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Ukraine says national stimulus package will cost $750 billion

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Ukraine has said it will need $750 billion to fund a national stimulus package as it strategizes to rebuild its shattered infrastructure and revitalize its economy after war with Russia.

Prime Minister Denys Shmyhal said the Russian invasion caused more than $100 billion in infrastructure damage and demanded that the “main source” of funds for reconstruction be the confiscated assets of the Russian government and its oligarchs.

“The Russian authorities started this bloody war and caused this massive destruction, and should be held accountable for it,” the prime minister said at the Ukraine Recovery Conference in Lugano, Switzerland. “Our goal is not just to restore glass and concrete, but to build a new country.”

Ukrainian officials are meeting with representatives of the European Commission and donors, including the European Bank for Reconstruction and Development in Switzerland, for two days of talks on the costly reconstruction program once the war is over.

The reconstruction plans will involve governments and agencies around the world, including lenders such as the World Bank and the European Investment Bank. The talks were accelerated by the EU’s decision last month to recognize Ukraine as a candidate for joining the bloc.

However, the country’s partners are only in the early stages of identifying ways to finance the huge cost of reconstruction.

The EU is still trying to finalize up to 9 billion euros in emergency aid to help shore up Kyiv’s public finances, before starting to work out how to raise the huge sums needed for longer-term reconstruction.

Shmyhal said funding should come from grants and concessional loans from international organizations and partner countries, as well as from the private and corporate sector, and from Ukraine’s national budget. But he added: “We believe that the main source of recovery should be the confiscation of the assets of Russia and the Russian oligarchs.”

EU member states have frozen just under €14 billion in assets belonging to sanctioned individuals and entities, including yachts, cars and houses, according to figures compiled by the commission. The value of the frozen foreign exchange reserves of the Russian central bank could be much higher.

Russia said in March it had lost access to about half of its reserves, or about $300 billion, after G7 countries imposed sanctions on Russia’s central bank.

Josep Borrell, the EU’s high representative for foreign policy, said in May that he would favor seizing Russia’s frozen foreign exchange reserves and using them for reconstruction, calling such a move “full of logic”.

However, confiscating Russian assets and using them to pay for Ukraine’s reconstruction is legally and politically complex.

US Treasury Secretary Janet Yellen said the confiscation of Russian central bank assets should only be done in coordination with allies and should not be undertaken lightly.

Shmyhal said there would be three phases of the recovery plan – an immediate stage focused on rebuilding basic infrastructure such as water pipes; a second phase of construction of schools and temporary housing; and a final step aimed at the “long-term transformation” of the country and its economy.