A 'Marshall Plan for Ukraine' will require more than just funding

A satellite image showing the night radiance of Europe from space on November 23 shows Ukraine in almost total darkness. Photo: Nasa

People walking in the dark city centre of Kyiv which lost electrical power after Russian rocket attacks. AP

A man using a head torch to make his way around Kyiv. AP

An unlit street following missile strikes in Kyiv. Getty Images

People charge their devices using a power generator in Kyiv. EPA

Since October, Russia has launched regular strikes on the Ukrainian power grid. AP

People sit in candlelight in Lviv. Reuters

While Russia's bloody war on Ukraine is far from over, Ukraine’s battlefield progress has led many to begin contemplating the country’s post-war future.

A growing chorus of voices is calling for a “Marshall Plan for Ukraine”. And why not? In recent times, Mexican President Andres Manuel Lopez Obrador has called for a Marshall Plan for Central America, former German chancellor Angela Merkel called for one for Africa, and Pakistan Foreign Minister Bilawal Bhutto Zardari wants a "Green Marshall Plan" for Pakistan. Former US vice president Al Gore has even called for a "Global Marshall Plan".

The problem is that many in that chorus only seem interested in a Marshall Plan for the amounts of assistance it would probably bring. After all, the original Plan, which was enacted in 1948, involved about $130 billion in today’s dollars.

But in reality, the European Recovery Programme – its official name – was a lasting success because it was about much more than money and the humanitarian imperative of easing economic hardship. Leaders of the time realised that they also had an opportunity to counter the Soviet Union's expansion, as well as limit the influence of forces opposed to market-based economics. Accordingly, the Plan was built on terms and conditions that would reinforce Europe’s commitment to a future based upon democracy, liberty and market-based economic policy.

It required policies and reforms that encouraged regional co-operation and integration, as well as private enterprise and competition, balanced budgets, stable exchange rates, and liberalised price controls. It promoted increased trade within Europe, and between Europe and the rest of the world, as a critical tool to prevent economic stagnation and to stymie the spread of communism.

It was also designed as a four-year project, with a definite sunset and implemented by a temporary government agency, not an ongoing national security programme administered by a standing department or agency. The framers wanted recipient countries to keep their sights on “life after aid” and to pursue the notion of self-reliance over aid dependence.

Those calling for a Marshall Plan should also appreciate how different today’s world is from the one that war-torn Europe faced. In those days, the Soviet Union was acknowledged as the greatest challenge to democracy, economic liberty and a capitalist world order. Today’s challenges come from Beijing, and there is only modest agreement in the West on how it should respond to China’s geopolitical ambitions, and its aggressive economic and technology-centred initiatives.

In today’s world, unfortunately, there are also significant disagreements (even in the US) on the role of trade in the global economic framework. There seems little support for a US-EU trade agreement – or even the US-UK trade agreement that Brexiters and others took for granted. There are ongoing disagreements over regulatory standards for new industries and how to handle foreign investment in critical infrastructure. In some ways, we in the West need to reaffirm our belief in trade and western economic leadership if we are going to assist Ukraine in its economic journey.

Perhaps the biggest difference is that, while America held a preponderance of military and economic power in the wake of the Second World War, in modern times, Europe is economically stronger and more integrated than before. Since Ukrainians see themselves as European – that’s what this war is largely about – it seems logical that Europe, not the US, should play the leading role in helping Ukraine seize its future.

In short, if growing calls for a “Marshall Plan for Ukraine” are sincere efforts to harness all that the European Recovery Programme brought – including incentivised policy reforms and targeted institution strengthening – they are on the mark. If, on the other hand, they are merely efforts to dress up open-ended spending, they will represent both a missed opportunity and a betrayal of the sacrifices that so many Ukrainians have made.