state can free itself from the corruption and oligarch-strewn system that has plagued it, and whether it can forge a genuinely close relationship with the EU that might even include membership. It will also depend on whether Russia will ever pay for any of the damage.

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EU officials are divided over how intensively they can or even should be planning for this fraught reconstruction exercise given there is no end in sight to Russia’s assault on the country. But they are clear that if the eventual process is mishandled, it would be disastrous both for Ukraine and for wider European security.

“There is an enormous willingness among the international community and private actors to invest in the rebuilding of Ukraine, but how long this enthusiasm lasts will depend on the money being spent well,” warns Beata Javorcik, the chief economist of the European Bank for Reconstruction and Development, which will be one of the institutions closely involved in the effort.

“The most challenging aspect is rebuilding the institutional framework: Ukraine was no model in terms of business environment or high-quality institutions prior to the war.”

In a speech, earlier this month, president of the European Commission Ursula von der Leyen said the goals of the EU’s recovery project for Ukraine would include the fight against corruption and aligning Ukraine with European legal standards.

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“This will bring the stability and certainty needed to make Ukraine an attractive destination for foreign direct investment,” she told the European parliament. “And eventually, it will pave the way for Ukraine’s future inside the European Union.” Source: Financial Times


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