Exclusive-Top EU official backs multi-trillion plan to rebuild Ukraine
2022.05.11 17:31
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FILE PHOTO: Local residents walk past a burned building during Ukraine-Russia conflict in the southern port city of Mariupol, Ukraine April 4, 2022. REUTERS/Alexander Ermochenko
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By Marc Jones
BRUSSELS (Reuters) – A top European official has backed a multi-trillion-euro ‘Marshall’-style plan to rebuild Ukraine, pledging the firepower of the EU’s lending arm for what he said must be a global rescue effort.
Werner Hoyer, president of the European Investment Bank, said Europe must not be left alone to foot the vast bill that he predicted could run into the trillions.
Under the post-World War Two U.S. scheme known as the Marshall Plan, the United States granted Europe the present-day equivalent of some $200 billion over four years in economic and technical assistance.
Addressing the need for a similar programme for Ukraine, Hoyer told Reuters that the cost of rebuilding the country had been discussed at recent meetings at United Nations, the International Monetary Fund and World Bank in Washington.
“What will it cost to rebuild, reconstruct Ukraine? Figures were flying around the room … but one thing is quite clear to me: We are not talking about millions but trillions” said Hoyer, a former German foreign office minister under Chancellor Helmut Kohl following the fall of the Berlin Wall.
Hoyer’s remarks underscore how the European Union is preparing to tackle the ever-growing economic impact of the war, using the clout of the pan-national European Investment Bank, which typically funds infrastructure, such as roads and bridges.
“It’s a challenge for the entire free world to make sure that this (support) will be provided,” said Hoyer, one of the highest-ranking officials from Germany in the European Union.
“The political leaders must make up their mind as soon as possible,” Hoyer said. “But I think we need a structure that is really targeting a global audience and not just the taxpayers in the European Union.”
The debate is unfolding against the backdrop of war in Ukraine and an increasingly tense stand-off between Moscow and Brussels, which has backed tough sanctions to isolate Russia.
Russian President Vladimir Putin told his armed forces at a parade this week they were fighting for their country but offered no clues as to how long their assault 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 almost half this year.
Its central bank estimates a third of Ukrainian firms have stopped producing entirely for the time being, while the United Nations estimates that nearly 6 million people – around 13% of the population – have already fled.
Researchers from Economic Policy Research, a network of economists, estimate that the cost of rehabilitating Ukraine is already 500 billion-600 billion euros ($528 billion-$633 billion) – more than three times its annual economic output before the war.
Hoyer’s forecast suggests this could yet rise sharply.
GUARANTEES
Hoyer said that a critical part of the plan will be for the West’s large state-sponsored banks to provide “guarantees” that would underwrite Ukraine’s government once the war ends.
Doing that should help Kyiv regain access to global borrowing markets, much as Iraq did after the second Gulf War that overthrew Saddam Hussein, and speed up its reconstruction.
“If we want to entice the investor community to give us their money … then we need to give them reassurances,” Hoyer said, referring to guarantees against heavy losses for investors.
“I’m convinced that the capital markets will be open to this.”
($1 = 0.9472 euros)
