Post-war recovery is no less relevant in society than the course of military actions. It is discussed on every occasion by representatives of the government, civil society organizations, and ordinary citizens, as everyone wants to see a bright future after the hardships of war. The goal is to rebuild Ukraine and set it on a path of intensive economic development, just like Western European countries managed to recover, unite, and achieve a high level of prosperity after World War II.
However, success in the reconstruction efforts is not guaranteed, as it depends on numerous factors that will determine the outcome. Planning how the recovery should look and setting clear priorities for the state to rebuild are among the most critical issues in preparation for reconstruction. At present, adopting a systematic approach and having a comprehensive vision seems more challenging than the barrage of statements on the subject. Nevertheless, the first attempts to form a state reconstruction policy are already underway, mainly driven by government initiatives responsible for the country’s economy and development.
Let us try to understand what the process of post-war recovery will look like based on decisions already made by the government. The question also arises as to whether everything referred to as “reconstruction” truly falls under that category.
What should be considered as reconstruction?
When we talk about post-war reconstruction, it primarily refers to the restoration of the economy. After all, money generates even more money. The overall goal of this process is to ensure that businesses and the population once again generate gross domestic product for the country, and the larger the volume, the better.
This means that not every state activity that involves the expenditure of budget or donor funds should be automatically categorized as post-war reconstruction. For instance, restoring power lines or water pipelines after missile strikes is undoubtedly necessary. However, this is more about the restoration of critically important infrastructure objects necessary for people’s livelihoods.
These are typical economic processes for the state and communities, which would occur even without the war. Not every bucket of asphalt used to fill a pothole is part of the reconstruction process but rather the fulfillment of regular functions of various governmental or municipal structures.
In contrast, post-war reconstruction has a single root cause — the war, which resulted in the destruction of a significant portion of communities and production facilities. It also has a singular goal — to make the country more successful than it was before the war. Clearly, the reconstruction plan should be unified, so that every citizen understands what the government is doing and why. After all, the funds for reconstruction will come, in part, from taxpayers’ money. However, the government’s planning in this regard is not as satisfactory as it should be.
The importance of data
The issue with data for planning state processes in Ukraine is not entirely new. For over two decades, there has been no population census conducted, despite it being normally done once every ten years. And it’s not just about knowing how many people live in the country. While this data is essential, it is not the most decisive factor.
A significant part of state planning is tied to understanding the characteristics of the population, not just its size. Currently, Ukraine lacks such data due to the absence of a recent census and the extensive external and internal migration processes caused by the war. This presents a serious problem, as reconstruction planning is closely related to demographics, including population size, age distribution, geographic distribution, qualifications, and more.
The scale of the problem is vividly demonstrated by the discrepancy between the data provided by the UN and the State Border Guard Service regarding the number of people who have left Ukraine after the beginning of the large-scale invasion. The difference is three million individuals. The UN data suggests that around eight million people have left Ukraine due to the war, while the Institute of Demography estimates the number of Ukrainians abroad to be approximately five million, relying on the data from the State Border Guard Service. So, what data should be considered as the starting point? How many people are still in the country?
The situation becomes even more challenging when it comes to understanding the future plans of those who left the country. It is crucial to know how many of them intend to return after the war and where exactly within the country. It is uncertain whether someone from Kharkiv will return to Kharkiv or if a person displaced from Mariupol will return there. This information is essential to determine where and what needs to be rebuilt. Furthermore, there is a lack of data on the qualifications, education, and professional aspirations of these individuals. Only by having this dataset, we can actively begin the planning process.
Such data can only be realistically obtained after the end of the war and conducting a nationwide population census. According to the law, the census program must include questions about the composition and family relationships of household members; gender; age; date and place of birth; marital status; ethnic origin; language characteristics; citizenship; education; sources of livelihood; employment; migration activity; and housing conditions.
See also: 5 steps towards Russian funds for reconstruction of Ukraine
There is no other way to obtain this data from individuals residing in the territory of Ukraine. Previously, the government proposed conducting an electronic population census by gathering data from mobile operators. However, this approach was sharply criticized by demographers, as it would provide little information for reconstruction planning. The results of such a study would reveal almost nothing about the population’s characteristics, making it unsuitable for effective planning.
The second block of essential information consists of data from businesses that have relocated within the country. A significant number of them moved from the east and south to the west. Additionally, any economic relations with Russia have ceased. As a result, production and service-oriented businesses have either shifted focus to the domestic market or engaged in foreign economic activities with EU countries. There is no guarantee that companies that moved from Mykolaiv or Zaporizhzhia to Lviv or Zakarpattia will return. Those businesses oriented towards the EU market are likely to remain in their new locations, along with their migrant workers.
Therefore, before claiming readiness to rebuild everything, it is crucial to determine if everything needs to be rebuilt and, most importantly, for whom. The central question in the country’s reconstruction remains the people and their needs, rather than the territory itself.
First decisions: much PR, little strategy
An example of how the government lacks strategic planning but aims to make a good impression on the international community and its people is the decision to experimentally restore war-affected settlements. The government proposes to rebuild five war-ravaged settlements: the towns of Borodianka and Moschun in the Kyiv region, the village of Posad-Pokrovske in the Kherson region, the town of Trostianets in the Sumy region, and the villages of Tsyrkuny in the Kharkiv region and Yahidne in the Chernihiv region.
