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Post-war problems Journalist Konstantin Skorkin on the key stumbling blocks for rebuilding Ukraine — and why money isn’t the biggest one

Source: Meduza

Post-war problems Journalist Konstantin Skorkin on the key stumbling blocks for rebuilding Ukraine — and why money isn’t the biggest one

Source: Meduza
Oil pressure sensors show zero values after a Russian missile attack on a DTEK power plant in Ukraine. April 1, 2024.
Oil pressure sensors show zero values after a Russian missile attack on a DTEK power plant in Ukraine. April 1, 2024.
Evgeniy Maloletka / AP / Scanpix / LETA

With Russia’s full-scale invasion now in its third year, destruction and reconstruction are still proceeding simultaneously in Ukraine. Be that as it may, Kyiv has been laying out big plans for the country’s post-war recovery, which will require more than just international investment. In an article originally written for Kit, journalist and researcher Konstantin Skorkin looks to the future and examines the key stumbling blocks for rebuilding Ukraine that are already emerging through the fog of war. The following translation has been abridged for length and clarity.

The following is an abridged translation that appeared in The Beet, a weekly email dispatch from Meduza covering Central and Eastern Europe, the Caucasus, and Central Asia. Sign up here to get the next issue delivered directly to your inbox.

Even if Russia’s invasion ended today, according to the most conservative estimates, Ukraine’s reconstruction and recovery would cost around $500 billion and take at least 10 years. Kyiv has already taken the first steps on this long road, establishing a dedicated office for assessing the full extent of the damage, laying out a recovery plan, and securing tens of billions of dollars in international support for reconstruction. 

According to Bloomberg, Ukraine’s reconstruction could be “the biggest investment opportunity since at least World War II.” And companies worldwide are already jockeying for their piece of the pie. 

But rebuilding Ukraine will take more than cash. The war has dealt a terrible blow to the country’s human capital, from lives lost on the battlefield to civilians forced to flee abroad, many never to return. And bringing large numbers of people back to Ukraine is much harder than securing large amounts of funding. 

The damages 

Russia’s aggression has caused more than $150 billion in direct damage to Ukraine. The country’s GDP fell by 30 percent in 2022 and grew only 5 percent in 2023. The World Bank estimates the cost of reconstruction and recovery at $486 billion, while European Investment Bank chief Werner Hoyer predicts that Ukraine may require as much as $1.1 trillion in outside assistance to rebuild. 

Ukraine’s main export sectors, agriculture and metallurgy, have been hit especially hard. According to estimates from the Kyiv School of Economics, the agricultural sector has suffered more than $80 billion in damages and losses, with Russia occupying fertile areas in Ukraine’s south and east, and shelling and landmines rendering farmland in the north unusable. Ukraine’s richest oligarch, Rinat Akhmetov, has seen his agricultural holding HarvEast lose 70 percent of its arable land to Russian occupation. And one of Ukraine’s leading grain exporters, Nibulon, estimates its losses due to the war at more than $400 million. A Russian missile strike killed the company’s founder, grain tycoon Oleksiy Vadatursky, in July 2022.

The Azovstal steel plant in Mariupol. May 10, 2022.
AFP / Scanpix / LETA

The Ukrainian steel industry, meanwhile, has seen two of its biggest producers turned to rubble: the Azovstal and the Ilyich Iron and Steel Works in occupied Mariupol. These two factories, which once accounted for 40 percent of Ukraine’s steel production, made up the core of Akhmetov’s Metinvest Group. In June 2023, the company estimated its total damages from the war at more than $3.5 billion. Two other major steelworks — Akhmetov’s Zaporizhstal and ArcelorMittal Kryvyi Rih (formerly Kryvorizhstal) — are operating at half capacity, while the Nikopol Ferroalloy Plant, located in the Dnipropetrovsk region, has suspended work altogether. 

Ukraine’s energy sector is also suffering, mainly due to sustained Russian attacks on its power plants. Last month, President Volodymyr Zelensky said that Russia had destroyed “almost all” of Ukraine’s thermal power generation. And since Ukraine’s green energy infrastructure is concentrated in the south, Russian occupation has knocked out of commission 90 percent of its wind energy and half its solar power. 

