Tuesday, 28 May, 2024

Top EU official backs multi-trillion Marshall-style plan to rebuild Ukraine



“It’s a challenge for the entire free world to make sure that this (support) will be provided,” says President of the European Investment Bank Werner Hoyer.

Ukraine's Finance Minister Serhiy Marchenko says the country's economy is expected to shrink by almost half this year.
Ukraine’s Finance Minister Serhiy Marchenko says the country’s economy is expected to shrink by almost half this year. (AA)

A top European official hasbacked a multi-trillion-euro 'Marshall'-style plan to rebuildUkraine, pledging the firepower of the EU's lending arm for whathe said must be a global rescue effort.

Werner Hoyer, president of the European Investment Bank,said Europe must not be left alone to foot the vast bill that hepredicted could run into the trillions.

Under the post-World War Two, US scheme known as theMarshall Plan, the United States granted Europe the present-dayequivalent of some $200 billion over four years in economic andtechnical assistance.

Addressing the need for a similar programme for Ukraine,Hoyer said that the cost of rebuilding the country hadbeen discussed at recent meetings at United Nations, theInternational Monetary Fund and World Bank in Washington.

"What will it cost to rebuild, reconstruct Ukraine? Figureswere flying around the room … but one thing is quite clear tome: We are not talking about millions but trillions" said Hoyer,a former German foreign office minister under Chancellor HelmutKohl following the fall of the Berlin Wall.

Hoyer's remarks underscore how the European Union ispreparing to tackle the ever-growing economic impact of the conflict,using the clout of the pan-national European Investment Bank,which typically funds infrastructure, such as roads and bridges.

"It's a challenge for the entire free world to make surethat this (support) will be provided," said Hoyer, one of thehighest-ranking officials from Germany in the European Union.

"The political leaders must make up their mind as soon aspossible," Hoyer said. "But I think we need a structure that isreally targeting a global audience and not just the taxpayers inthe European Union."

The debate is unfolding against the backdrop of the conflict inUkraine and an increasingly tense stand-off between Moscow andBrussels, which has backed tough sanctions to isolate Russia.

READ MORE:$60B and rising: World Bank's estimate on Ukraine infrastructure damage

Bank guarantees

Earlier in the day, Ukraine's Finance Minister Serhiy Marchenko said the country's economy is expected to shrink by almost half this year.

Researchers from Economic Policy Research, a network of economists, estimate that the cost of rehabilitating Ukraine is already $530 billion-$630 billion – more than three times its annual economic output before the attack.

Hoyer's forecast suggests this could yet rise sharply.

Hoyer said that a critical part of the plan will be for theWest's large state-sponsored banks to provide "guarantees" thatwould underwrite Ukraine's government once the conflict ends.

Doing that should help Kiev regain access to globalborrowing markets and speed up its reconstruction.

"If we want to entice the investor community to give ustheir money… then we need to give them reassurances," Hoyersaid, referring to guarantees against heavy losses forinvestors.

"I'm convinced that the capital markets will be open tothis."

READ MORE:Poll: Many Americans think Biden 'not tough enough' on Russia over Ukraine

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