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Ukraine’s aspirations to join the EU face harsh economic realities. A new study estimates that the country’s accession costs will reach €136 billion, even before post-war reconstruction begins.
As the full-scale conflict with Russia enters its third year, reconstruction costs are expected to swell into the hundreds of billions of euros.
But Ukraine is looking beyond the battlefield and aiming for future membership in the European Union, with economic think tank Bruegel Institute predicting this week that Ukraine’s membership could cost current member states up to 136 billion euros. reported.
Although this amount is only a fraction of the European Union’s GDP, it still accounts for a significant portion of the EU’s seven-year budget.
Ukraine’s integration process into the European Union began at breakneck speed after the Russian invasion in February 2022.
By June of the same year, the EU demonstrated its commitment to Kyiv by quickly approving the membership application and granting Ukraine official candidate status.
However, amid criticism that the promotion of Ukraine’s accession was too hasty, the European Council specified further reforms, particularly in the area of rule of law and governance, as a prerequisite for accession negotiations.
These preconditions were finally agreed in December last year after months of vetoes and political support from Hungary’s pro-Russian Prime Minister Viktor Orbán.
public and private investment
If EU membership were to occur, what kind of assistance would Europe have to provide Ukraine in managing its post-war reconstruction, and at what cost?
Zsolt Darbas, a senior researcher at the Bruegel Institute and co-author of the report, said the cost of Ukraine’s recovery is estimated at around 400 billion euros, “which is a huge amount.”
“But it is not the EU that will pay most of the costs,” he explains.
According to the economist, the European Union will contribute to the rehabilitation of major assets not only through public funds, but also through private companies, “thereby gaining ownership of a large part of Ukraine’s infrastructure.”
“The private sector will contribute, the EU will contribute… as well as other countries. [but] It also depends on who the next president of the United States is,” Darvas said.
“At this stage, it is impossible to work out how this 400 billion euros will be distributed among the various parties.”
brussels sale
Many right-wing parties are already lamenting Europe’s “overextension” into Eastern Europe, and it is difficult to predict how such a hefty price tag will be received by EU member states.
“How will EU member states take this? That’s a big question, and certainly a political question,” Darvas told RFI.
He stressed that actual costs may be lower than the institute’s projections, which are based on several assumptions.
“First of all, it is assumed that Ukraine will regain its full territorial integrity and that its GDP and population will not be permanently affected by the war.
“This number would be even lower if some regions remained under Russian control, as war permanently reduces GDP and population,” he explains.
The analyst also noted that trade and foreign direct investment would become easier if Ukraine became a member of the EU, noting that Western companies “made huge profits” when the Central European country joined in 2004. .
fight against corruption
But the influx of new money also brings with it fears of corruption.
For Darvas, the biggest challenge is Ukraine itself: the rule of law, democracy and control of corruption.
“If you look at the indicators, Ukraine ranks very poorly in all aspects,” he says.
According to governance indicators compiled by the European Bank for Reconstruction and Development, Ukraine is “even worse than Russia and Belarus,” he explains.
“Ukraine’s starting point is very weak. And it will be a big challenge for this country [to reach] European standards,” he told RFI.
In other countries, the accession process has proven to be a powerful driver of fundamental reform. But Darbas emphasizes that Ukraine has a long and difficult road ahead.
Deteriorating relations in Europe
Nevertheless, Russia’s aggression has sparked a scramble within the EU to bring Ukraine in, no matter the cost.
Some have drawn parallels with Germany’s reunification in the early 1990s, when wealthy Western countries poured investment into the former Soviet-controlled East, at an estimated cost of around 2 trillion euros over 25 years.
Darvas explains that the main goal at the time was to bring East Germans’ standard of living closer to that of West Germans.
“Wages were still slightly below West German levels, but the difference was about 20 percent. In Ukraine, we’re talking about a wage gap of 10 to 15 times more,” he points out.
He does not think the Brussels government will spend a lot of money to bring Ukraine’s wage levels closer to the EU average, saying: “It would be a huge cost.”
What is more likely, Darvas suggested, is that Kyiv will begin a “path of convergence towards the EU,” which will put Ukraine’s economy on a trajectory towards improving wages and living standards. Yes, it’s a long road.
“Ukraine’s starting point is so low in terms of per capita income and GDP that I fear that it will still remain the poorest member state of the European Union in decades to come,” he says. .
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