For Ukrainians, the damage to power plants and the electric grid means living with rolling power and heating outages. Moreover, repaired energy infrastructure risks getting hit again — like Kharkiv’s Thermal Power Plant No. 5. After being damaged in a missile strike in September 2022, the power plant came back online this March only to suffer a devastating attack two weeks later. Repair work is expected to take at least a year. 

The Ukrainian authorities estimate that the country will need about $15 billion for immediate reconstruction and recovery efforts in 2024 alone. And Kyiv’s post-war Recovery Plan will require $750 billion over 10 years. Two-thirds of this funding is expected to come from Ukraine’s partners, with the remainder from private investors and confiscated assets from Russia and Russian oligarchs. 

In July 2022, 40 countries signed the Lugano Declaration, pledging to support Ukraine’s post-war recovery. According to Bloomberg, the European Union plans to “contribute the bulk” of this financial assistance, which could exceed 500 billion euros ($523 billion). E.U. countries are also kicking in individually: Finland’s Ukraine Investment Facility, for example, plans to fund 50 million euros ($54 million) worth of projects in 2025–2026. Other European countries — including Austria, Sweden, the Netherlands, Italy, Poland, and Germany — have committed to helping rebuild specific Ukrainian regions. 

An aerial view of the destroyed engine room of the Trypilska TPP, one of Ukraine’s largest thermal power plants in the Kyiv region, following a Russian missile attack. April 11, 2024.
Kostiantyn Liberov / Libkos / Getty Images

The United States Agency for International Development (USAID) has provided more than $23 billion in humanitarian, economic, and development assistance to Ukraine since the start of the full-scale invasion. Private companies are investing in Ukraine’s reconstruction, as well. In January, Kyiv announced that it was creating a Ukraine reconstruction bank with help from JPMorgan Chase and BlackRock. At the time, Zelensky’s deputy chief of staff Rostyslav Shurma said the fund could launch in five or six months with close to $1 billion in committed capital.

Theoretically, reparations and confiscated assets from Russia could also be important in rebuilding Ukraine. However, this is easier said than done. The former will hinge on when (and, more importantly, how) the war ends, while the latter is the subject of ongoing policy debate. Western countries have frozen around $300 billion in sovereign Russian assets since February 2022. The U.S. is still developing legislation that would allow for seizing the $5–$8 billion under its jurisdiction, while the E.U. greenlit using the profits from frozen Russian assets to help Ukraine just this week. 

The people 

The war has dealt perhaps the most terrible blow of all to Ukraine’s human potential. On top of causing tens of thousands of military and civilian losses, Russia’s invasion prompted one of the 21st century’s largest refugee waves. According to the United Nations, more than 6.4 million people have left Ukraine since February 2022. Some were forced to flee to Russia, but most found refuge in Europe.

More than two years on, many of these refugees have adapted to life in another country, and a significant proportion don’t plan to return home. A recent study by the U.N. Refugee Agency found that in the last year, the number of refugees who hope to go back to Ukraine has dropped from 77 percent to 65 percent. According to data from the Kyiv-based Center for Economic Strategy, between 1.3 million and 3.3 million Ukrainians may not return to Ukraine. 

A long line of Ukrainian drivers waiting to cross into Poland through the Shehyni border checkpoint. March 4, 2022.
Dan Kitwood / Getty Images

With the war still ongoing, European countries continue to extend temporary asylum to Ukrainian refugees, and governments faced with labor shortages are encouraging Ukrainians to integrate into their countries’ labor markets. (That said, some countries — such as Norway and Finland — have decided to provide one-time payments to Ukrainians who want to return home.) 

Then there’s the acute problem of displacement within Ukraine. The Ukrainian government has counted nearly five million internally displaced persons (IDPs). The aforementioned U.N. study found that 15 percent of Ukrainian IDPs have no intention or hope of returning to their former places of residence. For some, there’s nothing to return to: cities in the Donbas region like Bakhmut, Maryinka, and Avdiivka have been practically wiped off the map. 

