Financial architecture of reconstruction: how Ukraine will spend $1 trillion on recovery

10 July 16:49

Rebuilding and modernizing Ukraine will cost $1 trillion over 14 years. The head of the Ukrainian government, Denys Shmyhal, wrote about this on his Telegram channel, summarizing his online speech at a meeting of the Ukrainian Ministerial Donor Platform within the framework of the Ukraine Recovery Conference (URC2025) in Rome (Italy), "Komersant Ukrainian" reports.

According to him, this figure is not exaggerated and corresponds to the scale of what has been destroyed, lost, and what needs to be created from scratch. That is why the Ukrainian side has proposed a clear financial concept, which includes the creation of two large funds totaling a trillion dollars.

The first would be the $540 billion Ukraine Fund, based on the World Bank’s estimate of the needs for physical reconstruction. The Ukrainian government proposes to form this fund using confiscated Russian assets and a special tax on the export of Russian raw materials. This is not only a fair compensation from the aggressor state, but also a signal that the destruction of someone else’s land will have to be paid for.

The second fund, the $460 billion European Structural Fund for Ukraine, will become a platform for large-scale attraction of EU private sector investment in Ukrainian manufacturing, science, and infrastructure. Its task is to create a mutually beneficial economic partnership that will benefit the whole of Europe.

Newest challenges for Ukraine and the world: what Denys Shmyhal says about them

At the same time, Ukraine and the international community face two strategic challenges: increasing sanctions pressure on Russia and mobilizing sufficient financial resources to enable Ukraine to effectively resist the war and at the same time not lose its development prospects.

The Prime Minister noted that thanks to joint efforts with partners, official Kyiv has already overcome a significant part of the financial challenges. Thus, the ERA mechanism was launched, which opens the way to the use of frozen Russian assets. Ukraine fulfills all the conditions of cooperation with the IMF and has stable funding to cover the state budget deficit for 2025.

Shmyhal added that the Ukrainian side is already working on securing financial support for 2026 and 2027, taking into account possible scenarios of continuation of the war or transition to reconstruction in peace.

As part of these preparations, Ukraine has asked its European partners to contribute to European security through direct co-financing of the Ukrainian army. Today, Ukraine’s annual military expenditures amount to $100-120 billion. If the conflict ends, the cost of maintaining the army, excluding the cost of weapons, will be about 50 billion euros annually.

We invite our European partners to invest in European defense by co-financing the Ukrainian army. Military expenditures now amount to $100-120 billion. In peace and without taking into account the production of weapons, the maintenance of the Ukrainian army will cost 50 billion euros a year. We expect that half of this amount will be provided by the EU,” the Prime Minister wrote.

Rebuilding Ukraine in the midst of war: key statements at the Recovery Conference

President of the European Commission Ursula von der Leyen officially announced the creation of the European Flagship Fund for the reconstruction of our country.

“We are literally betting on the future of Ukraine by using public funds to attract large-scale investments,” she said.

Ursula von der Leyen added that the fund will boost investments in energy, transportation, critical raw materials and dual-use industries. We are literally betting on the future of Ukraine by using public funds to attract large-scale investments.

In his turn, German Chancellor Friedrich Merz urged Slovakia not to block the new package of sanctions against Russia.

We are preparing the 18th EU sanctions package against Russia. Only one country is missing for its adoption. I urge Slovakia and its Prime Minister to stop their resistance and open the way for this decision,” Merz said.

As a reminder, Slovakia is asking to postpone the adoption of the 18th package of sanctions against Russia. The reason is the need to find a satisfactory solution to the negative consequences for Slovakia of the proposed RePowerEU legislation.

Ukraine Recovery Conference 2025: What kind of help will Ukraine receive from the world?

Deputy Speaker Olena Kondratyuk posted on her Facebook page about the first decisions of the international community regarding Ukraine. According to her, the Netherlands has declared its readiness to provide official Kyiv with 300 million euros for recovery and strengthening in 2025-2026. This was confirmed by Dutch Foreign Minister Kaspar Veldkamp.

