Reconstructing Ukraine

Creating a Freer, More Prosperous, and Secure Future

From: World Economic Forum. Howard J. Shatz , Gabrielle Tarini , Charles P. Ries , James Dobbins.  https://www.rand.org/pubs/research_reports/RRA2200-1.html.

Post-war reconstruction in Ukraine may be the largest rebuilding effort in modern history. The United States and Europe have started to plan for its success. Over the past 75 years, they have been engaged in multiple reconstruction efforts. Drawing lessons from the most appropriate of these efforts will be important for planning Ukraine's reform and reconstruction.

In this century, the most notable U.S. reconstruction efforts were in Iraq and Afghanistan, but these are not the right models. Ukraine is fundamentally different. When the fighting slows, there is unlikely to be an insurgency or civil war. More-relevant lessons can be drawn from the truly transformative rebuilding of Western Europe after World War II, Eastern Europe after the Cold War, and the Western Balkans after the violent break-up of Yugoslavia. The basic formula for these reconstruction efforts was set early on. The United States provided seed money and security, while the Europeans provided the bulk of the funding and advanced the historic process of European integration.

Security Is Essential for Ukraine's Reconstruction

Without security, reconstruction will falter. Durable security gives businesses and investors the confidence to take risks and make long-term commitments. The North Atlantic Treaty Organization (NATO) provided security for European reconstruction after World War II and the Cold War and deployed more than 100,000 peacekeepers to Bosnia, Kosovo, Croatia, and Macedonia after the break-up of Yugoslavia. Security for post-war Ukraine will be as essential.

Once the fighting ends, the promise of reconstruction assistance and European Union (EU) membership will give Ukraine powerful positive incentives to keep the peace. Russia will not be offered any comparable benefits. Its adherence to peace will have to rest principally on deterrence.

This could take a variety of forms. The United States and its allies can promise to perpetuate current arrangements for the provision of Western arms, ammunition, training, and advice. They also could threaten or even forces into Ukraine if Russia reattacks. Or they could bring Ukraine into NATO.

While stronger measures of deterrence might make renewed fighting less likely, they could also raise Russia's threat perceptions, potentially leading Moscow to take desperate measures. And, if deterrence fails, the resultant conflict would be less likely to be limited to Ukraine.

Arrangements for Ukraine's security might require new models. Europe's security architecture has long offered states a binary choice: A country is in NATO or it is not. Policymakers should evaluate alternatives for Ukraine, which has never quite fit into this model.

Lessons from Post-War and Post–Natural Disaster Reconstruction

The United States played a leading role in Europe's 75-year post-war reconstruction. It also has often been central in response to large-scale natural disasters. Similar to war, these disasters feature significant destruction of physical infrastructure and socio-economic systems. Lessons for Ukraine's reconstruction can be drawn from the aftermaths of both wars and natural disasters.

Organizing Ukraine's reconstruction should be decided in advance. There are a few simple principles: Ukraine should set priorities. The United States should spearhead security, and the EU should spearhead economic recovery. But both the United States and the countries of Europe will need to be involved with security and economic recovery.

After the fall of the Berlin Wall and the freeing of Central and Eastern Europe, the U.S. Congress gave a single senior coordinator broad oversight powers. Replicating this for Ukraine will aid the U.S. reconstruction effort. The United States, Europe, and multilateral agencies should have senior officials on the ground in Kyiv in daily contact with Ukrainian authorities; periodic donor conferences are insufficient.

Ukraine reconstruction will need a strong, trusted inspector general to safeguard the integrity of assistance, especially given Kyiv's record of corruption since gaining independence in 1991. International donors should, in parallel, institute effective monitoring and be ready to halt funding if corruption emerges.

The sequencing and prioritizing of essential tasks—de-mining, rubble clearance, building shelter and schools, providing basic medical care—is needed to jump-start reconstruction and help people return. Aid conditionality is important, as are the prospects of EU membership and economic integration for trade and investment. Reconstruction efforts must solicit and address local priorities. The millions of internally displaced persons and refugees will not return organically, so policymakers will need to facilitate returns.

To pay for reform and reconstruction, international aid, private financing, and Ukraine's own resources are needed. Aid historically has provided a relatively small amount of the total but, importantly, attracts other funding and serves as risk capital when the private sector is reluctant. Russian assets, both official and private, could be significant parts of support to Ukraine, although using them will require strong legal justifications and could raise longer-term systemic risks both to the centrality of the U.S. financial system in global finance and to dollar dominance.

Sustaining Public Support for Reconstruction

Ukraine's recovery could take decades. Enduring public support will be vital. In 1948, President Harry Truman's administration and congressional leaders embarked on a well-coordinated, bipartisan effort to gain public approval for the Marshall Plan, the archetypal post-war reconstruction effort. Although the Marshall Plan stands out, in retrospect, as a great success, its approval was not at all certain. The United States will need a similar public strategy for Ukraine.

Implications for Action

Developing plans for, contributing to, and overseeing Ukraine's reconstruction will be a complex process; course corrections are certain as implementation starts and continues. But the United States has three priority actions even before the shooting in Russia's war on Ukraine stops.

First, U.S. policymakers need to carefully examine alternatives, both old and new, for Ukrainian security in preparation for engaging with allies. This will be crucial to every other aspect of reconstruction.

Second, the administration and Congress should approve a modern version of the laws that enabled U.S. activities in Central and Eastern Europe and the former Soviet Union after the Cold War—the Support for East European Democracy (SEED) Act and the Freedom for Russia and Emerging Eurasian Democracies and Open Markets (FREEDOM) Support Act. A new law will set the basis for organizing the U.S. effort and create the position of empowered coordinator, as was created in the past, to deal with European governments, international financial institutions, and the people and government in Ukraine. The new law should include both an inspector general and a monitoring and evaluation mechanism.

Third, the entire future course of Ukraine's reconstruction will benefit from the development and implementation of a bipartisan effort to explain and build support among the American people for a longer-term U.S. policy in Ukraine. Such support cannot be taken for granted.

The challenge of reforming and reconstructing Ukraine after Russia's full-scale invasion in February 2022 should be seen in light of Europe's successful post-war record and the consistent, 75-year security and economic policies of the United States. Security and reconstruction will go hand in hand, as they did after World War II. When the Marshall Plan was being formed, the participation of all of Europe, including the Soviet Union, was deemed possible, but the Soviet Union blocked such participation. A secure, economically prosperous Ukraine that is fully integrated into European institutions will be a capstone achievement, bringing to fruition the multigeneration European project built on the foundations of an enduring trans- Atlantic partnership.