Rebuilding Ukraine: What would it take?

 A woman walks past a destroyed building in Mariupol, Ukraine.
A woman walks past a destroyed building in Mariupol, Ukraine.

Someday Russia's war in Ukraine will be over. And when the hostilities have ended, Kyiv will have to rebuild the parts of the country still under its dominion. It will be no small undertaking — entire cities have been reduced to rubble, infrastructure great and small has been destroyed by Russian missiles and drones, and Kyiv's coffers are depleted.

Here's a look at what it will take to rebuild Ukraine.

How much will it cost?

The World Bank estimated in March 2023 that the cost of reconstruction and recovery in Ukraine had grown to $411 billion, with another roughly $10 billion added each month Russia continues to rain destruction on the country. That amount includes $5 billion just to clean up rubble. The assessment said Ukraine will need $14 billion for "critical and priority" reconstruction and recovery investments in 2023, while the war is still ongoing.

The World Bank's $411 billion estimate — reached in collaboration with the European Commission, the United Nations and the Ukrainian government — is more than twice the size of Ukraine's economy. It's also "100 times the annual budget of the United Nations," Peter Guest noted at Wired. "It's nearly two-thirds of the 2008 banking bailout in the U.S. And it's likely to be an underestimate." The European Investment Bank put the projected price tag at more than $1 trillion.

By comparison, the U.S. distributed more than $13 billion in economic aid to 17 European nations — more than $150 billion in today's dollars — in the aftermath of World War II, in what was called the Marshall Plan, NPR noted, citing economists Yuriy Gorodnichenko and Barry Eichengreen. Most of that was in grants, not loans, but very little of it arrived until 1948, three years after the war ended.

The Marshall Plan didn't pay anywhere near the full cost of reconstructing Germany and other European countries, but it did cover the costs of machinery and food that jumpstarted domestic reconstruction efforts, Harold James, a European studies professor at Princeton, told the Brookings Institution. While 1950s Europe needed a spark in the agriculture and manufacturing sectors, he added, Ukraine could use a boost in the energy and technology sectors.

What will $411 billion (and counting) buy?

"Energy infrastructure, housing, critical infrastructure, economy and humanitarian de-mining are our five priorities for this year," Ukrainian Prime Minister Denys Shmyhal told the World Bank.

As of March, the World Bank report said, Russia's war had damaged or destroyed nearly 2 million homes, at least 20% of the country's public health institutions, half of Ukraine's energy structure, and much of its shipping and transportation infrastructure. Over the next 10 years, Ukraine's highest rebuilding needs will be in transportation, housing and energy, the report assessed.

Who will (or should) pay for rebuilding?

It's most likely that some combination of foreign aid from Western countries and private investment will finance Ukraine's recovery, according to consulting firm McKinsey & Company. Morally speaking, it seems pretty clear that Russia and its president, Vladimir Putin, should foot the bill; they broke it, they should buy it. But making that work practically is more difficult and sets a potentially dangerous precedent.

Look, "there is not a snowball's chance in hell that Putin's Russia will pay Ukraine reparations for the destruction," Shmyhal wrote in The Guardian, unless the West makes it do so by using lawfully seized Russian assets to fund reconstruction.

The U.S., European Union, and other governments are actively exploring "various legal and financial mechanisms" to do just that, Jonathan Masters wrote at the Council on Foreign Relations in July 2023. And they have roughly $300 billion in Russian central bank assets they froze not long after its Ukraine invasion, plus "tens of billions of dollars in assets belonging to Russian oligarchs and private entities."

Most of the frozen central bank assets, about $220 billion, are being held in European accounts, and the EU is considering using or taxing the more than $3 billion in annual interest that those sequestered assets are producing. The U.S. Congress is considering bipartisan legislation that would give the White House the authority to simply confiscate Russia's frozen assets.

"Confiscating Russian funds is a dangerous proposition, no matter how strong the moral, political and financial case," The Washington Post said in an editorial. Those assets are protected under international law, and seizing them could destabilize the dollar and the euro by scaring away international investors. "Even using the predicted earnings generated by those assets is risky, as it could expose the United States and Europe to sizable losses if markets tank."

"We understand the fears of our partners, but Russia's criminal actions are so unprecedented that fundamentally new, courageous decisions are needed," Shmyhal said at The Guardian. "Russia's assets should work for Ukraine," but this isn't just for Ukraine. Letting the frozen assets return to Russia "would mean the defeat of the free world and maximum injustice to Ukraine: Russia will use these resources for new wars and our country will be in ruins," he added. "We are aware that we are pioneers," but, ideally, making "the internationally recognized aggressor and perpetrator of war" pay for its crimes will become a universal system and universal deterrent.

What about corruption?

Since the 1990s, Ukraine "has had a well-deserved reputation for corruption, which it has spent the past decade trying hard to shake," Guest reported at Wired. And "spending $1 trillion on potentially hundreds of thousands of different projects, with thousands of stakeholders, touching on areas of the economy and parts of local government long associated with corruption — all under the fog of war — is an incredible opportunity to get it wrong."

But "Ukraine now wants to show — has to show — that it's moving in line with other European countries" so it can join the EU, earn the trust of its citizens, and reassure international donors that their money won't be pilfered or squandered, Guest went on. To do that, Ukraine has uploaded every reconstruction project into a single digital platform, allowing radical transparency for Ukrainians and international partners and providing tools to help them make smart decisions on where to invest.

"The scale of the reconstruction effort means that some corruption is inevitable," Guest wrote. But this tool, unveiled in June 2023, "makes it a lot harder to get away with, and less likely to occur at the systematic level than it used to. For those still inclined to try, "the stakes are higher when getting caught out means losing access to the international money that's going to fund the construction industry in Ukraine for the next decade. It's the kind of project that could quietly change the way Ukraine works well beyond the end of the war."

Can Ukraine rebuild back better?

That is the hope in Kyiv — and elsewhere in Ukraine. "We really want to build a better country, and this is the chance that we have," Oleksandr Gryban, deputy economy minister, told Wired. A lot of the infrastructure Russia has destroyed was "outdated, inherited Soviet infrastructure that was not super efficient," and "we do have a chance to, as we say, to build back better," maybe becoming "the powerhouse of Europe with renewable energy, with hydrogen projects." This is a chance "we cannot waste," Gryban added, "because we're paying too high of a price."

"Look at these fields, this forest. Everything grows again," a Ukrainian sergeant who uses the call sign Fedya told The Associated Press near Andriivka, a gutted village just south of Bakhmut. "The cities that we reclaim, they will be rebuilt. ... We will clear out all that's left of the Soviet Union. ... The war could be the best thing to happen, in the sense that everything can start fresh."