Chapter 4: Reconstruction of Ukraine
182.It has been recognised since the early stages of Russia’s full-scale invasion that a substantial international effort will be required to support the recovery and reconstruction of Ukraine, regardless of the ultimate outcome of the conflict.
183.The reconstruction programme will need to be vast in scale and scope. A joint assessment by the World Bank, the Government of Ukraine, the European Commission and the United Nations published in March 2023 estimated the total cost of reconstruction and recovery at US $411 billion.260 This includes damage to infrastructure and to the environment, as well as economic and social losses resulting from the conflict.261 This figure will inevitably have increased further over the past year.
184.In October 2022 the German Federal Chancellor, Olaf Scholz, and the President of the European Commission, Ursula von der Leyen, wrote that “[a]lthough we should always be careful when making historical comparisons, what is at stake here is nothing less than the creation of a new Marshall plan for the 21st century”.262 They suggested that the task would “take generations” and should “start now”.
185.In its written submission to the Committee the Foreign, Commonwealth and Development Office described Ukraine’s reconstruction needs as “immense”.263 It suggested that reconstruction would require “unprecedented collaboration between governments, the private sector and international institutions”.
186.Orysia Lutsevych, Head of the Ukraine Forum at Chatham House, told us that reconstruction would be the “economic project of the century”.264 Meanwhile, the Tony Blair Institute for Global Change predicted that the reconstruction effort in Ukraine would ultimately be the single biggest since the aftermath of World War II.265
187.Radosław Sikorski, who was an MEP at the time he gave evidence before returning to the post of Minister of Foreign Affairs of Poland in December 2023, offered a somewhat different perspective. He acknowledged that international assistance would be “very useful” for Ukraine while the conflict is ongoing.266 However, based on his experience of regular visits, he told us that Ukraine was “not as destroyed as it looks on the telly” and that “in 80% of its territory, the state works”. He suggested that in the longer-term Ukraine “will not be a victim country that needs outside assistance for rebuilding”. He emphasised the strengths of Ukraine’s economy, including in energy, agriculture and IT, and predicted that “once the fighting stops, it will be boom time”.267
188.Several witnesses proposed that reconstruction should begin now, even while the conflict is still ongoing. Ms Lutsevych emphasised that “[a] lot of cities have already been liberated from Russian occupation, and it is difficult for people there to rebuild their lives”.268 Meanwhile, Mark Bowman, Vice President for Policy and Partnerships at the European Bank for Reconstruction and Development, noted that “the economy is functioning relatively normally in the west of the country, and there is the potential for investment even now”.269 Dr Stefan Meister (German Council on Foreign Relations) suggested that “we cannot wait until after the war” for reconstruction as the conflict was likely to be “long”.270 However, James Rogers (Council on Geostrategy) was a dissenting voice on this. In his view it was “too soon to be talking about reconstruction just yet” as there was still a “huge challenge in helping Ukraine to prevail ultimately”.271
189.Baroness Ashton argued that “you can never start early enough in thinking about the end of a conflict and what happens next”.272 She emphasised the importance of cooperation between the UK and the EU during this process, adding that Ukraine “needs us to get co-ordinated rather than expect it to co-ordinate us, which is too often what happens in times of crisis”. She considered it important for the UK to ensure that what it is offering forms part of a “broader programme” brought forward by the international community.273
190.The need for close cooperation on reconstruction was also emphasised by other witnesses. Mr Bowman described this as “absolutely critical”.274 He told us that there should be a “single reform plan, obviously owned by the Ukrainian authorities, which is ambitious, realistic and properly sequenced”, to ensure that “donors, international institutions and the Ukrainian authorities are all pushing in the same direction”. Natalie Jaresko, a former Finance Minister of Ukraine, argued that international cooperation would be particularly valuable in bringing together plans announced by individual donors, since “different donors are thinking about things with different timeframes”.275 Ms Lutsevych agreed on the importance of coordination, identifying this as the “keystone of success”.276
191.The reconstruction of Ukraine will be a colossal undertaking, regardless of the ultimate outcome of the conflict. Although Ukraine’s economy has underlying strengths and considerable future potential, the extent of the damage Russia’s full-scale invasion has inflicted on Ukraine means that a huge programme of international assistance will be required over an extended period of time.
