- A European official has come out to support a multi-trillion-dollar plan to rebuild Ukraine.
- The cost of rebuilding the country has been discussed between the UN, the IMF and the World Bank.
- Ukraine is devastated as Russia continues its invasion.
A top European official backed a multi-trillion-dollar plan to rebuild Ukraine, pledging the firepower of the EU’s lender for what he said should be a global bailout.
Werner Hoyer, president of the European Investment Bank, said Europe should not be left alone to pay the huge bill he predicted could run into the trillions.
Under the US post-World War II plan known as the Marshall Plan, the United States has provided Europe with the current equivalent of some $200 billion in economic and technical assistance over four years.
To address the need for a similar program for Ukraine, Hoyer told Reuters the cost of rebuilding the country had been discussed at recent meetings of the United Nations, the International Monetary Fund and the World Bank in Washington.
“What will it cost to rebuild Ukraine, rebuild it? Figures flew across the room… but one thing is very clear to me: we are not talking about millions but trillions,” said Hoyer, a former German minister of Foreign Affairs under Chancellor Helmut Kohl after the fall of the Berlin Wall.
READ | ‘It’s almost apocalyptic’: SA ambassador in Kiev describes scenes in Ukraine
Hoyer’s comments underscore how the European Union is preparing to address the ever-expanding economic fallout from the war, leveraging the power of the pan-national European Investment Bank, which typically finances infrastructure such as roads and bridges.
“It is a challenge for the entire free world to make sure it (support) is provided,” said Hoyer, one of Germany’s top officials in the European Union.
“Political leaders need to make a decision as soon as possible,” Hoyer said. “But I think we need a structure that really caters to a global audience and not just taxpayers in the European Union.”
The debate unfolds against the backdrop of the war in Ukraine and an increasingly tense standoff between Moscow and Brussels, which has backed harsh sanctions to isolate Russia.
Russian President Vladimir Putin told his armed forces at a parade this week that they were fighting for their country, but offered no indications as to how long their attack on Ukraine, which the Kremlin calls a “special military operation,” would last.
Earlier in the day, Ukraine’s Finance Minister Serhiy Marchenko said the country’s economy is expected to shrink by nearly half this year.
The central bank estimates that a third of Ukrainian companies have completely stopped production for the time being, while the United Nations estimates that nearly 6 million people – about 13% of the population – have already fled.
Researchers at Economic Policy Research, a network of economists, estimate that the cost of Ukraine’s rehabilitation is already between €500 and €600 billion, more than three times the annual economic output before the war.
Hoyer’s prediction suggests that this could rise sharply.
Hoyer said a critical part of the plan will be for the major state-backed banks in the West to provide “guarantees” that will insure the Ukrainian government once the war is over.
By doing so, Kiev should regain access to global lending markets, just as Iraq did after the second Gulf War that toppled Saddam Hussein, and speed up reconstruction.
“If we want to entice investors to give us their money… we need to reassure them,” Hoyer said, referring to heavy-loss guarantees for investors.
“I am convinced that the capital markets will be open to this.”