Tag: Ukraine Reconstruction

How to Rebuild Ukraine with Security, EU Support, and Grants

Posted on September 4, 2025 | News

Silhouetted human capital migrants working on scaffolding at sunset, symbolizing labor market integration challenges.

A new review explains how to rebuild Ukraine after the destruction of war. It highlights the importance of lasting security, EU accession, and grant-based funding. The study breaks down costs, phases, and reforms to modernize the state and economy. The research is by Torbjörn Becker (SITE/SSE), Yuriy Gorodnichenko (UC Berkeley/CEPR), and Beatrice Weder di Mauro (CEPR/Geneva Graduate Institute/INSEAD).

The Scale of the Challenge

The war has left widespread human and material losses. The World Bank estimates $486 billion in recovery needs through 2023, with other figures running even higher. Therefore, plans to rebuild Ukraine must address the concentrated destruction in Donetsk and Kharkiv, where housing and infrastructure were hit hardest. In addition, more than 6 million refugees remain abroad, while millions are still displaced inside Ukraine. 

Building a Path to Recovery

First, the review gathers insights from hundreds of proposals into a clear plan. Moreover, to rebuild Ukraine, the authors stress linking recovery with EU accession, anticorruption, and private investment. Finally, they urge the use of grants instead of loans and recommend creating a single, empowered coordination body aligned with EU standards.

Key Research Findings

Recovery unfolds in three phases: emergency relief, restoring essential services, and long-term modernization tied to EU accession. Policymakers should prioritize grants over loans to avoid debt traps and attract private foreign direct investment with risk-sharing and war insurance. Ukraine must rebuild energy and housing sustainably, replacing old fossil-based systems and inefficient Soviet-era structures. Finally, rule-of-law reforms, transparent procurement, and community involvement play a critical role in preventing corruption and securing investor confidence.

Looking Ahead for Ukraine’s Future

To rebuild Ukraine, policymakers must secure the country militarily while tying reforms closely to EU accession. A lean EU-linked agency should coordinate funding and enforce conditions. Investment in education, reintegration of veterans, and energy efficiency will be essential to protect long-term growth. Future research can identify which incentives are most effective in bringing back refugees and foreign investors. 

Meet the Researchers

  • Torbjörn Becker: Stockholm Institute of Transition Economics, Stockholm School of Economics. 
  • Yuriy Gorodnichenko: University of California, Berkeley; Centre for Economic Policy Research. 
  • Beatrice Weder di Mauro: Centre for Economic Policy Research; Geneva Graduate Institute; INSEAD.

Read The Full Report

Explore the full findings and detailed analysis in the complete report on the Annual Review of Economics website. You can also learn more about the impact of sanctions on Russia through SITE’s project, Sanctions on Russia & the Russian Economy.

The Case for Seizing Russian State Assets

Posted on June 18, 2025 | Policy Brief

Facade of the Central Bank of Russia with Russian flag, symbolizing the debate around seizing Russian state assets to support Ukraine.

This brief examines the legal and economic arguments in the ongoing debate over whether to confiscate Russian state assets frozen in Western democracies and redirect them toward supporting Ukraine’s resilience and reconstruction. It also outlines concrete proposals for how such a measure could be undertaken in compliance with international law and with manageable economic consequences.

At the outset of Russia’s full-scale invasion of Ukraine, substantial Russian state assets held in Western countries were frozen. While not all countries have disclosed precise figures, estimates place the total between $290–330 billion, most of it held within European jurisdictions. These numbers can be put in perspective to the total global support to Ukraine so far, €267 billion according to the Kiel Institute’s Ukraine Support Tracker. A lively discussion has emerged around the legal, economic, and political feasibility of seizing these assets to support Ukraine. As evident, this would constitute a very substantial addition to the support for the country. Thus far, agreement has only been reached on utilizing the returns on the assets to service a $50 billion loan to Ukraine under the Extraordinary Revenue Acceleration (ERA) mechanism. It has been argued that $50 billion should be enough, but Western contributions to the defence of Ukraine have been around €80 billion per year. The ERA is thus only a partial and very short-term financial solution for Ukraine, while a €300 billion fund based on the seizure of the assets would last perhaps 3-5 years. In short, the size of the fund matter and the principal amount is significantly larger than the fund that has been set up based solely on taxing the returns of the frozen assets.