192.Reconstruction cannot wait until the war has finished. Much of Ukraine is in urgent need of international support for rebuilding. There is also potential to promote investment into parts of Ukraine that have been less impacted by the conflict.
193.It is imperative that governments and international organisations, including the UK and the EU, cooperate closely throughout the reconstruction process. This will prevent duplication and ensure that all international partners are working on the basis of a coherent programme that best meets Ukraine’s needs.
Existing initiatives
194.An institutional structure has already been established over the past two years to provide for international coordination on reconstruction of Ukraine, building on arrangements that existed prior to Russia’s full-scale invasion.
195.In June 2022 the inaugural Ukraine Recovery Conference (URC) (see Box 6) took place in Switzerland, at which heads of government and representatives of international organisations agreed the “Lugano Declaration” setting out principles for reconstruction.
Box 6: Ukraine Recovery Conference
|
The Ukraine Recovery Conference (URC) is an annual international event focused on recovery, reconstruction and reform in Ukraine. It builds on a previous annual “Ukraine Reform Conference” that was held from 2017 until 2021. The first URC following Russia’s full-scale invasion was held in Lugano, Switzerland in June 2022. Participants, including the UK and the EU, over 40 heads of state and government, and representatives of international organisations, agreed the “Lugano Declaration”.277 This included commitments to “supporting Ukraine throughout its path from early to long-term recovery”; “linking this to Ukraine’s European perspective and EU candidate country status”; and “establishment of an effective coordination platform between the Government of Ukraine and all its bilateral as well as multilateral partners, organizations and international financial institutions for the preparation and implementation of Ukraine’s Recovery and Development Plan”. The second URC was held in London in June 2023. At this event the President of the European Commission, Ursula von der Leyen, announced plans for a new multi-year facility of up to €50 billion to support recovery, reconstruction and modernisation of Ukraine.278 The UK Prime Minister, the Rt Hon Rishi Sunak MP, also announced a new commitment to support Ukraine’s economy with loan guarantees worth $3 billion for the next three years. The joint statement by the Co-Chairs issued following this meeting referred to a “private sector led recovery” and noted that “[n]early 500 global businesses from 42 countries worth more than $5.2 trillion” had signed the Ukraine Business Compact, pledging support for recovery and reconstruction. The next URC is due to take place in Berlin in June 2024.279 |
196.The second URC was hosted by the UK in June 2023. The President of the European Commission and the UK Prime Minister, as well as the United States of America, announced substantial new financial commitments to support reconstruction. Many international businesses also pledged support for reconstruction by signing the “Ukraine Business Compact”. Reflecting on this conference, Mr Bowman identified a “strong desire to invest in Ukraine”.280 However, he qualified this by noting that “for many companies it is a long way off and they are quite a long way from having specific plans”.
197.The Multi-Agency Donor Coordination Platform for Ukraine (MDCP) (see Box 7) has a specific mandate to “coordinate the support for Ukraine’s immediate financing needs and future economic recovery”. This organisation is based in Brussels and Kyiv, with the Brussels office hosted by the European Commission.
Box 7: Multi-Agency Donor Coordination Platform for Ukraine
|
The Multi-Agency Donor Coordination Platform for Ukraine (MDCP) was launched in January 2023, following a decision of G7 leaders.281 Its role is described on its website as being to “coordinate economic assistance in line with Ukraine’s reform ambitions, in line with the conditions for financing and structural support of the major donors, and in line with its European path”.282 The MDCP’s steering committee contains high-level officials from Ukraine, the EU, G7 countries and international financial institutions. It is co-chaired by officials from Ukraine, the European Commission and the United States. It met regularly during 2023. Its secretariat is based in Brussels, hosted by the European Commission, and it also has an office in Kyiv. The UK has seconded an official to the body. |
198.Witnesses generally welcomed the establishment of the MDCP. Mr Bowman suggested that it had an “important role in bringing together the key players, ensuring that gaps are filled and that there is no duplication in efforts, and that everyone is working towards the same plan”.283 Although it had been a “bit slow to get up and running”, he considered that it was now “finding its feet”. Ms Jaresko indicated that this body would be the primary institution for “policy on reforms, coordination, collaboration on financial contributions, advocacy for best practices, and monitoring and reporting the harmonising of the actual recovery process”.284
199.According to Dr Meister, the MDCP formed part of an “infrastructure” established by the EU that meant that reconstruction was “more or less coordinated in Brussels”.285 However, it was noted that the UK and EU were cooperating within the platform.286 Ms Jaresko suggested that the UK had an “important voice” through the Foreign, Commonwealth and Development Office’s representative, Thomas Drew.287
200.The MDCP was described as a “multilateral hub” for coordination on reconstruction by the Minister for Europe.288 The Foreign Secretary considered it to be a “very effective set of arrangements”.289 He also noted that the UK was working together with Ukraine and the EU on the “Ukraine Plan”, which sets out an agenda for reconstruction. In his assessment the UK was “plugged in at all the right levels”.
