Ukraine Reconstruction Costs “Hopefully” to Rise

The costs of rebuilding Ukraine and its economy are already projected to be 2.6 times greater than the country’s entire 2022 GDP. But in some ways, Ukraine and its allies should hope the costs are even higher.

The World Bank’s most recent estimates for reconstruction and recovery in Ukraine have grown to US $411 billion. Along with the European Commission and the United Nations, the World Bank has produced a “Rapid Damage and Needs Assessment” that evaluates the impacts of Russia’s war with Ukraine across 20 different sectors. The highest needs are related to transportation (22%), housing (17%), energy (11%), and social protection and livelihoods (10%). They found that $135 billion will be needed just to address physical damage to buildings and infrastructure, and that damage to the energy sector created the sharpest rise in needs over the last year—largely a result of Russia’s continued targeting of Ukraine’s electrical grid and energy hubs.

But Russia’s unprovoked invasion has wreaked more harm upon Ukraine than any calculated monetary costs of infrastructure rebuilding could possibly capture. It has undone the past 15 years of economic progress, slashing Ukraine’s GDP by 29%, and pushing approximately 1.7 million Ukrainians into poverty. The Kakhovka Dam disaster added another item to Ukraine’s infrastructure reconstruction costs, but more than that, it displaced thousands from their homes, poisoned vast stretches of agricultural land, and drained the main water supply from the Zaporizhzhia nuclear plant’s cooling system.

Western media usually characterizes Russia’s war against Ukraine as having begun some 16 months ago. Ukrainians, however, remind us that Putin’s invasion really began in 2014 when he dispatched Russian operatives into Crimea (leading to Russia’s illegal annexation of the territory) and fueled separatist wars in two bordering Ukrainian territories. When Volodymyr Zelenskyy tells the world that his country will not rest until Russians have left Ukraine, he makes clear that he means all of Ukraine—including the areas that Russia seized nearly a decade ago.

The World Bank’s latest rebuilding estimate doesn’t factor in costs from the territory that Russia currently occupies. In other words, it doesn’t include the large peninsula of Crimea—an area that’s 10,000 square miles in size, home to nearly 2 million people, and the site of several important companies involved in agribusiness, and chemicals and fuel production. It also excludes recovery in the regions controlled by Russian-backed separatists in Luhansk and Donetsk.

While the cost of rebuilding Ukraine and its economy have risen in recent months in the eyes of the World Bank, Kyiv is far from deterred by the rising price. In fact—the opposite. Ukraine hopes the cost estimate will continue to rise and rise again as it recaptures the territories of Russian occupied Crimea, Donetsk, and Luhansk.

Finally, Ukraine also argues that its victory won’t be final and complete until it is a member of the EU and, it hopes, NATO. There are many steps involved in the accession process for both…steps that will require civic engagement, political reforms, and strong government institutions. That will be a time-consuming and costly process…but Ukraine understands these steps will be necessary to secure a bright future and protect itself—and the world—from future Russian aggression.

This blog was complied with the assistance of Caroline Moody