While reconstruction has begun, the architecture of reconstruction is currently ‘under construction’ itself. There is a need to ensure that Ukraine develop the domestic institutional and state capacity that are able to protect the public interest as the enormous scale of reconstruction needed will inevitably attract rent-seeking actors. A risk of ‘projectization’ – with thousands of disparate and semi-autonomous projects operating concurrently – can be avoided with effective management, sequencing and planning by the Agency for Restoration and Infrastructure Development. Ensuring the agency has sufficient resources is a key priority. Tailored instruments, including war insurance and investment funds, are needed to crowd-in investment and develop a multiplier effect to drive forward Ukraine’s recovery.
The Government of Ukraine needs a clear narrative for the reconstruction and recovery effort. It currently has a clear and effective narrative around the global mobilisation for military aid and assistance, but this has not been as clearly linked to the question of reconstruction and recovery – which can sometimes appear as separate to securing Ukraine’s on-going progress in the war. Given that Ukraine’s security and economic development are completely interlinked with one another, there are narratives that may be mobilised to link this effectively, e.g., casting the Ukraine Recovery Conference as a vital part of the counteroffensive.
The costs of the Russian invasion to Ukraine’s environment, institutions and human capital has been enormous. Social and environmental policy is critical to ‘building back better’ and addressing these enormous challenges. Women’s participation and involvement is key. Support needs to help sustain the civic ecosystems that have formed part of Ukraine’s extraordinary and ongoing resilience in the war.
Ukraine has the capacity to ‘insource’ much of its reconstruction. While needs assessments are important, so are assets and capability assessments and Ukraine has an abundance of such capabilities, from human capital (highly educated population) to agriculture, construction materials, manufacturing and industry. There is a need to insource the recovery by harnessing these capabilities and ensuring the institutional capacity exists to develop value added processing. The Ukrainian private sector will need the state to stimulate and drive forward demand, especially while the war is on-going, and create institutions that can credibly deliver the investment required to meet the huge challenge of reconstruction challenge.
It is important to be more specific when discussing the private sector and potential partnerships in the reconstruction of Ukraine, for example the role of local firms, exporters, international investors, and contractors and sub-contractors. These actors all have a role to play, but the ecosystem needs to be carefully designed.
Key downstream risks include balance of payments challenges, vulnerability to a decrease in international flows, and low levels of tax mobilisation. Ensuring that the Government of Ukraine has the fiscal and administrative resources to both fight the war and lead the recovery is critical to the country’s sovereignty over its war aims.