The article was originally prepared for LB.ua 

Post-war reconstruction is as relevant a topic for the public as the war developments. It is being discussed by representatives of the authorities, NGOs, and ordinary citizens. After all, everyone wants to see a bright future despite the wartime hardships. Everyone wants to hope that we can rebuild our country and embark on intensive economic development. Just as after World War II the Western European nations managed to recover, unite, and achieve a high standard of living for their people. 

However, the success of the reconstruction is not guaranteed since it depends on a large number of factors that will determine the final outcome. The most important question about the reconstruction is planning: how it should and will look like? Clearly defined state priorities regarding the order of the reconstruction are needed. So far, a systemic approach and a comprehensive vision are hard to find in a flurry of statements on the topic. However, there are already some attempts to forge a state policy on reconstruction. Mainly, these are initiatives of the Cabinet, which is responsible for the country’s economy and development. 

Let’s try to find out what the process of post-war reconstruction will look like, based on the already adopted Cabinet’s decisions, and what should be rightly called reconstruction. 

What should be considered a reconstruction? 

When we talk about post-war reconstruction, we primarily mean the restoration of the economy. Because money makes more money. The global goal of this process is to ensure that businesses and the population are again generating gross product for the state — the larger the volumes, the better. 

This means that not every state activity requiring budget or donor funding can be considered post-war reconstruction. Restoration of power lines or water supply after missile strikes is of course necessary but this is more about the restoration of critically important infrastructure elements necessary for people’s survival. 

These are usual economic processes for the state and communities, which would take place even without war. Not every bucket of asphalt poured into a pothole is part of the reconstruction process, but rather the usual duties of a state or municipal body. 

Post-war reconstruction, on the other hand, has a single primary cause — war, which has destroyed a significant part of communities and productions. It also has a single goal: to make the country more successful than it was before the war. Obviously, there should be only one reconstruction plan, so that every citizen understands what and why the authorities are doing. After all, taxpayer money will be used for these purposes. However, the Cabinet’s planning skills are not as good as they should be. 

The importance of data 

The issue of acquiring data for government planning in Ukraine is not new. After all, the last census was conducted more than two decades ago. Under normal conditions, a census should be carried out every 10 years. It is not only about how many people live in the country — as much as this data is important, it is not crucial. 

Much of state planning should be based on the information about who these people are, not just how many of them are present. Our state lacks that kind of data due to the absence of a census and also due to massive external and internal migration caused by the war. This is a serious problem. Planning for reconstruction is closely tied to demographics: the number of people, their age, distribution across the country, qualifications, and so on. 

A prominent indicator of the scale of the problem is the discrepancy between the UN data and the State Border Guard Service data on how many people have left Ukraine since the start of the large-scale invasion. The difference is three million people. The UN claims that about 8 million people have left Ukraine due to the war. Meanwhile, the Institute of Demography estimates the number of Ukrainians abroad at around 5 million, based on the data from the State Border Guard Service. So which data should be used? How many people live in Ukraine? 

Even worse is the data on the future plans of those who left the country. We should have a general idea of how many of them plan to return after the war and where they plan to settle. It is not a guarantee that a person from Kharkiv will return to Kharkiv or that a displaced person from Mariupol will return to Mariupol. However, the plan of where and what we should rebuild is supposed to be based on this information. There is also no data on the qualifications, education, and career plans of our citizens. Only when having this data, one can start real planning. 

Such data can realistically be obtained only after the end of the war and the conduct of the National Census. According to the law, the census must include questions about the composition and family relations of household members; gender; age; date and place of birth; marital status; ethnic origin; language; citizenship; education; sources of livelihood; employment; migration; living conditions. 

There is no other way to get this data from individuals living in Ukraine. Earlier, the Cabinet proposed to conduct an electronic population census by collecting data from mobile operators. However, this approach was sharply criticized by professional demographers. It also will not provide any substantial information for reconstruction planning. The results of such a census will give almost no knowledge to the state about its people. 

The second block of necessary information is data from enterprises that have moved within the country. Many of them have moved from the east and south to the west. What’s more, any economic relations that existed with Russia have ceased. Therefore, manufacturing and businesses providing services either reoriented themselves towards the domestic market or towards the trade with EU countries. It is not clear whether the enterprises that have relocated from Mykolaiv or Zaporizhzhia to Lviv or Zakarpattia will return. Enterprises integrated in the EU market are likely to remain in their new locations, as will their employees who migrated in search of work. 

So before claiming readiness to rebuild everything, it is necessary to find out if everything should actually be rebuilt. The main point here is to find who will be the beneficiary of the reconstruction since it is always about the people and their needs, not the territory as such. 

First decisions: lots of PR and poor strategy 

One of the examples of how the Cabinet failed to plan strategically while trying to make a good impression on the international community and people is the decision on the experimental restoration of war-affected communities. Five war-torn settlements are supposed to be reconstructed: the village of Borodianka and the village of Moshchun in Kyiv oblast, the village of Posad-Pokrovske in Kherson oblast, the town of Trostianets in Sumy oblast, the village of Tsyrkuny in Kharkiv oblast, and the village of Yahidne in Chernihiv oblast. 

