Post-conflict reconstruction assistance to Ukraine

Russia’s war on Ukraine has impacted every aspect of Ukrainian society from its economy, the provision of services such as healthcare and education, housing, energy infrastructure, to its religious and cultural heritage and natural environment.

Estimating the level of damage sustained is difficult as the conflict continues. However, assessments by various organisations and institutions such as the World Bank, estimate that the costs of recovery and post-conflict reconstruction are already in the hundreds of billions. When the security environment allows for a comprehensive and independent assessment of damage on the ground, some have suggested the real figure could be over a trillion US dollars.

Planning for post-conflict reconstruction

The international community is already providing emergency financial assistance to support Ukraine’s urgent economic and social needs as the conflict goes on.

Ukraine’s partners, along with international financial institutions and organisations such as the World Bank, the Organisation for Economic Cooperation and Development (OECD) and the European Bank for Reconstruction and Development, (EBRD) have also begun to look at how best to support Ukraine’s post-conflict recovery and reconstruction.

The debate so far has largely focused on establishing a long-term coordinated reconstruction plan and bringing relevant stakeholders on board.

Stakeholders agree that any plan will be guided by a set of key principles:

• Reconstruction priorities must be set by the Ukrainian government.
• Reconstruction presents an opportunity to transform and modernise Ukrainian society and set it firmly on the path to European integration.
• Partnership and the involvement of stakeholders across the public, private and third sectors will be critical to delivering reconstruction.
• Transparency in implementation, and oversight by international donors, will be essential.

In January 2023, a Multi-agency Donor Coordination Platform was set up to coordinate support between international donors and international financial institutions.

Ukraine Recovery Conference

One of the main channels for discussing reconstruction has been the Ukraine Recovery Conference.

Building on the annual Ukraine Reform Conference, established in 2017 to discuss Ukraine’s progress in its reform agenda and next steps, the first Ukraine Recovery Conference was held in Switzerland in July 2022.

It marked the start of a new political process for the post-conflict recovery and reconstruction of Ukraine. London hosted the second conference in June 2023, which was a multi-stakeholder event, focused on mobilising international and private sector support for Ukraine's recovery and reconstruction. The conference raised over $60 billion in commitments towards Ukraine’s recovery over the next few years and established a number of initiatives, such as the Ukraine Business Compact (PDF), to enable private sector involvement and investment in Ukraine.

The third Ukraine Recovery Conference was held in Berlin on 11 and 12 June 2024. It was the first such conference to be held in an EU member state and placed specific emphasis upon Ukraine’s reform progress within the context of EU accession.

Funding commitments and the use of sanctioned Russian assets

Funding commitments have been made to support the immediate needs of Ukraine over the next few years, including by the UK, the US and the EU.

Longer term, there has been extensive discussion over the use of profits from sanctioned Russian assets held in the US and Europe for reconstruction purposes. At the G7 leaders’ summit in June 2024 an agreement was reached to extend loans worth US $50 billion to Ukraine, that will be serviced and repaid using the interest generated from immobilised Russian sovereign assets in the EU and other relevant jurisdictions. The funds are expected to be made available towards the end of 2024.

G7 allies, including the UK, have already introduced legislation in their respective jurisdictions that will allow sanctioned Russian assets to remain immobilised until Russia pays reparations to Ukraine.

In May 2024, the EU also reached a separate agreement approving the use of net windfall profits generated from sanctioned Russian assets held within the EU (estimated to be worth approximately €2.5 billion per year) to be used to support Ukraine’s self-defence and reconstruction. 90% of that funding will be used for military assistance, while the remaining 10% will support EU humanitarian and reconstruction assistance programmes.