Plan for Ukraine’s Reconstruction in the East (PURE)

The purpose of this Memorandum is to propose a strategy to reframe the discussion of the conflict in the Donbas and prepare a political foundation for post-war stability in Ukraine. This might be done by moving the focus of the Normandy Group from military de-escalation to economic reconstruction. The Minsk Process has succeeded so far in stopping the war, but it offers no framework for the reconstruction of those parts of Ukraine which were heavily damaged during one of the worst military conflicts in Europe since decades. De-escalation has so far not led to a lasting peace and restored prosperity. The Minsk Process is missing this last chapter: a credible Plan for Ukraine’s Reconstruction in the East.

Such a Plan is intended to serve a multitude of purposes in a guise of a prosaic loan program. The beginning of the economic recovery aid should be contingent on the fulfillment of Minsk II commitments by both Ukraine and Russia. Politically speaking, aid will be granted in the context of Minsk compliance, including implementation of the political provisions (as agreed in para. 5 to 10 of Minsk II). The Plan offers a unique opportunity for an optimistic vision of Europe's East. It includes a loan by EU and memberstates of € 4 bn over the next four years on rebuilding businesses, homes and infrastructure in the zones of conflict and challenges the Russian Federation, United States, China (Silk Road Initiative), Canada, Japan and others to match that financial commitment. The total amount of money made available under this Plan should be around € 8 bn. The $ 3 bn loan to Yanukovich could possibly be Russia‘s contribution to PURE.

The Plan should operate as a venture capital fund lending directly to projects in the region which can secure additional capital from World Bank, EIB and EBRD. The borrowers will be Ukrainian businesspeople and companies (hopefully with European and Russian partners). Highest anti-corruption standards must be guaranteed.

Launching this initiative would pave the way to a normalization of relations between Ukraine and Russia (resumption of bilateral economic cooperation), The West and Russia (gradual lifting of sanctions) and to a stable and mutual advantageous partnership between EU and Russia. Such a partnership will open the road for energy cooperation, investment and modernization of Russia. At the same time there must be sufficient guarantees that partners will abide by all agreed international norms governing European security.

The PURE-Plan could be the first prophylactic measure taken by Europe to address the root causes of migration. The initiative is opening Russia options how to restore cooperation with the EU. The idea should be endorsed by Angela Merkel and François Hollande as a German-French initiative, designed and completed by the European Commission as a substantial part of its Neighbourhood Policy.

In conclusion, circumstances in Ukraine demand a European vision how to get peace, stability and economic recovery. Ukraine gets the reconstruction of its war zone. The EU has been presented with an affordable Action Plan to stabilize a large country in its neighbourhood preventing massive immigration. The plan is also a reality check for the Americans - there is something creative and generous which the US can do in partnership with European allies. Russia sees the chance of a greater package - Minsk, Donbas, modernization, sanctions.