In interviews for this article, three internally displaced Ukrainians complained about a lack of affordable housing and about difficulties obtaining compensation for their destroyed homes. For those whose homes are located in Russia-occupied territories, there’s no compensation available at all. Social support for IDPs is also minimal, with payments ranging from 2,000 to 3,000 hryvnias ($50 to $75) per month. The government also tightened eligibility for IDP benefits as of March 1.


‘I’m afraid for my children’ In Kostiantynivka, mothers in Russia’s warpath weather bombs and a looming evacuation


‘I’m afraid for my children’ In Kostiantynivka, mothers in Russia’s warpath weather bombs and a looming evacuation

The displaced Ukrainians said they receive a lot of help from the U.N., UNICEF, and European charities. Since 2023, the E.U. has financed a special program aimed at converting existing buildings in 10 Ukrainian cities into housing facilities for IDPs. However, the Kyiv-based Rating Group found that 60 percent of Ukrainians surveyed consider the restoration of jobs and businesses more important than direct financial support. 

The Rating Group poll also shows that opinions on reconstruction vary by region. For example, residents of western and central Ukraine are more supportive of postponing reconstruction until the war ends, whereas those living in eastern regions are more likely to support rebuilding as soon as possible. 

An aerial view of the total destruction in Bakhmut from heavy battles. September 27, 2023.
Libkos / Getty Images

Divisions such as these create additional tensions in society, which could, in turn, hinder Ukraine’s recovery. According to Rating Group’s director Oleksii Antypovych, a number of dividing lines have already begun to emerge, including between those who stayed (IDPs and the non-displaced), those who fled abroad, those who served in the army, and those who lost loved ones. “I think the biggest divisions are between those who are absorbed in the war ­— the mobilized and their families, people who lost their loved ones, residents of frontline territories — and those Ukrainians who are still trying to live a normal life,” sociologist Inna Volosevych told Politico earlier this year. 

At the same time, Kyiv International Institute of Sociology director Volodymyr Paniotto notes that people are far more aggressive in their opinions on social media than in real life. For example, KIIS found that nearly 90 percent of those surveyed in Ukraine bear no ill will towards Ukrainian refugees currently abroad. 

One way or another, Ukraine is on the verge of a demographic catastrophe. Polish political analyst Jadwiga Rogoża notes that current forecasts for Ukraine’s future population range from 24 to 35 million (compared to 48.5 million in 2001). Ukraine’s own Ministry of Social Policy estimates that the population could drop to 25 million by the end of 2050. What’s more, Ukraine is projected to have one of Europe’s oldest populations by 2030, since so many young people are leaving the country or dying at the front. 

As Rogoża explains, the dynamics of Ukraine’s post-war reconstruction and economic development will depend on not only the level of spending on reconstruction but also the size, age, and health of the country’s population. “The slow and uneven reconstruction process may leave the map of Ukraine dotted with numerous ‘ghost towns’ — half-ruined places with no prospects for work and development,” she warns.

A woman begs in an underground passage in downtown Kyiv. October 20, 2023.
Roman Pilipey / AFP / Scanpix / LETA

The future

To get an idea of Ukraine’s potential post-war trajectory, it’s worth looking at the wars in the Balkans in the 1990s, which are perhaps the closest example of a major armed conflict in recent European history comparable to the war in Ukraine.

The wars that followed Yugoslavia’s collapse displaced around 3.7 million people in the 1990s, 700,000 of whom received temporary asylum in Germany. By 2000, 75 percent of these refugees had returned to their home country or another part of former Yugsolavia; another 15 percent settled in third countries and only 10 percent remained in Germany. 

However, the return of these refugees didn’t solve the demographic problems facing the Balkan countries, which were in a state of post-war devastation. “Migration flows only grew stronger after the war,” says Maksim Samorukov, a fellow at the Carnegie Russia Eurasia Center. “One of the reasons [for this was] tighter European integration; the war-torn countries of the Western Balkans simply couldn’t compete with Europe in terms of attractiveness for living.” 

Further rapprochement between Ukraine and the European Union, and the experiences of Ukrainian refugees living in the bloc, could produce similar results: many Ukrainians may very well prefer life in E.U. countries to the instability of post-war Ukraine.

