Scholz and von der Leyen propose new Marshall Plan for Ukraine's reconstruction

Scholz and von der Leyen propose new Marshall Plan for Ukraine's reconstruction
EU President Ursula von der Leyen and German Chancellor Olaf Schultz today in Berlin have proposed a new Marshall plan for Ukraine / bne IntelliNews
By Dominic Culverwell in Berlin October 25, 2022

Ukraine’s Western allies have proposed a new Marshall Plan for the reconstruction of Ukraine, Ukraine Business News reported on October 25.

The World Bank estimated that Ukraine’s reconstruction will cost at least €350bn, which the country cannot afford on its own. German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen hosted a one-day conference in Berlin and announced the creation of a new Marshall Plan.

"This is not a regular donor conference," German Chancellor Olaf Scholz told the conference, Reuters reported. "It is something more profound... A new Marshall Plan for the 21st century," alluding to the economic aid programme the US implemented in Western Europe after World War Two.

With concerns over financial aid succumbing to corruption in Ukraine, Scholz and von der Leyen’s proposed donor platform will allocate funds in a more transparent manner. Moreover, Ukrainian President Volodymyr Zelenskiy highlighted that donor countries will make up three-quarters of the reconstruction advisory board to alleviate corruption concerns.

In front of leading figures from Poland and Switzerland, as well as institutions such as the International Monetary Fund (IMF), von der Leyen emphasised that Ukraine “needs fast rehabilitation right now”, with Russia targeting hundreds of energy facilities and causing billions in damages over the last two weeks.

“We have no time to waste. The scale of destruction is staggering,” von der Leyen said, reported the Associated Press. “We need all hands on deck the G7, the European Union, Europe; strong partners like the United States, Canada, Japan, the UK, South Korea, Australia, New Zealand and many, many more.”

Zelenskiy told international donors earlier this month that Ukraine needs $38bn to make up for the budget deficit next year in addition to $17bn for a “fast recovery” plan to rebuild key infrastructure. However, speaking to the conference via video call, he mentioned that Kyiv hasn't yet “received a single cent for the implementation of the fast recovery plan”.

Nevertheless, the EU assured Kyiv that €9bn will be sent by the end of the year in macro-financial assistance. Moreover, von der Leyen mentioned that mechanisms are being developed to allocate $18bn to Ukraine next year.

“So, the discussion was about €1.5bn per month for Ukraine, financed by the EU. This gives a total amount of €18bn next year – an amount that Ukraine can rely on,” von der Leyen noted at the EU summit last week. 

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