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How we get Europe to ensure Ukraine’s post-war success

It’s been frustrating to watch German Chancellor Olaf Scholz drag his feet for weeks over the prospect of delivering his country’s Leopard 2 tanks to Ukraine, before agreeing to dispatch just one company, or 14 tanks — a far cry from Ukraine’s needs.

Frustration is understandable. Yet the talk about Europeans’ shirking their responsibilities, or not paying their “fair share,” is factually inaccurate and risks poisoning the difficult conversation the US administration and Congress must have with Europeans about their role in Ukraine’s future.

But first, some facts.

The United States remains, by a wide margin, the leading provider of military assistance to Ukraine, with almost $23 billion worth of total commitments, followed by the United Kingdom and Germany. But because we are also the world’s biggest defense spender, our military aid to Ukraine amounts to a tiny fraction (3%) of the Pentagon’s total budget — compared to one-third in the case of, say, Estonia.

Ukrainian President Volodymyr Zelensky
Ukrainian President Volodymyr Zelensky has urged the US and Europe for aid.

Non-military assistance matters, too. European nations, most notably Poland, have also taken in perhaps six or more million Ukrainian refugees, providing them with accommodation and extending to them access to their health-care and education systems and labor markets. The European Union has also taken a lead in securing sea corridors for Ukrainian grains exports, helping to prevent global food-price inflation and providing revenue for Ukraine’s economy.

Because of the Russian war, the country’s budget shortfall lies between $3 billion and $4 billion every month. Unlike in peacetime, the Ukrainian government would struggle today to finance that gap on the financial market. To help stabilize Ukrainian public finances, European nations and EU institutions are doing as much as anyone, having already extended some $21 billion in loans and pledged another $19 billion for 2023.

Providing Ukraine with financing is the responsible thing to do as it allows the government to continue to pay salaries of civil servants and pensions and provide basic public services without having to monetize the debt by the central bank. The latter would set in motion an uncontrolled cycle of inflation, jeopardizing, even under the best of circumstances, the prospects for Ukraine’s post-war recovery.

Europeans will also play a central role in helping Ukraine once the war is over. With a heavily damaged economy and a large debt burden from the war effort, Kyiv is already struggling to service its ballooning debt. The EU may soon accept that a significant part of its loans will never be repaid — and be prepared to invest more still.

German Chancellor Olaf Scholz
Chancellor Olaf Scholz announced that Germany would provide Ukraine with 14 Leopard 2 A6 tanks.

Americans do not always appreciate the EU’s centrality in Ukrainian politics since at least the 2014 Maidan Revolution. The prospect of joining the club of successful European democracies fueled many of Ukraine’s reforms before the Russian invasion. Without a realistic path to the EU, it’s unimaginable that Ukraine would have a fair chance at succeeding in its reconstruction, eradicating corruption or freeing up its economy.

For a warning, it is enough to look at countries of the Balkans. Although they were promised eventual accession, half-heartedly, the prospect of joining has remained distant. The decades-long limbo has rendered public opinion cynical and entrenched a craven, corrupt form of politics epitomized by Serbia’s Aleksandar Vučić, who keeps playing the West against China and Russia.

Ukraine cannot be allowed to fall in the same trap. Yet under the existing strictures, full membership remains a tall order. For one, accession is bound to be extraordinarily expensive for the EU. In 2021, Ukraine’s real per-capita income was sitting just above half that of Bulgaria, the EU’s poorest member state — a gap that has only widened since the conflict’s start.

With a population of 44 million and a large agricultural sector, Ukraine could be expected to be on the receiving end of massive transfers from Western Europe for decades. Given its size and its looming military might, its accession would also further complicate the EU’s already-complex internal power dynamics — in ways that make Paris and Berlin understandably nervous.

But the alternatives to Ukraine’s firm place in Europe are much worse — including instability and war. And while it is completely appropriate for policymakers in Washington to push the German and French governments to provide Ukraine more military aid, it’s even more important to create political conditions for the EU and its member states to play their part in the country’s reconstruction and post-war economic and political success.

Dalibor Rohac is a senior fellow at the American Enterprise Institute.

Twitter: @DaliborRohac

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