This brief survey’s the main areas of contention and proposes viable pathways forward. It focuses on the legal and economic dimensions, setting aside moral arguments—which are broadly accepted given Russia’s unprovoked aggression and the destruction it has caused. Ultimately, the question is a political one: whether the legal justification and economic trade-offs favour asset seizure over other financing methods.

The Legal Arguments

Opposition to seizure often cites the principle of sovereign immunity. Yet, international law permits exceptions through countermeasures—acts that would otherwise be unlawful but are allowed in response to grave violations by another state. Additionally, asset confiscation may be lawful when enforcing international judgments (other possible legal avenues are for instance explored in Webb (2024), though in the end deemed as less likely to gain traction and legal approval). In both cases, the goal is to induce compliance with international obligations and secure reparations. A further legal basis lies in the doctrine of collective self-defense, which permits states not directly attacked to aid those that are, in response to unlawful aggression (Vlasyuk, 2024).

Critics often note that countermeasures should be temporary and reversible. However, as Vlasyuk (2024) points out, international law qualifies reversibility as being required only “as far as possible.” This implies that in cases of severe violations—where reversible countermeasures have failed—non-reversible actions may be justified. One proposed mechanism ties the frozen assets to future war reparations, allowing permanent transfers only if Russia refuses to comply with a future reparations ruling. Since reparation should go to the victim of Russia’s aggression, it also means that it is Ukraine that has the ultimate claim on the frozen Russian assets. This implies that any decision of confiscation and governance structure for transferring funds to Ukraine should be made with the consent of Ukraine. Put differently; even if the money is in Western financial institutions, there are good reasons to make sure the resources are used according to Ukrainian preferences.

The Economic Arguments

The principal economic concerns surrounding asset seizure are its potential impact on confidence in European capital markets, including risks of capital flight, increased interest rates, and diminished credibility of the euro. There are also fears of reciprocal actions by Russia against remaining Western investments.

These concerns, however, are increasingly overstated. The major shock to financial markets occurred when the assets were first frozen; any anticipated impact should now be fully priced in. Moreover, a viable reserve currency must be supported by convertibility, sound economic governance, and rule of law—features absent in countries like China, Gulf states, or most other emerging economies. The yen and Swiss franc lack either scale or stability. Despite previous sanctions and the 2022 asset freeze, the dollar and euro still account for around 80 percent of global foreign exchange reserves (The International Working Group on Russian Sanctions, 2023). Given the current crisis of confidence in U.S. fiscal governance, the euro remains especially robust.

The extraordinary nature of the situation also diminishes fears of setting a destabilizing precedent. Investors alarmed by this measure may not be long-term assets to Western markets but rather criminal states or individuals that should not be protected by the West’s financial and legal systems. More broadly, it signals to authoritarian regimes that aggressive actions will carry financial consequences. Western firms still operating in Russia have had ample time to disinvest, and those that remain should not constrain public policy.

Importantly, the costs of inaction must be considered. Financing Ukraine through increased public borrowing could raise interest rates across the eurozone and widen yield spreads between fiscally stronger and weaker member states. Seizing Russian assets, by contrast, may be economically safer, more equitable, and legally sound (International Working Group on Russian Sanctions, 2023).

Suggested Approaches

Several proposals aim to facilitate asset transfer in ways consistent with international law and economic stability.

Zelikow (2025) proposes the establishment of a trust fund to lawfully assume custody of frozen assets. This fund—grounded in the legal doctrine of countermeasures—would not represent outright confiscation but a conditional hold. Assets would remain Russia’s property until disbursed to victims of its aggression. A board of trustees would oversee disbursements—for example, servicing ERA loans or financing reconstruction. In this proposal, the fund would broadly define “victims” to include Ukraine and neighbouring states that have borne costs, such as accommodating refugees. This can perhaps help build political support among Western countries for the trust fund, but it has the obvious drawback that it may imply less support to Ukraine. Zelikow (2025) argues that institutions like the Bank of England or World Bank could manage the fund, given past experience with similar arrangements, potentially issuing bonds backed by the assets to accelerate support.

Vlasyuk (2024) proposes a multilateral treaty among coalition states recognizing Russia’s grave breaches of international law. This would provide a unified legal basis for transferring central bank assets to Ukraine via a compensation fund. National legislation would follow—similar to the U.S. REPO Act—tailored narrowly to address such violations. These laws should include safeguards, such as provisions to suspend asset seizure if hostilities end and reparations are paid.

