The recent meeting in Berlin on the reconstruction of Ukraine raises issues about what Ukraine will look like when and after the war ends. The Berlin conference, a follow-up to a July Ukraine Recovery Conference in Lugano, was organized by German presidency of the G7 and by the European Commission. Why consider Ukrainian recovery or reconstruction while Russia bombs key infrastructure sites is an obvious question. “It is never too early to start,” said German Chancellor Olaf Scholz. “We know from our own history that reconstruction is always possible,” he added.
Besides the assumption that the West will be the determining factor in reconstructing Ukraine, Scholz’s comment about reconstructing Ukraine and German history warrants examination. While the costs of reconstructing vary from $350 billion by the World Bank to $730 billion by Ukrainian officials, and the time involved is considered to be “several generations,” Scholz’s analogy of “a Marshall Plan for the 21st century” in Ukraine is not correct. It perpetuates the myth that Ukraine was a stable, functioning country before February 24, 2022, and that all that is needed is to return Ukraine to what it was before.
A brief review of the Marshall Plan shows Scholz’s error and the dangers of the analogy. The 1948 Marshall Plan transferred over $13 billion (about $115 billion today) of foreign aid to Western European countries after World War II. The principal beneficiaries were major industrial powers. Over 50% of the Marshall Plan’s aid went to the United Kingdom, France and West Germany, all successful industrial economies before the War. The United Kingdom received $1316 million (1948) or 26% of the total; France received $1085 million (1948) or 18% of the total; West Germany received $510 million (1948) or 11% of the total. The Marshall Plan resuscitated thriving industrial economies that had been devastated by war.
A “Marshall Plan for the 21st century” in Ukraine cannot resuscitate Ukraine’s economy. Ukraine has an agrarian economy. It has long been considered the breadbasket of Europe. In 2018 it was: the 5th largest world producer of maize, the 8th largest world producer of wheat and the 3rd largest world producer of potatoes. But it was not an industrial power. The devastation reeked by Russia will mean basic infrastructure will have to installed, not just replaced.
And the United Kingdom, France and West Germany were not subject to blatant corruption, at least not on the scale of Ukraine. In 2015, the Guardian called Ukraine “the most corrupt nation in Europe.” Transparency International’s 2021 Corruption Perception Index ranked Ukraine 122nd out of 180 countries, ranking second in Europe behind Russia. Billions of dollars flowing into a country well-known for corruption is not favorable for reconstruction.
But let’s try to be more positive. Instead of talking about reconstruction, recovery and resuscitating an economy, let’s talk about constructing an economy and even more. Following World War II, the defeated Japanese and Germans were under Allied control. Their political systems were rewritten and new constitutions were drafted. Both countries thrived, becoming major economic powerhouses with relatively stable governments. (Comparisons with Britain today cannot be avoided.)
The argument here is that if Ukraine is somehow victorious in the war, with enormous help, there will be an illusion that all is needed is to fix what was physically destroyed. There will be no need for deeper reforms. On the other hand, if Ukraine does survive as an independent, sovereign country, it will need fundamental changes, like Japan and Germany after World War II.
Talk of reconstruction and a Marshall Plan in Ukraine is an illusion. The 2014 coup d’etat that overthrew the pro-Russian President Viktor Yanukovych, the revolts in Maidan, the endemic corruption are all elided by comparisons with the United Kingdom, France and West Germany after World War II. Economically, Ukraine will have to accelerate its industrialization if not modernization if and when the war ends. Politically, it will have to change its institutional organizations as well as modifying a culture of corruption.
Reconstruction, recovery and talks of a Marshall Plan mythologize what Ukraine was before the war. In order for Ukraine to emerge successfully from the brutal Russian invasion, a more realistic analysis of what Ukraine was like before and what it may become are necessary. Constructing Ukraine is more ambitious, but much more realistic than talk of recovery or reconstructing.