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An activist from an anti-government protest group presents a bouquet of flowers to his girlfriend in front of fellow activists near the site of previous clashes with riot police in Kiev on Feb. 13, 2014. (REUTERS)
An activist from an anti-government protest group presents a bouquet of flowers to his girlfriend in front of fellow activists near the site of previous clashes with riot police in Kiev on Feb. 13, 2014. (REUTERS)

DANIEL BILAK

We need a Marshall Plan to fix Ukraine Add to ...

The turmoil in Ukraine, now in its third month, will be not be resolved without robust intervention on the part of its key western partners, the European Union, the United States and Canada. The crisis began when Ukrainians swept into the streets to protest President Yanukovych’s abrupt refusal to sign an association agreement with the European Union. Explaining that Ukraine was bankrupt and required an immediate cash injection that the EU was unprepared to provide, the president gratefully accepted a $15-billion bailout from an obliging President Vladimir Putin of Russia.

While the protests have morphed into a countrywide revolt against cronyism and corruption, a political resolution is currently deadlocked, while Ukraine’s beleaguered currency remains in freefall and its bankrupted economy faces imminent collapse. A bellicose Mr. Putin is using the unfolding drama to suborn Ukraine economically and politically, in much the same way that Stalin attempted to leverage the devastation in Europe to advance communism after the Second World War.

These circumstances pose a clear geo-strategic choice to the EU, U.S. and Canada: can the West afford a poor, politically unstable, autocratic, economically derelict nation of 46 million potential refugees on Europe’s eastern border tethered to a poor, but aggressive Russia; or is it in the West’s collective interests to embrace a prosperous, democratically confident and economically stable Ukraine firmly integrated into Europe?

Indeed, as pithily explained by geo-strategist Zbigniew Brzezinski, the ultimate prize for the West is not even a stable Ukraine, but a democratic Russia; a peaceful, prosperous European Ukraine destroys Mr. Putin’s residual imperial ambitions and provides Russia with an opportunity to eventually transform into a democratic, responsible and peaceful partner, sharing common values.

This outcome requires the development of a comprehensive assistance plan for Ukraine modelled on the post-war European Recovery Program, better known as the Marshall Plan. In 1948, facing the dual threats of Soviet expansionism and the total collapse of Europe’s economies, the United States pumped $15-billion (roughly $148-billion in today’s terms) into modernizing and integrating Europe’s economies. This far-sighted strategic decision resulted in the total political reconstruction of Western Europe, leading to decades of unprecedented growth and prosperity on the continent.

The recovery plan for Ukraine (let’s call it the Ukraine Recovery Program, or URP) should take this same bold, strategic approach. It should be based on the following framework: in return for starting to implement pre-agreed structural reforms (and only then), a new reform-oriented Ukrainian government demonstrably committed to (and capable of) implementing reforms should be offered a substantial three-to-four-year aid package that 1) facilitates the democratic transformation of Ukraine’s governing institutions; 2) stimulates the modernization and competitiveness of the Ukrainian economy; and 3) by offsetting the adverse socio-economic consequences of Russian economic retaliation, provides a social cohesion cushion in three key sectors: energy, state-owned enterprises, and the pension system. Social cohesion assistance in the following areas would cost between $21-25-billion, comprised of stand-by money to be used to backstop the plan agreed with the government to modernize the economy.

Moreover, a detailed outline of the URP, beyond vague promises, should be announced immediately. The impact of the EU, U.S. and Canada demonstrating their willingness to stand behind Ukraine with a massive program of assistance will help break the political logjam and provide a framework for the outcome of the current negotiations. It will 1) reassure Ukrainians of the West’s seriousness in helping Ukraine integrate into Europe; 2) build support among Ukrainians for a European future; 3) assuage the fears, stoked by the governing party and Russia, among Ukrainians (especially in the densely populated and heavily industrialized eastern part of Ukraine) of losing their jobs and pensions during the integration process; and 4) undermine the specious arguments that Ukraine’s only hope of economic salvation lies with Russia.

With this plan the West reaffirms its position as an honest broker to the current dispute, as the URP would be politically neutral and addresses the concerns of all sides.

Notwithstanding the hobbling economic problems in the West, the URP is worth the investment; the cost of containing the long-term fallout from economic collapse in Ukraine will be significantly higher. For the West, Ukraine is too big to fail. Moldova and Georgia may also lay claims for massive assistance, but their own viability as independent states may depend on whether or not Ukraine falls back into Russia’s orbit. Only Ukraine has the heft to block Russia’s imperial aspirations.

Ultimately, the URP will reassure the Ukrainian people that they can enter through Europe’s “open door” not as paupers, but as proud partners.

Finally, the EU, backed by the U.S. and Canada, should take the long overdue, and now obvious step of explicitly promising to open talks with Ukraine on EU accession following implementation of the reforms.

Ukrainians have shown the world that they are prepared to die for the values behind the original Marshall Plan – they have certainly earned the right to be integrated back into Europe.

Daniel Bilak is an international lawyer based in Kiev and a former UNDP senior governance advisor to the government of Ukraine.

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