Dixon et al. (2024) propose a “reparation loan” backed by Ukraine’s reparations claims. The EU or G7 would lend to Ukraine, using these claims as collateral. If Russia fails to pay after a ruling by a UN-backed claims commission, the frozen assets could be seized. This approach aligns well with the requirement for reversibility in countermeasures and may also reassure financial markets.

Conclusions

In summary, compelling legal arguments support the transfer or confiscation of Russian state assets under international law. Meanwhile, fears of damaging economic consequences appear increasingly unfounded. Any meaningful support for Ukraine—whether through asset seizure or public borrowing—will carry financial implications. However, using Russian rather than Western taxpayer resources is both morally and politically compelling.

What is now needed is coordinated political will and a practical, legally sound mechanism to operationalize asset transfers. With sound governance, such a step would not only finance Ukraine’s recovery but reinforce the international legal order and deter future aggression. An arrangement that makes sure all resources go to Ukraine—and not toward covering losses incurred by supporting Western countries—should be prioritized.

References

  • Dixon, H., Buchheit, L. C., & Singh, D. (2024). Ukrainian reparation loan: How it would work. The International Working Group on Russian Sanctions.
  • The International Working Group on Russian Sanctions. (2023). Working Group paper #15. Stanford University.
  • Vlasyuk, A. (2024). Legal report on confiscation of Russian state assets for the reconstruction of Ukraine. KSE Institute.
  • Webb, P. (2024). Legal options for confiscation of Russian state assets to support the reconstruction of Ukraine. European Parliament.
  • Zelikow, P. (2025). A fresh look at the Russian assets: A proposal for international resolution of sanctioned accounts (Hoover Institution Essay). Hoover Institution Press.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Development Day 2024: Integrating Ukraine, Moldova, and Georgia into the European Union

Posted on January 20, 2025 | Policy Brief

Flags of Ukraine, Moldova, and Georgia alongside EU flags in a conference setting.

For Ukraine, Moldova, and Georgia, integration into the European Union (EU) is a pathway to modernization, economic development, and increased resilience against authoritarianism. At this year’s Development Day Conference, hosted by the Stockholm Institute of Transition Economics (SITE), policymakers, researchers, and experts convened to discuss the shared challenges, opportunities, and reforms required for these countries’ successful EU accession.

This policy brief draws on the insights from the conference, briefly outlining the discussions across panels and presentations on governance reforms, hybrid threats, economic transformation, and security challenges.

The Geopolitical Context for Enlargement

The Russian invasion of Ukraine has intensified the European Union’s strategic focus on enlargement. Ukraine, Moldova, and Georgia find themselves at a crossroads, where integration into the EU is not merely aspirational but essential for safeguarding sovereignty and ensuring economic and political stability. The urgency of this enlargement stems from the need to counteract Russian aggression and bolster the EU’s geopolitical standing.

At the opening sessions of the Development Day Conference, three special guests offered their respective countries’ perspectives. Yevhen Perebyinis, Ukraine’s Deputy Minister of Foreign Affairs, underscored how Ukraine’s integration process aligns with its defense of European values against Russia’s aggression. Cristina Gherasimov, Moldova’s Deputy Prime Minister for European Integration, highlighted Moldova’s efforts to advance reforms while countering persistent Russian hybrid threats, including systematic election interference. Christian Danielsson, Sweden’s State Secretary to the Minister for EU Affairs, accentuated the necessity of ensuring that the EU is ready for enlargement, something political leaders now see as an imperative in the shadow of Russia’s war on Ukraine. Similarly, discussions emphasized Georgia’s historical and policy-oriented commitment to Europe, despite recent democratic backsliding and a recent pivot toward Russia.

Challenges on the Pathway to EU Accession

The integration paths of Ukraine, Moldova, and Georgia face numerous challenges. Critical areas for alignment with EU standards include governance reforms, anti-corruption efforts, and institutional capacity building. Moldova has made strides in public administration reform and jumped significantly on the Corruption Perceptions Index from 120th place in 2019 to 76th in 2023. However, persistent gaps in judicial independence and public procurement transparency remain hurdles. Similarly, Ukraine has enacted sweeping reforms under extraordinary wartime circumstances, reflecting a persistent and widespread commitment to European values. Yet, continued progress in judicial and financial oversight is essential, with the administrative framework in these areas needing improvement in both countries.

