Over €10 billion has now been pledged for Ukraine’s recovery. It’s nowhere near enough

Clearly angered by the intensification of Russia’s air campaign against Ukraine, Donald Trump has pivoted from the suspension of US military assistance to Ukraine to promising its resumption. Russia’s strikes on major cities killed more civilians in June than have died in any single previous month, according to UN figures.

Over the past two weeks, the US president has made several disparaging comments about his relationship with Vladimir Putin, including on July 13 that the Russian president “talks nice and then he bombs everybody in the evening”.

Not only will the US resume delivery of long-promised Patriot air defence missiles, Trump is now also reported to be considering a whole new plan to arm Ukraine, including with offensive capabilities. And he has talked about imposing new sanctions on Putin’s regime.

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This is the background against which the eighth Ukraine Recovery Conference took place in Rome on July 10 and 11. The event, attended by many western leaders and senior business executives, was an important reminder that while the war against Ukraine will be decided on the battlefield, peace will only be won as the result of rebuilding Ukraine’s economy and society.

Ending the war anytime soon and on terms favourable to Kyiv will require an enormous effort by Ukrainians and their European allies. But the country’s recovery afterwards will be no less challenging.

According to the World Bank’s latest assessment, at the end of 2024 Ukraine’s recovery needs over the next decade stood at $524 billion (£388 billion). And with every month the war continues, these needs are increasing. Ukraine’s three hardest-hit sectors are housing, transport and energy infrastructure, which between them account for around 60 per cent of all damage.

At the same time, the International Monetary Fund (IMF) provided a relatively positive assessment of Ukraine’s overall economic situation at the end of June, forecasting growth of between 2 per cent and 3 per cent for 2025 — likely to grow to over 4 per cent in 2026 and 2027. But the IMF also cautioned that this trajectory — and the country’s macroeconomic stability more generally — will remain heavily dependent on external support.

Taking into account a new €2.3 billion package from the EU, consisting of €1.8 billion of loan guarantees and €580 million of grants, the cumulative pledge of over €10 billion (£8.7 billion) made by countries attending the Ukraine recovery conference is both encouraging and sobering.

It is encouraging in the sense that Ukraine’s international partners remain committed to the country’s social and economic needs, not merely its ability to resist Russia on the battlefield.

But it is also sobering that even these eye-watering sums of public money are still only a fraction of Ukraine’s needs. Even if the EU manages to mobilise its overall target of €40 billion for Ukraine’s recovery, by attracting additional contributions from other donors and the private sector, this would be less than 8 per cent of Ukraine’s projected recovery needs as of the end of 2024.

As the war continues and more of the (diminishing) public funding is directed towards defence expenditure by Kyiv’s western partners, this gap is likely to grow.

Overcoming the trauma of war

Money is not the only challenge for Ukraine recovery efforts. Rebuilding the country is not simply about undoing the physical damage.

The social impact of Russia’s aggression is hard to overstate. Ukraine has been deeply traumatised as a society since the beginning of Russia’s full-scale invasion in February 2022.

Generally reliable Ukrainian casualty counts — some 12,000 civilians and 43,000 troops killed since February 2022 — are still likely to underestimate the true number of people who have died as a direct consequence of the Russian aggression. And each of these will have left behind family members struggling to cope with their loss. In addition, there are hundreds of thousands of war veterans.

Even before the full-scale invasion of Ukraine, there were nearly half a million veterans from the “frozen” conflict that followed Russia’s annexation of Crimea and incursion into eastern Ukraine. By the end of 2024, this number had more than doubled to around 1 million. Most of them have complex social, economic, medical and psychological needs that will have to be considered as part of a society-wide recovery effort.

Returning refugees

According to data from the UN refugee agency (UNHCR), there are also some 7 million refugees from Ukraine and 3.7 million internally displaced people (IDP). This is equivalent to one quarter of the country’s population. The financial needs of UNHCR’s operations in Ukraine are estimated at $800 million in 2025, of which only 27 per cent was funded as of the end of April.

Once the fighting in Ukraine ends, refugees are likely to return in greater numbers. Their return will provide a boost to the country’s economic growth by strengthening its labour force and bringing with them skills and, potentially, investment. But like many IDPs and veterans, they may not be able to return to their places of origin, either because these are not inhabitable or remain under Russian occupation.

Some returnees are likely to be viewed with suspicion or resentment by those Ukrainians who stayed behind and fought. Tensions with Ukrainians who survived the Russian occupation in areas that Kyiv may recover in a peace deal are also likely, given Ukraine’s harsh anti-collaboration laws.

As a consequence, reintegration — in the sense of rebuilding and sustaining the country’s social cohesion — will be a massive challenge, requiring as much, if not more, of Ukraine’s partners’ attention and financial support as physical reconstruction and the transition from a war to a peace-time economy.

Given the mismatch between what is needed and what has been provided for Ukraine’s recovery, one may well be sceptical about the value of the annual Ukraine recovery conferences. But, to the credit of their organisers and attendees, they recognise that the foundations for post-war recovery need to be built before the war ends. The non-military challenges of war and peace must not fall by the wayside amid an exclusive focus on battlefield dynamics.