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1. Explaining Ukraine’s recovery and reconstruction: what, how and when?

Author:
Tinatin Akhvlediani
Publication Date:
06-2024
Content Type:
Special Report
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
Russia’s full-scale invasion of Ukraine has resulted in colossal human loss. According to the World Bank, this has already in 2023 amounted to 26 000 civilian casualties, the displacement of around 3.7 million people internally within Ukraine and around 5.9 million externally in Europe and beyond. The war has pushed 7.1 million people into poverty and reversed 15 years of economic development. This is reflected in the drastic increase in inequality, particularly among women, children, people with disabilities and elderly. This CEPS Explainer aims to review what is at stake, how Ukraine’s reconstruction has been addressed thus far, and what conditions and timelines are necessary for scaling up efforts. It looks at the immediate and long-term needs for Ukraine’s recovery and reconstruction, examines the existing framework for coordinating and implementing rebuilding efforts, describes potential funding sources and analyses the financial support already committed for Ukraine’s reconstruction. Finally, it reviews Ukraine’s ability to effectively absorb reconstruction funds and outlines the basic conditions required for scaling up reconstruction.
Topic:
Reconstruction, Recovery, Economic Development, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

2. The Impact of Ukraine’s Accession on the EU’s Economy

Author:
Tinatin Akhvlediani and Veronika Movchan
Publication Date:
03-2024
Content Type:
Special Report
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
The groundwork for Ukraine’s integration into the EU’s single market was laid by the EU-Ukraine Association Agreement (AA). A key component of the AA, the Deep and Comprehensive Free Trade Area (DCFTA), paved the way for Ukraine’s gradual integration into the EU’s single market. Building on the DCFTA, Ukraine’s integration into the EU’s economy has significantly advanced since February 2022. In response to the invasion, the EU swiftly and temporarily but completely liberalised its market for Ukrainian goods through Autonomous Trade Measures (ATMs) and triggered the Temporary Protection Directive that has enabled over 4 million Ukrainian refugees to reside and work in the EU. With a continued swift trajectory, Ukraine’s integration is set to be much more comprehensive by the (yet unknown) time of accession. As this study outlines, the prospect of Ukraine’s accession to the EU brings some challenges but holds immense potential for mutual economic benefit. Free movement of goods. Full access under the ATM has not caused drastic changes in the EU’s imports or in the functioning of the single market in general. Yet, to avoid disruptions in the future, the accession treaty could include transition periods for full market access for Ukrainian goods in those EU Member States that may be vulnerable to a sharp increase in imports. Full trade liberalisation in services is expected to have more trade-easing effects, particularly for the EU, as it holds most of the reservations. Ukraine’s main EU partners in services trade are Germany and Poland, but services trade with Ukraine’s other major partners, including Estonia, has been steadily increasing since the implementation of the EU-Ukraine DCFTA. Thus, trade absorption capacity should be sustainable. Free movement of capital. Given the underdevelopment of Ukraine’s financial sector and capital markets, legislative and policy alignment should serve as a solid foundation for financial deepening in the country. Eased movement of capital will make it significantly easier to conduct business and trade and commercial and non-commercial payments between Ukraine and the EU. Free movement of workers. As long as Ukrainian workers fit the labour demands of the receiving EU countries, they could fill the gap in the labour supply and complement rather than replace local workers. An enlarged EU as a global supplier. Ukraine could strengthen the EU’s position in critical materials and key agricultural products, as well as contribute to the EU technologically with its emerging ICT sector and increasing skills and know-how in IT and computer services. Ukraine’s reconstruction and sustainable recovery is a significant challenge that requires substantial financial support. Yet, by addressing these considerations with foresight and diligence, Ukraine’s accession to the EU could not only elevate Ukraine’s standing but could also strengthen the EU’s position on the global stage.
Topic:
Reconstruction, European Union, Economy, Regional Integration, Trade, Recovery, and Russia-Ukraine War
Political Geography:
Europe and Ukraine