Russia’s hybrid warfare poses a persistent and evolving threat to democratic resilience across the region. Moldova’s elections in 2024 showcased large-scale, sophisticated interference by Russian actors. This interference began well before election day and continues in the form of disinformation campaigns and energy blackmailing in the Transnistria region. In Georgia, Russian influence compounds the challenges of domestic political unrest, particularly as the ruling party engaged in substantial electoral fraud and manipulation to secure its position in the 2024 October elections. These challenges highlight the need for robust countermeasures, including enhanced cybersecurity and strengthened democratic institutions across the candidate countries. It also points to the need for support from the international community, especially in the case of Georgia, where protesters are currently taking to the streets to challenge the widely recognized electoral fraud.

Economic transformation and alignment also remain a critical challenge. Ukraine’s economy, suffering wartime devastation, requires extensive reconstruction, with the cost of infrastructural damage alone nearing its annual GDP. Ukraine’s vast agricultural sector, a major player in global markets, will require careful integration into the EU to address compliance costs and alignment with the Common Agricultural Policy while maintaining its competitive edge. Moldova faces significant challenges in effectively communicating the benefits of EU integration to its population, a critical issue in countering Russian influence and maintaining public support for reforms. Despite clear economic progress, such as the increase in Moldovan exports to the EU, many Moldovans remain skeptical about the long-term benefits of EU alignment. This skepticism is particularly pronounced in regions like Gagauzia, where pro-Russian sentiment is strong and local populations are vulnerable to disinformation and propaganda.

As emphasized by multiple panelists, targeted communication strategies are vital to ensuring that the benefits of EU integration are understood across populations. Concrete examples—such as enhanced economic opportunities, improved infrastructure, and access to EU funding—must be clearly communicated to counteract Russian narratives and build broad-based support for EU accession.

In this regard, pre-accession funding offers a potentially transformative tool. The successful use of pre-accession funding in Poland in the 1990s and early 2000s demonstrates the potential for such resources to modernize infrastructure, connect markets, and build institutional capacity, a capacity that has later proved pivotal to overcoming democratic backsliding. Poland serves as a reminder that alignment and integration may take time, but also clearly showcases the economic and social benefits it can yield.

During the conference, security concerns were at the core of the enlargement discussion, with several panelists emphasizing NATO’s historical role as a critical security complement for EU member states. However, Ukraine’s potential EU accession may advance without parallel NATO membership. This raises significant challenges, as the absence of NATO guarantees leaves Ukraine vulnerable to further Russian aggression. Panelists highlighted the urgent need for the EU to adopt concrete security measures, such as strengthened hybrid defense capabilities, cybersecurity frameworks, and coordinated responses to disinformation—threats already witnessed in Moldova and Georgia. Additionally, ensuring Ukraine’s security would require increased military and financial support from EU member states to safeguard territorial integrity and maintain resilience against Russia, argued a necessity by several panelists.

The Opportunities of Enlargement

The integration of Ukraine, Moldova, and Georgia into the European Union offers profound opportunities for these states. It represents access to the single market, pre- and post-accession funding, and vital structural support that can accelerate modernization efforts. Overall, this can reduce the countries’ infrastructure gaps and cause an increase in foreign direct investment. Beyond economic gains, EU support drives crucial institutional reforms, enhances public administration capacity, and provides a framework for addressing corruption and strengthening the rule of law—key challenges across all three countries.

For the EU, enlargement would entail strategic benefits aligned with its new geopolitical focus and long-term economic goals. Ukraine’s reserves of critical raw materials, including lithium and titanium, are essential for Europe’s green transition. Furthermore, Ukraine and its defense industry offers strategic benefits to Europe by bolstering collective security. Its agricultural capacity remains pivotal not only for the EU but for global food security, and its IT sector provides additional growth potential. Moldova and Georgia, on the other hand, offer untapped market potential and workforce integration opportunities, which could strengthen the EU’s competitive edge. Enlargement also represents a critical opportunity to counter the threat from Russia, manifesting the Union as a geopolitical leader committed to stability, democracy, and shared values.

However, as voiced throughout the conference, the EU must prioritize clear communication of these benefits. Concerns about increased competition in existing member states need to be met with transparency while communicating the long-term economic and security advantages of enlargement. Involving the business perspective in the enlargement process and ensuring that both candidate countries and current EU citizens and businesses see tangible benefits early in the process will be key to sustaining both momentum and public support. Such messaging could include the fact that the EU is originally a peace project and that the counterfactual scenario to the current enlargement ambitions is Russia and its wars creeping even closer to the Union’s border. In regard to the business sector, it could be emphasized that enlargement associated risks can be met with risk sharing instruments and credit guarantees.