How the aid from the Netherlands will be spent:

30 million euros will be allocated to support Dutch companies and organizations in creating projects that contribute to the reconstruction and sustainable recovery of Ukraine through the Partnership Fund for Ukraine grant program;
eUR 52 million will be spent in 2025 to restore energy infrastructure and drinking water supply in Ukraine;
4 million euros will be spent on the construction of a new wing of the Children’s Hospital in Lviv in cooperation with the Princess Maxima Center for Pediatric Oncology in Utrecht.

On the sidelines of the conference, there was also talk of “frozen” Russian assets. According to the head of the Cabinet of Ministers, Denys Shmyhal, Ukraine has received €1 billion from the EU using the profits from these assets.

The politician noted that since the beginning of the year, Ukraine has already received more than $18.5 billion in frozen Russian money. “These funds are directed to Ukraine’s resilience and ‘rapid recovery’.

The ERA initiative is yielding good results, but we will not stop there. At the URC-2025, we urge our partners to work with us to develop legal instruments for the complete confiscation of all Russian assets,” Shmyhal shared his plans.

In addition, the President of the European Commission announced a new aid package worth 2.3 billion euros for Ukraine’s recovery.

According to her, these are not just numbers, but concrete commitments that will be transformed into rebuilt homes, reopened hospitals, resuscitation of small and medium-sized businesses, and strengthening the country’s energy security.

She added that the signed agreements should become a financial lever for attracting even more funds – up to 10 billion euros of investments that will contribute to the real restoration of life where the war left ruins.

Von der Leyen emphasized that today’s support is not just crisis relief, but a recognition of a long-term strategic partnership. Every day Ukraine is getting closer to the European Union, not only through political statements or membership prospects, but through real steps in integration into the European space: in the fields of energy, education, digital communication, and cultural exchange. Therefore, European support is a guarantee not only of reconstruction, but also of Ukraine’s gradual inclusion in the larger European community as a full member.

Restoring Ukraine after the war: Volodymyr Zelenskyy’s opinion

The Ukrainian president emphasized that now we need to create a coalition for recovery: not a formal one, but a real, effective one, united by a shared responsibility to Ukraine and the world.

Let this very moment, when the most intense attacks on Ukrainian infrastructure since the beginning of the war are underway, be the beginning of such a coalition. In a situation where Russian terror is targeting not only civilian objects but also the future of Ukrainian statehood, we have a chance and a duty to launch a new wave of progress, and this requires not temporary solutions but strategic thinking,” Zelenskyy said.

The President clarified that such an approach should be decisive and large-scale, similar to the Marshall Plan. But instead of postwar Europe, we have Ukraine, which is fighting for survival right now. And this plan cannot be written behind closed doors, it must be developed together by all those who share the values of freedom, democracy and human dignity.

We must clearly agree that the frozen Russian assets should be used to rebuild Ukraine. We need to use the assets themselves, not just the income from them, and much more actively than we are doing now to save lives. We also need a clear system of reconstruction – a special recovery fund and financing at different levels: for the state budget of Ukraine and local communities,” the President noted.

He added that Ukraine also needs a transparent and effective system of reconstruction. A special fund should be created to provide long-term financing for both the state budget of Ukraine and the needs of local communities that are the first to bear the brunt of war. This fund should contain not only money, but also control, audit, clear rules that will give partners confidence in every hryvnia invested in Ukraine.

The Ukrainian leader emphasized that at a time when Russia is stepping up its attacks on energy infrastructure, logistics, and businesses, Ukraine should not be allowed to have a shortage of funding for drone production. After all, drones are not only a defense tool, but also a chance to change the very logic of this war.

According to Zelenskyy, the Ukrainian air defense and drone technology industry should become a global project. It should be supported not by ten or twenty, but by more than thirty countries, hundreds of companies from Ukraine, Europe, the United States, and around the world. This is an investment in common security, in the future, in innovations that save lives.

Context

On Thursday, July 10, the Ukraine Recovery Conference kicked off in Rome, Italy. Ukrainian President Volodymyr Zelenskyy and First Lady Olena Zelenska have already arrived at the event.

The event is also attended by members of the governments of Ukraine’s allies, international organizations, financial institutions, representatives of business, regions, municipalities, and civil society. In particular, Italian Prime Minister Giorgia Meloni, Polish Prime Minister Donald Tusk, German Chancellor Friedrich Merz, and European Commission President Ursula von der Leyen have already arrived in Rome.