BOOSTING UKRAINE

In late June, the Ukraine Recovery Conference (URC) convened in Gdánsk, Poland. The annual event is the pre-eminent international forum for planning Ukraine's post-war reconstruction and recovery. It endeavours to attract public and private investments, set out a roadmap for economic reforms, and ensure the sustainable and resilient rebuilding of communities. On the sidelines there were meetings of the Ukraine Donor Platform and other initiatives that also seek to raise funds for, and coordinate, the country's postwar reconstruction.

The increasingly unstable international situation in which the 2026 conference took place, with a shifting kaleidoscope of friendship and enmity, underscores the complications around commitments and investments secured whilst the war is ongoing. I will argue that the uncertainty in contemporary international relations is undermining the financing and planning for Ukraine's recovery.

What do conferences achieve?

A degree of scepticism follows such conferences around. There is a sense that platitudes are exchanged, funds are pledged to win headlines, and that commitments made often sound vague. Money is sometimes directed into the wrong hands because donors' interests seldom quite align with those of the country being helped.

When foreign governments commit funds to foreign states, they need to justify allocations to their own taxpayers. The UK foreign secretary, for example, announced a new recovery package for Ukraine of £0.5bn at the URC last month: the announcement emphasised the economic benefits to the UK, with £210m of the package comprising an export finance guarantee for UK-based Urenco to supply nuclear fuel to Ukraine's power plants. It is a good thing. But are we certain that the Ukrainians, if it was entirely left to them, would not prefer a different deal?

The use of intermediaries for disbursing loans and grants can make the situation worse. Projects end up shaped by rigid performance indicators, which too often deprive practitioners of the flexibility they need in implementation. Some scepticism is certainly warranted.

At the same time, events such as the URC bring together stakeholders and experts, and do a good job of focusing attention on pressing issues. Key issues for Ukraine include the need to rebuild its human capital, put in place the necessary postwar healthcare and housing provisions, and ensure support for its regions. Without such gatherings now, Ukraine's future recovery could be poorly coordinated, under-resourced, and inefficient.

Continuity...

There are two big challenges facing the planning for Ukraine's recovery today: prospects for an end to the war any time soon are diminishing and geopolitical alignments are shifting.

In respect of the first point, important as preparing for reconstruction is, the reality is that only so much can be done whilst the war is ongoing. The battlefield looks relatively stalemated. Nearly 1,600 days after Russia launched its full-scale invasion, it controls only 20% of the country; a percentage that has not changed very much since February 2022 (Russia occupied 7% of Ukraine prior to the full-scale invasion and quickly captured most of the rest it today controls). [1] Neither Ukraine nor Russia is likely to prevail soon, whilst Russia rejected Ukraine's recent overtures for direct talks.

To be sure, there is a certain impetus on the Ukrainian side. Its operations against Crimea are weakening Russian resolve, with the Kremlin declaring a state of emergency on the peninsula. Ukraine's drone attacks on oil and gas infrastructure are also leading to fuel shortages throughout Russia and souring the public's mood there. Even US President Donald Trump reportedly told G7 leaders last month he was 'impressed' by Ukraine's strikes.

But US efforts to broker a peace deal have noticeably slackened. The lack of diplomatic breakthrough is wearying officials, albeit I write this with President Trump due to meet Ukraine's Volodymyr Zelenskyy on the margins of the NATO summit in Ankara. Yet short of a major change to US policy, Ukraine can only slowly erode Russian capabilities.

...and change

The second issue is the dynamic situation around Ukraine. As the pattern of relations between states changes, so too do attitudes towards supporting Ukraine's recovery. As opinions among donor states and institutions shift, the confidence that what is pledged will materialise weakens.

Most obvious is the US's changed policy towards Europe, including its drop off in support for Ukraine since Trump returned to the presidency. This has several ramifications harming Ukraine's recovery planning. For one thing, the US, having depleted its own weapons stockpiles to wage war in Iran, has delayed arms shipments to Europe this year. Coupled with the fact that the US is berating its European allies for not spending more money on their defence needs, European governments are under pressure to divert money away from financing Ukraine's recovery.

Then there is Ukraine's strained relationship with Poland, which has traditionally been one of its staunchest backers. Relations have deteriorated considerably in recent weeks, such that President Zelenskyy pulled out of the recent URC and sent his prime minister to Poland in his stead.

The two countries' diplomatic row stems from Ukraine's decision to name a military unit in honour of the Ukrainian Insurgent Army (UPA), a group of second world war anti-Soviet partisans who slaughtered an estimated 100,000 Poles in Volhynia (a region that is today part of Ukraine) in 1943. This is sensitive history on which I would not wish to tread lightly, but I note that the historian Timothy Snyder called it 'ethnic cleansing' of the Poles (The Reconstruction of Nations, p.169). In response to the recent renaming, Poland stripped Zelenskyy of the Order of the White Eagle, Poland's highest honour, which had been bestowed on the Ukrainian president in 2023.

Poland's views on Russia and NATO remain unchanged, but committing resources to Ukraine has become a matter of contestation in its domestic politics. Just this week Poland's prime minister Donald Tusk said the country must be 'careful' about future financial commitments to Ukraine.

The effects of changing state-level support for Ukraine should not be underestimated. Companies and private individuals may only invest time and effort if they think it aligns with their national government's interests and objectives. If national governments draw down support for Ukraine, this could affect the legal and bureaucratic ease for other actors wishing to support Ukraine, affecting issues such as insurance, visa support, or access to technical and financial support.

What is to be done?

The foregoing discussion shows why planning for recovery is so complicated – and that is before one considers the competing ideas about what should be prioritised in the reconstruction process. Some recommendations:

1. Foreign governments should prioritise military support for Ukraine: Unless and until there is a favourable outcome to the war for Ukraine, whether through victory or a negotiated settlement, much of the recovery planning will be sitting idle. Politics in and between donor countries and agencies are changing, which is imperilling some of the planning already done. Facing pressures from domestic opponents to reduce commitments to Ukraine, European governments' past pledges will start to look less robust; the best way to address this is to ensure a swift end to the war by prioritising military aid.

   
   

2. International donors need to involve Ukrainian civil society in all stages of planning: Gatherings such as the URC help to coordinate aid and planning. Ukrainian initiatives such as the RISE Ukraine coalition work hard to ensure 'local ownership' of recovery processes, though surveys still show civil society routinely feels left out of international discussions or that it lacks a voice with the Ukraine government. Recent Chatham House research found many civil society actors feeling that they were seen as a useful source of information but that recovery policies remained 'top-down'.

   
   

3. The Ukrainian government can reform its tax system to attract foreign direct investments: In light of the argument made above, Ukraine will be its own worst enemy if it fails to make itself more attractive to foreign direct investments. Yet its convoluted tax system continues to attract negative coverage. If Ukraine wishes to join the European Union one day, it must help itself by showing that its systems are converging with EU norms and practices.

Footnote:

[1] Russia's gains continue to be very small. According to the Economist's estimations, Russia registered a net gain of 23 square kilometres of territory in June (data for the 30 days to 1 July; updated daily).