How Trump is torpedoing Ukraine's reconstruction efforts

Telegraph

a day ago

When it comes to the outlook for post-war Ukraine, hope springs eternal among the international community.
Last week, scores of Western leaders, along with an army of NGOs, and thousands of businesses from around the world descended on Rome for the ambitiously named 'Ukraine Recovery Conference'.
In the words of the organisers, the purpose of the summit was to devise a roadmap that will lead to 'the swift recovery and long-term reconstruction of Ukraine'.
Hosted by Italian Prime Minister Giorgia Meloni, high-profile attendees included Donald Trump's special envoy to Ukraine Keith Kellogg, Volodymyr Zelensky, European Commission President Ursula von der Leyen, and German Chancellor Friedrich Merz.
In the build-up, the illustrious think tank Chatham House released an upbeat survey of what so-called 'civil society organisations' wanted from post-war reconstruction.
Anti-corruption measures and assistance for young people in overcoming the trauma of war featured heavily on a wish list of the Ukrainian people, the report said.
Over two packed days, there were sessions on how to repair Ukraine's crippled energy infrastructure, attract investment in the country's critical minerals, and ways to revitalise its shattered manufacturing industry.
One panel, attended by foreign ministers from across Europe, was entitled: 'Ukraine's path to the EU'. Zelensky said the pacts that would be forged in the Italian capital would 'make Ukraine stronger'.
But no amount of warm words and well-intentioned diplomacy can disguise the fact that Ukraine's future continues to be dictated by the whims of one man: Donald J Trump.
A false start
The reconstruction of a country that has suffered more than three years of relentless bombardment, will mostly come down to the generosity of strangers – mainly in the West.
Without significant outside funding – much of it from private investors – Ukraine is destined to remain a hollowed-out husk for a generation or more.
Yet in the days leading up to the Rome pow-wow, hopes for Ukraine's resurrection suffered a major setback after it emerged that Wall Street asset management giant BlackRock, a linchpin of efforts to raise tens of billions for the post-war rebuild, was no longer involved.
Even more alarming for Ukraine, reports claim that it was ultimately Trump's election that prompted BlackRock to get cold feet and pull out.
In the aftermath of Russia's invasion, the investment powerhouse was pivotal in the creation of something called 'The Ukraine Recovery Fund'. Described as Ukraine's 'Marshall Plan' – a nod to the US economic aid that paid for the reconstruction of Europe following the Second World War – the project was the brainchild of Australian billionaire Andrew 'Twiggy' Forrest.
Yet having made his fortune amid the dirt and dust of Australia's frontier mining towns, Forrest needed someone with the heft to bring together global investors willing to pledge serious money to the fund.
After a meeting between Zelensky and BlackRock chief Larry Fink, the Ukrainian government proudly announced that the Wall Street titan had agreed to coordinate 'the efforts of all potential investors and participants in the reconstruction of our country'.
Weeks later, BlackRock confirmed it would 'advise the MoE [Ukraine's ministry of economy] on establishing a roadmap for the investment framework's implementation'. Forrest predicted that Ukraine would 'enter a golden era'.
Fast forward to 2024, and Philipp Hildebrand, vice chairman of BlackRock, was confident that his firm had managed to raise in the region of $2.5bn (£1.8bn) from a club of Western allies, development banks, and private investors. The figure could eventually top $15bn, he thought.
Yet even at the upper end of Hildebrand's estimates, it still would only have been a small fraction of the $525bn that the World Bank and others believe it will take to piece Ukraine back together.
Forrest was even more optimistic – he envisaged the fund eventually having $100bn at its disposal.
Such sums now look wildly overstated with the future of the fund undoubtedly hanging in the balance. Forrest had already expressed his reluctance to remain involved while the US president was talking about enforcing a peace deal on Ukraine that didn't have the blessing of the Ukrainian people.
The expectation in Rome was that BlackRock would be in a position to unveil a big commitment from a consortium of investors.
With it gone, who will coordinate fundraising from the capital markets now? Reports suggest France had been working on an alternative proposal but without heavyweight American backers, there are doubts about whether it would get off the ground.
BlackRock's loss will be felt hard in Kyiv and beyond – but the way that Trump continues to cast a shadow over its sovereignty will be felt harder.
It is indicative of a figure whose attitude towards Ukraine has flittered between indifference and outright hostility – in front of the world's media at the White House, no less – only for his stance to soften after repeated humiliations at the hands of a defiant Vladimir Putin.
Such inconsistency appears to have ultimately been the catalyst for BlackRock's change of heart. Reports suggest that it was forced into an about-turn because Trump's flip-flopping had spooked the investors it was trying to round up.
'The only conversations that drive our decision-making are those with our clients,' a spokesman said.
Failure to communicate
Washington's chaotic approach is encapsulated in the debacle surrounding the Pentagon's recent decision to halt weapons deliveries to Ukraine.
The move blindsided even those who are usually closely briefed on such matters, including members of Congress, State Department officials and key European allies, Politico reports.
According to CNN, the list of people that Pete Hegseth, the US defence secretary failed to inform before authorising a pause on shipments included the president himself.
With the White House seemingly unable to make up its mind on where it stands on Ukraine, it leaves the country's ability to determine its own destiny more uncertain than ever. The US is, by some margin, the largest single donor to Ukraine. It is also the biggest provider of military support. Kyiv is facing a deficit of as much as $19bn this year, largely driven by declining US assistance.
The Kiel Institute for the World Economy, a German think tank, calculates that the US has provided just over €115bn (£99bn) of support to Ukraine – €3.4bn in humanitarian aid, €47bn in financial assistance, and €65bn in military funding.
The country that has provided the next largest amount of aid is the UK, at €19bn. Some experts believe renewed US backing could change the course of the war.
Some observers believe a different approach is required altogether. 'Past Ukraine Recovery Conferences have convened thousands of experts and produced grand ideas, with zero follow-through,' American diplomat Kurt Volker wrote in a piece for the Centre for European Policy Analysis, a Washington-based think tank.
There are several obstacles to genuine progress, in his view.
First, 'no one has taken charge of supporting Ukraine's economic recovery,' and secondly, 'war risk' – with the Kremlin's bombs still raining down on Ukraine 'major private investment has stayed on the sidelines', Volker, a former US ambassador to Nato, said.
Victory on the battlefield has to come first, and that can only happen if Western funding increases dramatically to around $150bn from roughly $100bn a year, Timothy Ash, strategist at RBC Bluebay Asset Management, said.
With the US looking to do the opposite and reduce its share, European leaders should bankroll the war effort with the $330bn of Russian central bank assets that are frozen in bank accounts across the continent, he said.
Yet, concerns about the possible violation of international law, the destabilisation of financial markets, and possible Russian reprisals against Western companies that still have assets in Russia, have ensured the funds remain untouched.
'It's Russian taxpayer money, so we are spending our taxpayers' money to protect theirs. We're imbeciles and there can be no recovery and reconstruction unless you win the war,' Ash said.