201.A more sceptical view on the institutional arrangements to support reconstruction was expressed by researchers from the Centre for Britain and Europe at the University of Surrey. These authors suggested that in the past processes such as that envisaged within the MDCP, whereby political actors make assessments of progress on reform and take decisions about transfers of funds based on these assessments, had failed to call out shortcomings in reform processes effectively and funds had consequently sometimes been lost to corruption.290 They called for the establishment of “new cooperation mechanisms”, including an institution that would monitor the use of funds and provide “binding” reform recommendations to Ukraine.
202.Other established international institutions are also expected to play an important role in the reconstruction process. Sir Julian King, a former European Commissioner for the Security Union, highlighted the roles of the World Bank, European Investment Bank and European Bank for Reconstruction and Development (EBRD), as well as the World Health Organisation and the International Telecommunication Union in specific sectors.291 He stressed that these actors would need to coordinate and that the MDCP provided a forum for this. Witnesses also made reference to the role of the International Monetary Fund, which the Foreign Secretary said would have a “crucial role” that the UK would need to back up with “guarantees, loans and other economic support we are giving”.292
203.Mr Bowman highlighted the EBRD’s contribution to reconstruction, emphasising that it had “increased its investment” in Ukraine following the outbreak of the conflict.293 He noted that the EBRD was headquartered in London, and had EU and G7 shareholders, which meant it was a “very good forum for international collaboration and co-operation and for the different players to get together and support Ukraine”.
204.We welcome the UK’s close involvement in planning for reconstruction up to this point, including hosting the successful Ukraine Recovery Conference in London in June 2023. The URC should continue to be an annual international event and we note that the next meeting will be in Berlin later this year. We therefore look forward to considering, in its response to this report, the Government’s ambitions and priorities for this event, including any additional spending commitments in relation to reconstruction of Ukraine and/or specific projects to which the UK is committed.
205.The London-based European Bank for Reconstruction and Development was set up to help Central and Eastern European countries from the former Soviet bloc to restructure and reform. It has the required expertise and experience necessary to support the reconstruction of Ukraine. It should be given a prominent role.
206.We welcome the establishment of the Multi-Donor Cooperation Platform for Ukraine, and that the UK has seconded an official to this body. The MDCP can be expected to perform a pivotal role as a forum for cooperation among supporters of reconstruction in Ukraine, including the UK and the EU. We urge the Government to remain closely involved in its work over the coming years. We ask the Government to commit to updating the Committee periodically on the work of the MDCP.