This decision essentially initiates reconstruction without any clear plan. The list of objects for restoration or construction will be determined by regional state administrations based on proposals from community authorities. The final decision will be made by the Reconstruction Agency. Within the experiment, the restoration of objects of all forms of ownership is permitted: private, state, and communal.
However, the lists of objects to be restored will be formed by community authorities based on the community’s priority needs. The experiment will be funded from the resources of the Fund for Elimination of the Consequences of Armed Aggression and other non-prohibited sources. The list of these sources is not specified, of course.
It is essential to note that this experiment will be conducted from 2023 to 2025. During its implementation, the rules for state funding of capital construction and specific provisions of the Order for the use of funds from the Fund for Elimination of the Consequences of Armed Aggression will not apply. On the one hand, this significantly simplifies the decision-making process for administrators. On the other hand, it creates a wide field for corruption and other abuses due to the lack of control over the spending process.
Moreover, the reconstruction process of these settlements does not take into account the significant decrease in the number of inhabitants. Nor does it consider the impact of such changes on the employment structure, and thus, the need for infrastructure and job opportunities in these communities.
The restoration of individual communities begins without developing comprehensive approaches to the future economic development of the country and a general model for the country’s reconstruction. This may lead to the inefficient use of funds.
Priorities
Analyzing the existing government decisions on reconstruction, it seems that officials are not overly concerned about where to obtain the funds for implementing their plans. Sometimes they rely on local budget funds, and other times, they count on mythical reparations. However, the history of the Fund for Elimination of the Consequences of Armed Aggression demonstrates the reality of prioritizing needs and the situation with reconstruction funding.
In the fall of 2022, the Verkhovna Rada (Ukrainian Parliament) established the Fund for Elimination of the Consequences of Armed Aggression. By May, more than 60 billion hryvnias were transferred to the fund. These funds were intended to be prioritized for the restoration of critical infrastructure, providing housing for internally displaced persons (IDPs), and purchasing equipment for hospitals and schools. However, in April of this year, the government made changes to the resolution and allowed the fund’s money to be directed towards compensations for destroyed and damaged housing.
This is due to the fact that on May 22, the law on compensation for destroyed and damaged housing came into force. According to this law, there are several sources of funding for compensation. These sources include funds from the state and local budgets, international financial organizations, other creditors and investors, international aid, and even reparations from Russia. However, as these funds are not yet available, government officials decided to redirect money from infrastructure projects to housing compensation.
Additionally, the government adopted a resolution to allocate 4.4 billion UAH (119 million USD) for the housing restoration program called Erecovery. These funds can be used to purchase construction materials for current or capital repairs, which the compensation recipient can either do independently or hire contractors for.
Interestingly, neither in the resolution allocating 4.4 billion UAH nor in the resolution on the procedure for providing compensation within the Erecovery housing restoration program is there any reference to the law on compensation. It appears that parallel planning and legislative regulation processes for reconstruction are happening in the parliament and the government, which instead of a systematic approach, lead to management chaos.
It would be fair if the government clearly communicated its priorities and capabilities. The state is obliged to pay compensation for destroyed and damaged property. The question is the extent and timing of such payments. According to data from the Kyiv School of Economics, the losses to the housing stock from Russian aggression amounted to nearly 2 trillion UAH (54 billion USD) as of March. This amount is slightly less than the size of the expenditure part of the state budget for 2023. Therefore, it would be rational to work within the framework of an approved program with clear funding, rather than inflating it and diverting funds from other directions. As for the priority of expenditure, Ukrainians support an approach where businesses and job opportunities are restored first and then focus on housing.
After reviewing the government’s decisions related to reconstruction, a few simple thoughts come to mind. First, there is no plan. It doesn’t seem like anyone in the government, parliament, or other state structures is trying to develop a strategy. And it is essential to have one to efficiently and successfully rebuild the country’s economy under very limited financial resources.
The second thought is that the topic of reconstruction will become the basis for the government’s election campaign after the war. As a result, high-ranking officials are already guided more by the logic of political PR than by common sense and the needs of the people.
Thirdly, the non-systemic approach to reconstruction creates an unlimited space for corruption and other abuses by the authorities. Instead of new industries and manufacturing centers around Kyiv and other cities, a few exclusive elitist towns for “heroic” officials of reconstruction will emerge.
The recipe for preventing such a scenario is quite simple. Firstly, the Constitution states that the highest value of the state is the individual. Therefore, it would be logical to place the principle of “money follows the person” at the center of reconstruction. In practice, this means that if a former resident of the Kharkiv region decides to settle and live in Zakarpattia, the state should assist him in acquiring housing in the new location rather than rebuilding his previous home where he no longer wishes to reside.
Second, job creation should be prioritized over the restoration of housing and secondary infrastructure. The state’s task is to give able-bodied people affected by the war the opportunity to work again as soon as possible, and not to turn them into perpetual welfare recipients. Third, there must be public control over every penny spent by the government. Under such conditions, there will be a chance to rebuild the country to be truly better than it was before the war.
Originally posted by Oksana Zabolotna on LB. ua. Translated and edited by the UaPosition – Ukrainian news and analytics website
