The New Marshall Plan?: Europe's Designs for Ukrainian Economic Reconstruction

By Tara Chandni M.

In 1947, George Marshall’s proposition of a reconstructive plan for the states of a fragmented, post-war Europe was certainly a novelty, yet seemingly set a precedent for global polity’s management of wartime economic recovery efforts in the century to follow. The European Union’s architecture of assistance in the case concerning Ukraine has, thus far, been compromised by the absence of organised mechanisms for financial aid and dispensation; but is the ‘21st Century’s Marshall Fund’ the newfound key to its structural integrity?

In its capacity of G7 Presidency, Germany played host to the most recent Berlin-Ukraine Recovery Conference on 25th October, marking a notable juncture in the EU’s management of the crisis unfolding at its Eastern frontier; presently entering its ninth month. Convening an assembly of experts, senior institutional representatives and academics, the forum aimed to present international perspectives on the logistical dimensions of recovery processes. Within their respective addresses, EU President Ursula von der Leyen and German Chancellor Olaf Scholz outlined Europe’s vision for a post-war Ukraine, emphasising the role of global community support while expanding upon the principles of cooperation and democratic concord accepted at the Swiss Lugano Reconstruction Conference in early July.

Characterised by ‘catch-all’ guarantees of international support and vehement assertions of European collective security, the Recovery Conference was set to proceed congruent with the tone of antecedent summits on the Ukrainian question. However, with designs for the formal establishment of a ‘coordinated donor platform’, likened by Scholz to “a new Marshall Plan of the 21st century”, came renewed emphasis on tangible and organised measures for the revival of the national economy and infrastructure. Conjoined damage assessments conducted by the World Bank and EU Commission placed the cost of such an endeavour at an approximate $350 billion, further accounting for $97 billion in physical damage sustained between February and June 2022. Consequently, the practicalities of financial resource mobilisation occupied a position of centrality within the rehabilitation dialogue.

Interestingly, and converse to its historical counterpart, the operational premise of Europe’s 'New Marshal Plan’ is multilateral aid, distinguishable from previous attempts at similar international collaboration by virtue of the ambitious scale of its organisation. The contemporary Euro-Marshall Plan aims to mitigate, to the greatest extent achievable, the principal limitations of Marshall’s original programme of U.S. financial support. With significant provisions for improved functionality, the importance of an inclusive donor body composed of both private and public sector stakeholders was emphasised during a thematic panel discussion.

Following seldom expressed murmurs of consternation in the capitals of Western Europe, panellists proposed a series of counter-corruption apparatuses ensuring adherence to legitimate practices in the exercise of aid. In the interest of a transparent and ‘rule-of law’ based sovereign restitution process, Ukrainian President Volodymyr Zelensky, in attendance virtually, conceded 75% membership of the proposed reconstruction fund’s advisory board to donor states. Although curtailing Ukrainian ownership, such an allowance conduces a well-delineated distribution of accountability, namely one proving ostensibly consistent with the Conference’s ‘good governance’ agenda.

Presumably, the framework for economic stabilisation is to be launched by the G7, its institutional anchor, in collaboration with the Euro-American partnership, all the while remaining heavily reliant on the support of international financial institutions (IFIs). These IFI’s, identified by von der Leyen as the European Investment Bank, European Bank for Reconstruction and Development (EBRD), World Bank and International Monetary Fund, are to constitute the fiscal core of the enterprise. The resultant donor platform would effectively formalise a highly regulated mechanism of co-operation, aligned with the strategic and humanitarian interests of partner states.

Despite clarifications of the program’s ‘preparational’ intent to serve as the foundation for Ukraine’s future membership to the EU, the initiative invites questions of empirical efficacy and credible substitution. Simply expressed, should designs for reconstructive measures precede or replace initiatives for ‘hard-power’ wartime assistance? Or, is it prudent to initiate an extensive reconstruction programme when a state remains very much embroiled in conflict, with resolution as yet elusive?

Among the EU cadre there appears to exist a resignation to the reality that such a scheme is a protracted initiative, with Chancellor Scholtz recognising the undertaking as one that shall “take generations” to fulfil. While comparatively, the provision of arms to the ends of defensive capability enhancement would be a palpably utilitarian solution, a rehabilitation programme remains a tactical necessity to ensure the sustenance of Ukraine’s economic infrastructure. In this manner, complete subsidence under the pressures of what may, in several regards, be likened to a regional war of attrition, is allayed. It is therefore possible to interpret the donor platform proposal in the context of the long-term reconstitution of Ukraine as a sovereign state, which regardless of comparative efficacy, remains a significant measure in its own right.

It can be surmised, therefore, that Europe’s very own Marshall Plan is something of a ‘premature’ operation within the broader agenda of Ukrainian integration into the Brussels bureaucracy. Nevertheless, it remains a crucial development in the context of global economic stability mechanisms, namely those that extend beyond the objective of immediate relief in armed-conflict scenarios. The outcome of October’s Berlin-Ukraine Recovery Conference is set to inform bilateral, European, and multilateral discussions with Ukrainian officials as strategic assistance continues to materialise. Policy recommendations precipitated by Berlin’s special panellist discussions are liable to resurface at the 2023 Ukraine Recovery Conference hosted by the United Kingdom, where definitive commitments are all but presupposed.