The UK’s contribution to reconstruction
207.Several witnesses told us that the UK was well-placed to make a major contribution to reconstruction. Ms Lutsevych emphasised that the UK had a “very high reputation” and what she termed “amazing soft power” in Ukraine.294 She attributed this to the UK having been “there with the Ukrainian people from day one”. Ms Jaresko added that the UK “has a voice in Ukraine that is very credible” and went as far as to say that it was “uniquely positioned to help”.295
208.The UK’s expertise in private sector investment, given the location of the City of London, is expected to be especially valuable. Ms Lutsevych suggested that “[a]s a global financial centre, the UK is well positioned to reach out to the private sector and look at where public-private partnerships are possible”.296 Meanwhile, Mr Bowman noted that securing private sector donations had been a “big theme” of the URC in London and that the UK is an “important shareholder” in relevant international institutions, including the EBRD.297 The Minister for Europe saw the URC as “a signpost that capital from the City of London and the UK could find opportunity in Ukraine”.298
209.Ms Jaresko highlighted work that the UK was already doing with the insurance industry, which has a key role to play in facilitating other private sector investment in Ukraine, in particular through providing war risk insurance. She told us that because of the UK’s “prominence” in this area, it was “able to bring the players together, engage with them and, in future, start to map out the types of public/private sector partnerships and public sector risk-mitigating programmes that can enable the mobilisation of private money”.299 Olaf Henricson-Bell, EU Director at the FCDO, referred to this as an area where the UK “brings something different” to the table.300
210.We also heard that the UK may be able to take on a leading role in supporting Ukraine in its efforts to tackle the longstanding issue of corruption. Ms Wright (Institut Montaigne) emphasised the importance of this, suggesting that concerns about corruption were holding back private sector investment into Ukraine (discussed further in paragraphs 223–232). She noted that the UK had “shown interest in leadership [on corruption] in the past” and that it was “something that the EU and other European countries would expect the UK to lead on right now, too”.301 Ms Lutsevych argued that the UK could be a “champion” of the “integrity and inclusivity of the recovery process”, adding that it was important to ensure that Ukrainian civil society had a “stake” in the process so that it is “grounded in the needs of the people”.302
211.Mr Rogers suggested that the UK could “begin thinking about using additional areas of leverage in reconstruction”.303 He highlighted the Three Seas Initiative, which aims to improve north-south connectivity among countries in central and eastern Europe, and suggested that the UK “could become an associate, similarly to Germany and the United States”. He also identified the potential for expanding on existing trilateral initiatives involving Poland, Ukraine and the UK, which he considered to have shown that “Europe is not just the EU”.304
212.At a political level, Professor Menon identified an additional role for the UK in ensuring that, in the longer term, “Ukraine does not get forgotten or relegated down our priorities”.305 He noted that the UK had “played a crucial role in whipping up support for Ukraine in the early stages of the conflict” and suggested that it may need to do so again in the future if the focus of the EU and other allies on Ukraine diminishes over time.
213.The UK has a strong reputation in Ukraine with expertise to offer in several sectors that will have an important role in reconstruction. The Government should take full advantage of this and aim to perform a leading role, working closely with the EU and other partners, in areas such as encouraging private sector investment and engaging with the insurance industry.
214.The UK has been a strong and reliable supporter of Ukraine throughout the conflict. It is essential that the Government continues to prioritise support for Ukraine in the future, including after the fighting has ended. The Government should also continue to use all mechanisms available to it to encourage allies, including the EU and EU Member States, to remain focused on support for Ukraine.
Reconstruction and Ukraine’s EU candidate status
215.Reconstruction is expected to be linked closely to Ukraine’s candidacy for EU membership.306 Ms Lutsevych explained that “for Ukrainian society, membership of the European Union is part of victory”.307 She referred to an opinion poll indicating that 89 per cent of Ukrainians supported EU membership and argued that this meant that “any political force, any President of Ukraine, will have to deliver on that “.
216.Dr Meister saw the EU’s close involvement in establishing the machinery for international coordination on reconstruction, and the location of the MDCP in Brussels, as an indication that the reconstruction process would be “very much driven by the EU and EU integration, and increasingly by EU investment and budgetary support for Ukraine”.308 Dr Martill (University of Edinburgh) explained that the EU could “use its market power and the prospects of accession to shape policies and reforms within Ukraine”.309 Meanwhile, researchers from the Centre for Britain and Europe at the University of Surrey highlighted “significant overlap between the benchmarks of reconstruction and EU accession”, particularly in areas such as anti-corruption and the rule of law.310 In this context Mr Bowman described the accession process as a “powerful anchor for the whole reform process”.311
217.Nathalie Loiseau MEP suggested that the EU’s approach to reconstruction was “specific because Ukraine is a candidate country” and that in this context it is “quite normal that support comes with reforms and making sure that we push Ukraine on the European path”.312 She acknowledged that Ukraine’s EU ambitions were “not necessarily high on the British agenda”, although she was “pretty certain that the reform priorities set by the European Commission for Ukraine—the fight against corruption and oligarchs—fit with British priorities”.
