Economists put the price tag so far at $220bn-540bn. Reforms will be needed, too
WHEN THE war ended, the country resembled a wasteland. Almost all industrial structures had been flattened by air raids, infrastructure rendered unusable and large cities bombed out. Russian-led forces occupied the east, with millions fleeing their brutality. But West Germany’s economy recovered strongly after 1945, in what would soon be coined theUnlike Nazi Germany, Ukraine is not the aggressor, and may yet be victorious. Nonetheless, rebuilding will be a monumental task.
The government is trying to limit the damage where it can. Aid from the West, of around $7bn so far, has kept the public finances afloat. Farmers have been given 20bn hryvnia so that they can continue to work their fields. Manufacturers can apply for help to relocate within Ukraine. With Russia blockading Ukraine’s main export route through the Black Sea, the government is working with the EU to make trading by land easier. It says that 80% of exports can still leave the country.
A bigger-ticket item still is rebuilding damaged infrastructure and industrial facilities. The Kyiv School reckons that the destruction to everything from power plants and factories to bridges and roads so far exceeds $50bn . But lost production, a lack of maintenance and missing investment mean that even the infrastructure that is still standing will need upgrading.
The next question is allocating the money, a tricky task in an economy that has long been dominated by vested interests. Ukraine has made its process for tenders more competitive since 2014, but the contracts this time will be much larger. The CEPR suggests the use of framework agreements—standing contracts with firms to deliver a certain product for a fixed price—and open contracts that, even without tenders, ensure transparency.
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