This decision essentially launched the reconstruction without any clear plan. The list of objects to be restored or built will be determined by oblast state administrations on the proposals by local authorities. The final decision will be made by the Restoration Agency. As part of the experiment, it is allowed to restore private, state, and communal property. 

However, local administrators should submit the lists of objects to be restored taking into account the priority needs of the community. The experiment will be funded by the Fund for liquidating consequences of the armed aggression and other legitimate sources. The list of these sources, of course, is not defined. 

It is important to note that this experiment will last throughout 2023-2025. During its implementation, the procedure for state funding of construction and certain provisions of the Procedure for the use of the budget of the Fund for liquidating consequences of the armed aggression will not apply. On the one hand, this greatly simplifies the decision-making. On the other — it creates a very wide field for corruption and other abuses due to the lack of control over spending. 

Moreover, the process of restoring these settlements does not take into account the significant reduction in the population, as well as the impact of this reduction on employment, and therefore, on the need for infrastructure and jobs in these communities. 

The restoration of individual communities will begin without a comprehensive vision of the future development of the state economy and a general model of country restoration. All this can lead to inefficient use of funds. 

Priorities 

Analyzing the existing decisions on restoration, one gets the impression that officials are not very worried about where to get the money to implement their plans. Sometimes they count on local budgets, sometimes — on mythical reparations. But the story with the Fund for liquidating consequences of the armed aggression demonstrates what is actually happening with the prioritization of needs and the situation with the funding of restoration. 

In the fall of 2022, the Verkhovna Rada created the Fund for liquidating consequences of the armed aggression. As of May, more than 60 billion UAH were transferred to it. Primarily, this money was to go to the restoration of critical infrastructure, providing housing for IDPs, and purchasing equipment for hospitals and schools. But in April of this year, the Cabinet amended its resolution and allowed to use money from the Fund for compensation for destroyed and damaged housing. 

It happened because on May 22, the Law on Compensation for Destroyed and Damaged Housing came into force. According to this law, many funding sources for compensation are allowed. Among them are the government budget and local budgets, international financial organizations, other creditors and investors, international assistance, and even Russian reparations. However, since this money is not available, government officials decided to redirect money allocated for infrastructure to housing. 

Also, the Cabinet has adopted a resolution to allocate 4.4 billion UAH for the housing restoration program “E-Recovery.” People whose housing was damaged or destroyed will be allowed to use this money to purchase building materials for major repairs or restoration they will perform on their own or to order repair services and works. 

Surprisingly, neither the resolution on the allocation of 4.4 billion UAH nor the resolution on the Procedure for providing compensation for the restoration of housing under the E-Recovery program mentions the law on compensation. It seems that parallel processes of planning and legislative regulation of restoration issues are taking place in the Parliament and the Government. This results into chaos instead of a systematic approach. 

It would be fair if the Cabinet clearly stated its priorities and capacity. Yes, the state is obliged to pay compensation for damaged and destroyed property. The question is how much and when. According to the data from the Kyiv School of Economics, the loss of housing stock from Russian aggression as of March amounted to almost 2 trillion UAH. This is slightly less than the spending of the government budget 2023. Therefore, it would be rational to implement a program with a clearly defined amount of funding, rather than inflating it, shifting money from other priorities. As for the priority of how to spend money, Ukrainians support the approach when first businesses and jobs are restored, and then housing. 

After reviewing governmental decisions on state reconstruction, several simple thoughts come to mind. The first one — there is no plan. It doesn’t seem like anyone in the Cabinet, Parliament, or any other state body is trying to develop any strategy. However, such a strategy is needed to restore the country’s economy as quickly and successfully as possible with very limited financial resources. 

The second thought — the topic of reconstruction will be at the forefront of the election campaigns after the war. That is why high-ranking officials even now approach it more from the PR perspective rather than using common sense and paying attention to the needs of people. 

The third thought — the ad hoc approach to reconstruction opens an unlimited space for corruption and other abuses. Instead of new productions and industries around Kyiv and other cities, several new posh towns for officials responsible for the reconstruction will grow. 

The recipe for how to prevent such a scenario is quite simple. Firstly, the Constitution states that the highest value of the state is a human being. Therefore, it would be logical to put the principle of “money follows the person” at the center of reconstruction planning. In practice, this means that if a former resident of Kharkiv oblast settled down and wants to continue living in Zakarpattia, then the state should help him buy housing in a new place, rather than restore a house where the person does not want to live anymore. 

Secondly, creating more jobs should be a higher priority than housing and secondary infrastructure restoration. The task of the state is to give able-bodied people who have suffered from the war the opportunity to work again as soon as possible, rather than making them dependent on state aid. Thirdly, the public should oversee every penny spent by the authorities. If these principles are followed, there will be a chance to rebuild the country better than it was before the war.