218.In light of the inter-relationship between reconstruction and Ukraine’s aspirations to EU membership, some of those that we heard from recommended that the UK should offer support for Ukraine’s candidacy. Baroness Ashton, a former EU High Representative for Foreign Affairs and Security Policy, argued that the UK should be “wholly supportive” because EU membership “provides the best opportunity and the best way for the country to develop and grow in the way it always planned”.313 In a similar vein, Mr Bond and Dr Scazzieri of the Centre for European Reform considered EU accession to be “the most promising way to stabilise Ukraine during and after the conflict, ensuring good governance and economic reforms”.314 They suggested that the UK should offer its support in a “nuanced” way, for instance through “bilateral initiatives that seek to promote economic reform and good governance in Ukraine”.
219.Researchers from the Centre for Britain and Europe at the University of Surrey also proposed that the UK should “support Ukraine’s aspirations” in relation to EU membership.315 However, in their submission they argued that the UK should be prepared to “publicly nudge” the EU and Ukraine to “deliver on the concrete promises made” with respect to reconstruction and the EU accession process.
220.The Foreign Secretary emphasised that the UK is a strong supporter of “Ukraine wanting to anchor itself in the Euro-Atlantic alliance”.316 He added that although EU enlargement is a “matter for the EU”, “we note what Ukraine wants, and we want Ukraine to succeed in its aims and goals”. He told us that the UK’s role was to “help Ukraine in all the ways that we can” to help it achieve its ambitions.
221.Reconstruction will be closely linked to Ukraine’s candidacy for EU membership. The drive to meet the criteria for EU membership is likely to serve as a lever for reforms to Ukraine’s economy and public institutions.
222.The Government should therefore work closely with the EU and Ukraine to ensure that assistance provided to Kyiv serves the shared objective of bringing Ukraine into western institutions. This should include providing support for Ukraine in implementation of the reforms needed to meet EU accession criteria.
The challenge of corruption
223.Several witnesses indicated that the ongoing prevalence of corruption in Ukraine could serve as a disincentive to providing support for reconstruction.317 Mr Bowman described this as a “critical issue for stimulating private investment and for the EU, the UK, the US and donor countries to justify the resources to their taxpayers”.318
224.We heard that insufficient coordination between donors may increase the likelihood that funds are not used for their intended purpose. Ms Loiseau told us that “often, EU institutions and the member states are fooled by third countries’ authorities, which are very good at playing one off against the other”.319 She said that in these cases the money usually “does not go for reconstruction and it does not go for development; it goes into the pockets of people who play one off against the other”. Similar concerns were raised by researchers from the Centre for Britain and Europe at the University of Surrey, who suggested that “large-scale in-flows of funds for reconstruction will be an attractive target for less well-intentioned actors”. They noted that “lax regulation in the UK and its overseas territories” had previously played a role in “facilitating money-laundering from the former Soviet Union” and called on the UK to work closely with the EU and other partners to “ensure that money intended for projects in Ukraine does not end up here”.320 However, Mr Bowman did not see “much danger of competition or overlap” between donors, since Ukraine’s “needs are very great, and all the different institutions have different functions and roles”.321
225.Ms Jaresko said that it would be necessary to provide “factual proofs” to investors that “the environment has changed on the corruption front” compared to the period before Russia’s full-scale invasion, when the private sector had not been “terribly active” in investing in Ukraine.322 Ms Lutsevych agreed, telling us that if the rule of law was not adhered to, this would “destabilise Ukraine post the war and even during the war, which would be very risky”.323 Ms Dennison suggested that it was “crucial that in the early stages of reconstruction we do not see scandals emerging about corruption in the way funds are used”.324
226.Ms Lutsevych emphasised that “Ukrainians themselves demand the uprooting of corruption”.325 She told us that “the veterans who are coming back home, the volunteers who are supporting the front line, cannot stand a single act of corruption”. Mr Sikorski also identified considerable domestic pressure to address corruption. In his experience the public authorities in Ukraine were aware that corruption is “the biggest threat not only to their image but to the willingness of democracies to help them”.326
227.Witnesses noted that some steps are already being taken to tackle corruption. Ms Lutsevych reported that in 2022 the High Anti-Corruption Court of Ukraine had “issued 33 guilty verdicts and transferred more than 1.2 billion Ukrainian hryvnia, the equivalent of £27 million, to the Ukrainian budget on corruption charges”.327 In Mr Sikorski’s view, reports of the arrests of Supreme Court judges on bribery charges are “good news” as it means that “[a]t last, they are being arrested”.328