As emphasized by several speakers, the EU also needs to ensure that it is ready for enlargement in terms of capacity. As the EU was not initially built to be this large, a further expansion requires the Union to critically reflect on how to ensure it will stand up for the rule of law and all member states’ adhesion to EU principles in the years to come.

Concluding Remarks

How to facilitate the accession of Ukraine, Moldova, and Georgia into the European Union was the topic for discussion at the 2024 Development Day. The discussions highlighted the substantial early progress and rapid reforms undertaken by Ukraine while being a country at war. Moldova’s steady progress toward its ambitious 2030 accession target underscores its commitment to reform, though challenges remain in securing public trust and countering Russian interference. Georgia, meanwhile, serves as a warning of how quickly democratic gains can erode, with political turmoil and Russian influence threatening its European path. These examples underscore the need for sustained support and clear communication of the benefits of EU integration. Panelists and participants also underscored that integrating these nations is not merely about expanding the EU—it is a vital response to ongoing geopolitical threats, in particular from Russia, and an affirmation of the EU’s foundational values.

Ultimately, the enlargement of the EU to include Georgia, Moldova and Ukraine holds significant potential, both for the aspiring members and the EU itself. However, as the discussions at Development Day 2024 showcased, such enlargement requires robust partnerships, unwavering and early support, and a recognition that integration strengthens the EU as a whole, ultimately positioning the EU as a much-needed major democratic geopolitical actor.

List of Participants

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

OECD DevTalks: The Transformation and Reconstruction of Ukraine

Posted on May, 2022 | Videos

20220520 Transformation and reconstruction of Ukraine Video Poster 01

The war in Ukraine, caused by Russia’s invasion, remains a profound humanitarian crisis with far-reaching economic and social consequences worldwide. In response, the Organisation for Economic Co-operation and Development (OECD) has strongly condemned Russia’s actions. Moreover, it is now advancing a new strategy to strengthen Ukraine’s recovery and reconstruction efforts.

The OECD’s work builds on a Memorandum of Understanding first signed with Ukraine in 2014 and renewed in 2021. Since then, the organisation has deepened its collaboration with Ukrainian partners to rebuild the nation’s economy and institutions. In addition, the OECD Development Centre plays a crucial role by providing policy expertise and data-driven analysis. It supports multiple sectors, including governance, innovation, and sustainable growth. As a result, these coordinated efforts aim to help Ukraine achieve long-term stability and resilience.

Webinar on Ukraine’s Economic and Social Transformation

On Tuesday, 17 May 2022, the OECD DevTalks series hosted a high-level webinar focusing on Ukraine’s economic and social transformation, both before and after the full-scale invasion. The event gathered leading economists, policymakers, and development experts to discuss:

  • The state of Ukraine’s economy prior to 2022
  • The impact of the war on social and economic structures
  • Priorities for reconstruction and recovery
  • The role of international support and cooperation

This discussion contributed to shaping a shared vision for Ukraine’s future, highlighting the resilience of its people and institutions amid ongoing challenges.

Distinguished Speakers

  • Mathias Cormann, Secretary-General, OECD
  • Vadym Omelchenko, Extraordinary and Plenipotentiary Ambassador of Ukraine to France
  • Yuriy Gorodnichenko, Quantedge Presidential Professor of Economics, University of California, Berkeley
  • Nataliia Shapoval, Head of KSE Institute & Vice President for Policy Research, Kyiv School of Economics
  • Tymofii Brik, Acting Wartime Vice-President of International Affairs & Head of Sociological Research, Kyiv School of Economics
  • Torbjörn Becker, Director, Stockholm Institute of Transition Economics (SITE), Stockholm School of Economics
  • William Tompson, Head of Eurasia, Global Relations and Co-operation, OECD
  • Ragnheidur Elín Árnadóttir, Director, OECD Development Centre

About OECD DevTalks

OECD DevTalks is a continuing series of expert panel discussions and blogs organized by the OECD Development Centre. Each session brings together global thought leaders to exchange ideas on sustainable development, inclusive growth, and policy innovation.  For more #DevTalks – a series of online panel discussions, along with Development Matters blogs, follow the OECD #DevTalk page.

Disclaimer: Opinions expressed during events and conferences are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.