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Opinion How the G-7 can tip the scales toward Ukraine

The flag of the Group of Seven, second from left, is flanked by the flags of Germany, left, and the European Union outside the International Media Center in Garmisch-Partenkirchen, Germany, on June 25 before the G-7 leaders summit. (Krisztian Bocsi/Bloomberg News)
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Robert B. Zoellick has served as president of the World Bank, U.S. trade representative and deputy secretary of state. He is the author of “America in the World: A History of U.S. Diplomacy and Foreign Policy.”

The United States and its Group of Seven partners must use their Bavarian summit starting Sunday to plan the next critical campaign of the Russian-Ukrainian war: the battle for Ukraine’s economic survival and reconstruction.

Russia is waging a war of attrition. Artillery shells and logistics dominate. If both sides maintain their will, economic resilience is likely to determine the outcome.

Moscow’s economy has declined, but Russia’s sales of commodities will keep Vladimir Putin’s regime supplied with the necessities of war for a long time. Ukraine’s productive capacity, on the other hand, has collapsed between 40 to 50 percent. Almost 13 million Ukrainians have fled their homes. Kyiv cannot export most of its harvest to earn foreign currency. The best guesses are that Ukraine needs between $5 billion and $6 billion in assistance each month just to stay afloat. Nevertheless, heroic Ukrainians have managed to maintain basic governmental functions while supporting an army at war.

The G-7 must create and commit to an economic plan worth hundreds of billions of public and private dollars to do much more than simply meet Ukraine’s immediate humanitarian needs. An economic mobilization of that size would signal to Moscow that Russia is waging a financial contest against a coalition that it cannot defeat. Such a commitment, combined with a blueprint for recovery and reconstruction, would offer hope to Ukrainians.

The Center for Economic and Policy Research, a network of economists based in London, recommends three phases: emergency aid; swift restoration of critical infrastructure and services; and building the foundation for rapid, sustainable growth. The work anticipates the human costs of divided families, labor force disruptions and children’s loss of education, in addition to the needs for physical infrastructure. The European Union’s pathway for Ukraine’s future membership guides the integration of infrastructure, standards, foreign private investment and supply chains.

Ukraine must co-own the plan. In doing so, Ukraine needs to confront the obstacles that stymied reforms since independence in 1991: corruption, the domination of oligarchs who resisted competition, manipulation of the energy sector, and out-migration of talent. Transparency and use of mobile apps for procurement, backed by international judges during a transition, can counter graft and theft. Fiscal decentralization will connect spending with local citizen watchdogs.

When security conditions enable Ukraine to look beyond emergencies, the assistance needs to encourage rapid recovery, conditioned upon accountability and achieving measurable, verifiable milestones. To jump-start economic life, Ukraine — like Europe in 1948 — needs basic shelter and housing, transport systems, social infrastructure such as schools and medical facilities, and primary inputs for production. The aid should be through grants, not loans; some 90 percent of the Marshall Plan support were grants.

With a sound recovery, Ukraine’s reconstruction offers great potential. The country enjoys high levels of education; the world has witnessed Ukraine’s powerful technological and digital capabilities. Modern productive capacity, designed for a zero-carbon future, will serve the world well.

The G-7 in Bavaria needs to agree on an agency to coordinate this effort in partnership with Ukraine. The European Commission, the International Monetary Fund, the World Bank, the European Investment Bank and United Nations’ humanitarian agencies should all take part, but someone must be in charge. A central organizer will help avoid confusion and wasteful overlap, save the time of Kyiv’s stretched officials and ensure accountability. The Marshall Plan created a stand-alone agency that closed down when it finished its work; the E.U. should consider establishing such a model.

The G-7 needs to integrate economics with a geopolitical strategy. Open transit of the Black Sea is vital for global food supplies today as well as for Ukraine’s future economic geography. The G-7 and Turkey should propose and, if need be, insure and protect neutral passage for food supplies; looking ahead, any settlement must assure Ukraine’s right of maritime transit. The coalition also should encourage China to help finance reconstruction and thereby distance itself from Russia’s blunder. The G-7 must also support developing countries facing food, energy, climate, covid-19 and other threats to resilience. Otherwise, the Global South will conclude that G-7 sympathies only extend to people who look like those in the G-7.

North America and the E.U. have already authorized huge sums. Yet the leaders of the G-7 need to decide whether they want Ukraine to survive — and eventually prosper — as an independent, sovereign democracy. Their legislatures and publics are more likely to maintain wartime resolve if governments can explain how assistance now contributes to a coherent plan for Ukraine’s ultimate victory.

Finally, the G-7 should declare that Russia owes compensation to Ukraine under international law.

During World War II, lend-lease helped U.S. allies defeat a common enemy. The G-7 needs to build upon that experience by resolving to give Ukraine the means to win both the military and economic campaigns.