228.Drawing on her experience as Minister of Finance in Ukraine from 2014–16, Ms Jaresko highlighted government initiatives to improve transparency, move towards more localised governance arrangements, end reliance on strategic Russian assets and establish anti-corruption entities. In light of this, she felt that businesses with concerns about corruption were “relying on memories of pre 2014” and that there should now be an effort to start working on “informing the business sector better of all the changes have occurred”.329
229.Mr Bowman added a note of caution to the discussion about measures to tackle corruption. He told us that “there is a risk of badly designed policies leading to a kind of paralysis in the system” if government officials are “worried that, for unjustified reasons, anti-corruption agencies will crack down on them”.330
230.The Minister for Europe indicated that the Government was “alive” to the risk of funds being lost to corruption, but that there are “institutional and liaison mechanisms in place to ensure that that money is not wasted or embezzled”.331 He highlighted existing work in this area that the Government was supporting, including support for the establishment of Ukraine’s anti-corruption bureau and the UK Good Governance Fund, a “£38 million, three-year technical assistance programme that supports good governance, economic resilience and growth”.332 The Foreign Secretary told us that a “lot of progress is being made”, noting that several anti-corruption measures were based on ideas originally proposed by the UK.
231.The Government should take a leading role with the EU and other international partners to support Ukraine in its efforts to tackle corruption and strengthen its public institutions. Effective action in this area will be vital to creating an environment in which both public and private sector donors have confidence to invest in Ukraine and provide support for reconstruction.
232.Close coordination between the UK, EU and other allies on reconstruction, as we have recommended elsewhere in this Chapter, will contribute to minimising the risk that reconstruction funds are lost to corruption.
Lessons from the Western Balkans
233.We asked some of our witnesses whether any lessons could be learned from previous experiences of post-war reconstruction, in particular in the Western Balkans, where progress has not always been smooth.
234.Ms Jaresko identified five relevant insights: that “you cannot have a successful recovery and reconstruction without security”; the need for “long-term commitment of the donors”; the importance of “local ownership” of the process; the role of transparency and accountability in creating an environment in which the private sector will be willing to make donations; and that there should be a “holistic approach”, addressing “not only the physical but the economic and political reconstruction, as well as the social dimension”.333
235.Mr Bowman acknowledged that the experience of reconstruction in the Western Balkans had been a “mixed picture”.334 He suggested that one factor was that “the EU accession process, which had the potential to be transformative, stopped being transformative because people stopped believing that it would happen”.
236.Dr Denisa Kostovicova and Dr Luke Cooper, respectively Associate Professor of Global Politics and Associated Professorial Research Fellow at LSE, suggested that in Ukraine, as in the Western Balkans, problems arising specifically from the war would exacerbate challenges related to the post-Communist transition.335 They noted that most indicators of political and economic progress in the Western Balkans suggest “regressive trends” in recent years. In their assessment, “multiplying policy instruments” had “neither increased the chances of success nor accelerated reform processes required for progress on the path to EU membership”.
237.One problem identified by Dr Kostovicova and Dr Cooper was that wartime relationships between political, economic and military elites had become “entrenched in the post-war period”, undermining the development of democracy. To avoid this, they suggested that “investment in rebuilding of infrastructure needs to spread the benefits of reconstruction equally rather than promote distinct market players and their monopolies”. They also highlighted a risk that Ukraine may “prematurely adopt economic liberalisation measures” that are unsuited to what will, in the short-to-medium term, remain a “wartime economy”.
238.Recent post-war reconstruction efforts in Europe, notably in the Western Balkans, have a mixed record in terms of achieving their longer-term objectives. The UK, the EU and other participants in the reconstruction of Ukraine should reflect on what lessons can be learned from this experience, including the effectiveness of mechanisms intended to incentivise reforms. We ask the Government to provide us with its assessment of lessons that can be learned from previous experience in supporting post-war reconstruction and how these can be applied to Ukraine in response to this report.
