Post-War Reconstruction Is a Good Investment
Ukraine’s European neighbors will need to make a major financial commitment to help rebuild its economy after the war. Fortunately, as the legacy of the post-World War II Marshall Plan shows, investing in Ukraine's future will also serve Europe's own long-term interests.
CHICAGO – Nine months after Russia invaded their country, Ukrainians are seizing back their territory and giving their people hope of a military victory. But when it comes to long-term peace and prosperity, a military victory would be only the end of the first phase. The next phase – reconstruction – will be much longer and harder, and it will require continued, extensive economic support from the country’s friends and allies.
The Ukrainian economy is expected to have contracted by one-third in 2022. The war has kept people from their homes and normal jobs, some 13 million civilians have been displaced, and 700,000 Ukrainians (mostly young men) have left the labor force to serve in the armed forces. Factories and homes have been destroyed, and the Kyiv School of Economics estimates that Ukraine’s infrastructure losses total $115 billion.
Some of these problems will be resolved naturally whenever the war ends, but most will not be. Many of the displaced will not have homes or jobs, and the wholesale reconstruction of housing, schools, hospitals, and other infrastructure needed to begin economic recovery will bring massive costs. Ukrainian economists estimate that restoring the lost infrastructure will cost at least $200 billion – and the longer the war lasts, the larger the bill will be.
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