It’s a huge ask — convincing countries and investors to plow billions of dollars of aid and investment into a country at war.

But for a growing number of countries, supporting Ukraine looks like a gamble worth taking, as Europe tries to stave off a humanitarian and economic disaster on its continent. 

The price tag is already a cool $411 billion, according to the World Bank, United Nations and European Commission — a figure that will only increase as the war grinds on. 

But as top global figures, governments and private investors flock to London Wednesday for the Ukraine Recovery Conference, signs point to the Western world preparing to open its purse strings to help Ukraine rebuild.  

On Tuesday, the European Commission unveiled a new multi-year, billion-euro project to help with the reconstruction of Ukraine — the first major economic grouping to outline a costed, multi-annual funding plan. 

Private investors are also limbering up. BlackRock and JPMorgan Chase are working with the Ukrainian government on a new Ukraine development fund — essentially a reconstruction fund that would tap seed capital for rebuilding projects. 

For Ukraine, it’s vital that the recovery project starts now. “Reconstruction is already happening. It’s part of our resistance,” Oleksandra Azarkhina, Ukraine’s deputy minister for communities, territories and infrastructure development told POLITICO. “People have left Ukraine, but at the same time, millions are staying — working, living here,” she said. “We need to find ways to provide access to the basic needs of those people.”

“Ukraine needs help — not just on the battlefield, but in terms of private and public investment.” 

Starkly laying out the moral case, President Volodymyr Zelenskyy stressed the importance of the conference in an address on Monday night, saying Ukraine’s economic recovery “should demonstrate to the world that freedom is invincible.”

Beyond wartime

Seven decades after the U.S.-run Marshall Plan helped to rebuild Western Europe after World War II, Europe finds itself at a decisive moment: questioning whether it should give Ukraine the resources and investments it needs to rebuild, even as war rages in the east and south of the country. 

It’s a Herculean task. Adjusted for inflation, the Marshall Plan — a package of loans and grants — provides less than a third of what Ukraine needs. Furthermore, the scale of the challenge keeps shifting — destruction of the Nova Kakhovka dam this month unleashed massive environmental as well as infrastructure damage, showing how the needs of Ukraine are changing in real time. 

“People want to bring their life back to normal, go to school, go to work. We cannot deter people from that. It’s something that should not be postponed until the post-war period because it is urgent and it is needed now,” Ukrainian Deputy Prime Minister Olha Stefanishyna told POLITICO.

Ukraine’s needs range from rebuilding the 300-plus bridges that have been destroyed, to de-mining and dealing with the millions of tons of industrial waste generated by Russia’s bombardment.

But despite the scale of the challenge, the EU is going all in — at least for now.

On the eve of the summit, the European Commission unveiled a new plan to help the country run its day-to-day operations and fund Ukraine’s reconstruction. Dubbed the “Ukraine Facility,” it will provide up to €50 billion in financial support for Ukraine from 2024 to 2027 — €33 billion in loans and €17 billion in grants, which will be managed via a new special instrument called the Ukraine Reserve.

Additionally, the Commission is also in talks with the European Investment Bank to provide EU budget guarantees to fund another €100 million of loans to Ukraine. 

It’s a significant commitment from the EU at a time when its budget is facing many demands from member states — from building its own collective defense capability and irregular migration, to bolstering the EU’s competitiveness and industrial base. 

The commitment “will provide perspective for our partners in Ukraine — predictability — and it should also incentivize other donors to step up too,” said European Commission President Ursula von der Leyen in announcing the plan in Brussels on Tuesday. But the EU’s motivation is not purely altruistic. Brussels has skin in the game and is vulnerable to any instability in Ukraine. Following the European Council’s decision to grant Ukraine and Moldova membership status last year, Ukraine is on track to join the EU. It’s therefore in the EU’s interest that a the country of 40 million that might one day join the bloc is a stable, economically healthy democracy.

The EU is also eyeing Ukraine’s potential in other ways.

European Commission vice president Maroš Šefčovič believes Ukraine — the biggest country, by area, that lies entirely in Europe — could be a crucial resource for Europe. “If you look at critical raw materials, Ukraine has 21 of the 30 materials needed by the EU. It could completely replace Russia’s supplies of critical raw materials to Europe,” he told POLITICO. 

Similarly, Ukraine could act as Europe’s energy storage hub. “Ukraine has the largest underground storage facilities for gas in Europe — 33 billion cubic meters, just at the border of Slovakia. The potential there is enormous,” he said.

“It could be a very important strategic asset for the energy security of the European Union,” he added, also name-checking hydrogen as another possible growth area for energy.

Hard road ahead

But challenges remain; least of all the potential for corruption in Ukraine, of which many EU countries remain wary. As a result, the European Commission’s package comes with strings attached. 

Brussels will exercise significant control over how the money is distributed and deployed. Under the Commission’s proposal unveiled Tuesday, the Ukrainian government must prepare a “Ukraine plan” detailing its vision for the country while meeting EU standards on governance and public administration. Money would be disbursed on a quarterly basis, provided conditions are met.

Companies and governments are also grappling with the challenge of investing in projects in a country still at war. The new Ukraine development fund would not start actually investing money until the war is over. 

Ukraine has been pushing back against these concerns. Stefanishyna points out that most of Ukraine is unoccupied and not in Russia’s crosshairs. “It’s highly unlikely that land aggression will return to this territory. People are already coming back,” she says.

But in a chilling reminder of Russia’s reach, Moscow launched a barrage of drone and missile attacks at Ukraine on Monday night, aiming as far west as Lviv just 70 kilometers from the Polish border.

Looming over the discussion about investment ahead of this week’s conference is the issue of insurance — a massive barrier to businesses wanting to invest in the country. 

Commission Vice-President Valdis Dombrovskis said last week that the Commission is in discussion with several partners, including the U.K. and the European Bank for Reconstruction and Development, about a potential scheme to incentivize the insurance industry to launch war insurance policies for Ukraine. Further details are expected to be announced Thursday. 

The other contentious issue is whether Russian assets, particularly the estimated $300 billion of frozen Russian central bank reserves, should be used to fund the reconstruction of Ukraine. A bipartisan bill was introduced in the U.S. Senate this week advocating this move. 

In Brussels, the jury is still out, as the EU tries to reach consensus amid concerns by some countries about the legality of such a move and the precedent it may set, with leaders to discuss the matter at a summit next week. As the war in Ukraine and debate about how to fund the reconstruction of the country continues, the issue of Russian assets could become the next big battle ground. 

But even if these hurdles are overcome, many warn of the scale of the challenge ahead. 

Jacob Funk Kirkegaard, a senior fellow at the German Marshall Fund, worries that the EU’s plan is not ambitious enough — particularly if the EU decides that Ukraine will ultimately become a member of the European Union by the early 2030s. 

“Obviously, this depends on what the war goes — but none of the estimates I’ve seen suggest that this is near enough for a full-blown, front-loaded recovery that would make Ukrainian EU membership in around 10 or 12 years feasible,” he says.

“You could have a reconstruction of Ukraine which isn’t ambitious enough.”

Paola Tamma contributed reporting.