Security and reconstruction
239.The prospects for reconstruction in Ukraine will ultimately be determined to a large extent by the security situation. Ms Jaresko said that this was “fundamental” as “you cannot have a successful recovery and reconstruction without security”.336 Similarly, Ms Lutsevych argued that “if we want the private sector to go, it is important that we have a strong security cushion for Ukraine”.337 Without this, she feared that investors may hold back from providing donations.
240.Witnesses emphasised the role of the UK in providing the necessary military assistance to Ukraine to facilitate reconstruction. For example, Ms Jaresko noted that the UK provides “critical support” for the “intelligence, surveillance and reconnaissance operation” for the “Black Sea corridor” trade route.338 She explained that this “opens up exports in steel and iron ore that are not really profitable or realisable through rail or trucking, so it is critical”. Ms Lutsevych similarly told us that the UK’s naval capabilities could “help to develop Ukraine’s ability to protect its naval routes on the Black Sea so that food and other goods can flow to the international markets”.339
241.Witnesses generally considered that NATO was the critical actor in terms of providing Ukraine with long-term security. Dr Meister told us that interim NATO security guarantees would provide a “security framework for reconstruction”.340 Ms Lutsevych similarly indicated that it would be important to put in place security arrangements that would serve as a “transition decision while the war goes on”.341 However, she saw NATO membership as the “permanent solution” that would “allow the private sector to come” to Ukraine.
242.Mr Rogers expected that the UK would be “instrumental” in providing security guarantees and that these could “provide the breathing space for Ukraine to prepare to become an EU member and then to become one under the protection of the UK and another group of member states of NATO or through some other format”.342
243.The EU Ambassador to the UK indicated that EU membership would provide additional security guarantees on top of those that may be offered by other allies.343 However, other witnesses expressed scepticism about the value of security guarantees from the EU. For example, Mr Bond and Dr Scazzieri suggested that the fact that the Finland and Sweden had decided to seek NATO membership implied that EU security guarantees on their own were “not particularly credible”.344
244.The Minister for Europe stressed that the UK’s defence relationship with Ukraine would remain “hugely important” in the future. He identified the need for Ukraine to “put their military on a world-class footing in a very sustainable way, in a way that requires more domestic defence industry”. He considered that the UK would be among the nations that would “have a critical role in that”.345
245.The Foreign Secretary told us that the Government was doing “everything that we can to help Ukraine in its ambitions to join NATO”, including providing support for reform of the defence sector.346 He added that where the UK was “in an organisation and can help them join, we are absolutely all in and doing what we can”.
246.In January 2024 the UK and Ukraine concluded an Agreement on Security Cooperation, containing provisions aimed at “coordinating and strengthening joint efforts to support Ukraine’s accession to NATO”.347 This included UK commitments to “provision of comprehensive assistance to Ukraine for the protection and the restoration of its territorial integrity”, “prevention and active deterrence of, and counter-measures against, any military escalation and/or a new aggression by the Russian Federation” and “support for Ukraine’s future integration into Euro-Atlantic institutions”.
247.The UK has an important role to play in providing the naval support to Ukraine necessary to facilitate trade through the Black Sea corridor. The Government should continue to prioritise this as it will be essential to facilitating Ukraine’s economic recovery in the short-to-medium term.
248.Reconstruction cannot be successful in the long-term unless investors feel confident about Ukraine’s long-term security. We therefore welcome the UK-Ukraine Agreement on Security Co-operation that was concluded in January 2024. Security guarantees will be most credible if they are provided by NATO. The Government should set out in its response to this Report its policy on providing interim security guarantees for Ukraine.
260 World Bank, ‘Updated Ukraine Recovery and Reconstruction Needs Assessment’, (23 March 2023): https://www.worldbank.org/en/news/press-release/2023/03/23/updated-ukraine-recovery-and-reconstruction-needs-assessment [accessed 23 January 2024]
261 For discussion of issues relating to environmental damage see written evidence from Dr Suwita Hani Randhawa (RUI0006).
