EXCLUSIVE Top EU official backs multi-billion dollar plan to rebuild Ukraine
- Rebuilding Ukraine will cost trillions of euros – EU’s biggest banker
- EIB Managing Director Hoyer calls for a Marshall-style plan for Ukraine
- Urges West and his banks to guarantee Ukraine’s finances
BRUSSELS, May 11 (Reuters) – A top European official has backed a multi-trillion-euro “Marshall-like” plan to rebuild Ukraine, pledging the firepower of the EU’s lending arm for what it will. said to be a global rescue effort.
Werner Hoyer, President of the European Investment Bank (EIB), said Europe should not be left alone to foot the huge bill for Russia’s invasion of Ukraine which he said could be amount to trillions.
Under the Marshall Plan implemented after World War II, the United States granted Europe the current equivalent of some $200 billion over four years in economic and technical aid.
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Addressing the need for a similar program for Ukraine, Hoyer told Reuters the cost of rebuilding the country had been discussed at recent meetings at the United Nations, International Monetary Fund and World Bank in Washington.
“What will rebuilding, rebuilding Ukraine cost? Numbers were flying around the room…but one thing is clear to me: we’re not talking millions but trillions,” said Hoyer, a former German minister. of Foreign Affairs under Chancellor Helmut. Kohl after the fall of the Berlin Wall.
Hoyer’s remarks underscore how the European Union is preparing to deal with the ever-increasing economic impact of war, using the leverage of the pan-national EIB, which typically funds roads, bridges and other infrastructure.
“It’s a challenge for the whole free world to make sure that this (support) will be provided,” Hoyer said.
“Political leaders need to make up their minds as soon as possible,” Hoyer said. “But I think we need a structure that really targets a global audience and not just European Union taxpayers.”
Russian forces razed towns, villages and villages in Ukraine, destroying infrastructure, disrupting normal economic activity and displacing an estimated 11 million people. The invasion triggered extensive Western sanctions against Russia.
In a speech at a military parade on Monday, Russian President Vladimir Putin gave no indication of the duration of what he calls a “special military operation”. US intelligence services say they expect a protracted conflict.
Ukraine’s economy is expected to contract by 45% this year, its finance minister, Serhiy Marchenko, said on Wednesday. Read more
“The Ukrainian people are paying a huge price, and this price cannot be assessed,” Marchenko said.
The Ukrainian central bank estimates that a third of companies have completely stopped production for now, while the United Nations estimates that almost 6 million people – around 13% of the population – have fled abroad.
Economic Policy Research, a network of economists, estimates that the overall cost of rebuilding Ukraine is already 500-600 billion euros ($528-633 billion), more than triple its annual economic output. before the war.
Hoyer’s forecast suggests this could rise sharply further.
Hoyer said an essential part of the plan would be for major state-sponsored Western banks to provide “guarantees” to support the Ukrainian government once the war is over.
This should help kyiv regain access to global capital markets, just as Iraq did after the second Gulf War that toppled Saddam Hussein, and speed up its reconstruction.
“If we’re going to get the investment community to give us their money…we have to reassure them,” Hoyer said, referring to safeguards against heavy losses for investors.
“I am convinced that the capital markets will be open to this.”
Many private global investment funds that have lent to the Ukrainian government and companies since a debt reduction in 2015 – following Russia’s 2014 takeover of Crimea – say they understand another will be now inevitably necessary.
Kyiv has a nearly $1 billion bond payment due in September, which it has repeatedly said it intends to honor.
“I have the impression that we will have to discuss with the Ukrainians the best way to spend the money coming from the West,” said Sailesh Lad of AXA Investment Managers.
“Nobody will want to say, ‘I’m going to be a resister,'” added Ray Jian of Europe’s biggest fund manager Amundi, referring to how bondholders were likely to accept debt relief because they understood perfectly that Ukraine would not have been in such difficulties without the invasion.
Having already made finance available to Ukraine, Hoyer said the EIB has an additional immediate support of 1.5 billion euros if approved by the European Commission.
The “great uncertainty” for Ukraine and investors, he said, is whether Russia will be permanently pushed back or remain locked in a series of frozen conflicts like in Crimea.
Hoyer said the international aid could be used to fund rail infrastructure to transport Ukraine’s wheat harvest from last year, adding that around €8 billion worth of wheat was still stuck in the country. .
“Part of this scandal is that Ukraine is sitting on an enormous amount of wealth that it cannot monetize. This needs to be addressed.”
He said financial aid could be sent even before the end of the conflict, for example to repair bridges in safer parts of the country.
($1 = 0.9472 euros)
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Additional reporting by John O’Donnell and Karin Strohecker Editing by Hugh Lawson and Gareth Jones
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