For now, martial law remains a restraining factor on emigration. Ukraine’s borders have been closed to military-age men for more than two years, so 80 percent of Ukrainian refugees are women and children. Once martial law is lifted, however, many men will reunite with their families abroad and may even choose to stay there. 

As Alfred Kammer, the director of the International Monetary Fund’s European Department, has pointed out, Ukraine’s economic recovery will depend on a number of factors, including how many people return to the country and their home regions in the medium term. 

And though the fog of war makes economic forecasting difficult, some of what the future holds for Ukraine is already visible today.

According to Deloitte, the Ukrainian economy will not survive without structural changes. Agricultural exports, for example, will depend on developing rail routes as an alternative to maritime ports. And the metallurgy industry should not rely on restoring Soviet legacy infrastructure, but rather invest in innovative production such as green steel


Azovstal: A history Journalist Konstantin Skorkin tells the story of the steelworks that lay at the heart of Mariupol life


Azovstal: A history Journalist Konstantin Skorkin tells the story of the steelworks that lay at the heart of Mariupol life

Researcher Oleksandr Zabirko believes Ukraine’s Donbas could end up like other post-industrial regions of Europe, such as the Ruhr in Germany and Upper Silesia in Poland. “Obviously, the role of the E.U. in Ukraine’s recovery will be key, and I doubt that European investors will want to rebuild monstrous Soviet factories like Sievierodonetsk’s Azot and Mariupol’s Azovstal,” Zabirko speculates. In other words, E.U. investment will likely be aimed at developing new industries — running contrary to the interests of Ukrainian “steel barons” like Akhmetov. 

As such, post-war reconstruction could radically reshape Ukraine. Small- and medium-sized businesses, including ones in new industries like IT, began to flourish after the Revolution of Dignity in 2014, but massive Soviet-built factories continued to play a key role in the country’s economy until Russia’s 2022 invasion. Now, it seems the country’s economic revival will largely depend on its ability to produce and sell high-tech goods.

A geographical shift in Ukraine’s economy is also underway, with enterprises moving from the industrial southeast to the country’s west and center. This shift, first and foremost, is for security reasons: even in the event of a frozen conflict, Ukraine’s southern and eastern regions will remain under constant threat. It’s also logistically more convenient since Ukraine has severed ties with its eastern neighbors and is strengthening its economic cooperation with the E.U. 

This westward migration began in March 2022, when the government launched a free relocation program for Ukrainian businesses. The program helped companies move their employees and equipment to safer regions. Enterprises that have taken advantage of the program range from a small Kyiv-based adhesive tape producer to the Zaporizhzhia Non-ferrous Metals Plant and the distillery behind Khortytsa vodka. 

Ukraine’s western and central regions are also taking in displaced people from the occupied territories. The Rating Group’s research shows trends towards population growth in the Zakarpattia, Khmelnytskyi, Vinnytsia, Kirovohrad, Odesa, and Dnipropetrovsk regions, as well as in Kyiv. 

According to sociologist Ella Libanova, who heads the Institute for Demography and Social Studies at the National Academy of Sciences of Ukraine, the country’s central regions have the greatest potential for denser settlement. (Citing ecologists, Libanova said that much of western Ukraine has nearly reached its ecological carrying capacity, which means it will soon be impossible to build new housing, businesses, and industry there.) 

Libanova also estimates that Ukraine will need to attract around 300,000 immigrants annually to keep its population at the predicted 30 million. Given the low standard of living, these immigrants will most likely come from poorer countries.

* * *

When it comes to restoring any country, the most crucial factor isn’t money or the size of the population; the attitude of those living there and those who will return is far more important. Without their faith in the future, no amount of investment will work. 

And in this sense, things look optimistic for Ukraine. According to the Rating Group’s polls, despite all the hardships of wartime life and the setbacks at the front, 80 percent of Ukrainians believe their country’s future looks “rather promising.”

Hello, I’m Eilish Hart, the editor of The Beet. Thanks for taking the time to read our work! Our newsletter delivers underreported stories like this one to subscribers every Thursday. Like all of Meduza’s reporting, it’s free to read, but relies on support from readers like you. Please consider donating to our crowdfunding campaign.

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Story by Konstantin Skorkin for Kit

Abridged translation by Eilish Hart for The Beet