262 Chancellor Olaf Scholz and President Ursula von der Leyen, ‘A Marshall Plan for Ukraine: G7 Presidency and European Commission to invite experts to a conference on the reconstruction of the war-torn country’, European Commission (25 October 2022): https://ec.europa.eu/commission/presscorner/detail/en/AC_22_6385 [accessed 23 January 2024]
273 Ibid.
277 Ukraine Recovery Conference, ‘Outcome Document of the Ukraine Recovery Conference URC2022 “Lugano Declaration’, (5 July 2022): https://uploads-ssl.webflow.com/621f88db25fbf24758792dd8/62c68e41bd53305e8d214994_URC2022%20Lugano%20Declaration.pdf [accessed 23 January 2024]
278 Ukraine Recovery Conference, ‘Co-Chairs Statement by the Governments of Ukraine and the United Kingdom’, (22 June 2023): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1164887/Ukraine-Recovery-Conference-2023-co-chairs-statement.pdf [accessed 23 January 2024]
279 ‘Germany will host next Ukraine recovery conference in June 2024, official says’, CNN (20 September 2023): https://edition.cnn.com/europe/live-news/russia-ukraine-war-news-09-20-23/h_21cf2db0ab063d1753b78a2582043e2d [accessed 23 January 2024]
281 Prime Minister’s Office ‘G7 Leaders’ Statement’, (12 December 2022): https://www.gov.uk/government/news/g7-leaders-statement-12-december-2022 [accessed 23 January 2024]
282 Multi-Agency Donor Coordination Platform for Ukraine ‘About Us’,: https://coordinationplatformukraine.com/about/ [accessed 23 January 2024]
286 Written evidence from Ian Bond and Dr Luigi Scazzieri (RUI0005) and the Tony Blair Institute for Global Change (RUI0007)
289 Oral evidence taken before the European Affairs Committee on 14 December 2023 (Session 2023–24), Q 18 (Lord Cameron of Chipping Norton)
290 Written evidence from Dr Laura Chappell, Professor Theofanis Exadaktylos, Professor Amelia Hadfield and Dr Michael Richter (RUI0017)
292 Oral evidence taken before the European Affairs Committee on 14 December 2023 (Session 2023–24), Q 19 (Lord Cameron of Chipping Norton)
293 Q 65 (Mark Bowman). The EBRD committed €3 billion of financing for reconstruction over 2022–23. Specific support includes emergency liquidity for railway and electricity companies. It announced a €4 billion capital increase that would enable it to double lending to Ukraine in December 2023. See European Bank for Reconstruction and Development, ‘The EBRD and the war on Ukraine’,: https://www.ebrd.com/what-we-do/war-on-ukraine [accessed 23 January 2024]; and ‘EBRD to double lending to Ukraine after agreeing €4bn capital increase’, Financial Times: https://www.ft.com/content/aaa730a1-f90e-405b-a6bb-b3aeded699c8 [accessed 23 January 2024]
306 EU candidate status was granted to Ukraine on 23 June 2022, and the European Council agreed to open accession talks on 14 December 2023.
310 Written evidence from Dr Laura Chappell, Professor Theofanis Exadaktylos, Professor Amelia Hadfield and Dr Michael Richter (RUI0017)
315 Written evidence from Dr Laura Chappell, Professor Theofanis Exadaktylos, Professor Amelia Hadfield and Dr Michael Richter (RUI0017)
316 Oral evidence taken before the European Affairs Committee on 14 December 2023 (Session 2023–24), Q 22 (Lord Cameron of Chipping Norton)
320 Written evidence from Dr Laura Chappell, Professor Theofanis Exadaktylos, Professor Amelia Hadfield and Dr Michael Richter (RUI0017)
346 Oral evidence taken before the European Affairs Committee on 14 December 2023 (Session 2023–24), Q 22 (Lord Cameron of Chipping Norton)
347 UK Government and Government of Ukraine, Agreement on Security Co-operation (12 January 2024): https://assets.publishing.service.gov.uk/media/65a14a6ae96df50014f845d2/UK-Ukraine_Agreement_on_Security_Co-operation.pdf [accessed 23 January 2024]