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In a speech delivered Tuesday in Brussels, U.S. Treasury Secretary Janet Yellen called on allies to provide more financial support to Ukraine, saying an effort like that to rebuild Europe after World War II would eventually be necessary to help Ukraine recover from the ongoing war with Russia. "Ukraine's immediate financing needs are significant," Yellen said, noting that the government cannot rely on regular tax revenue and continues to function "due to the ingenuity and bravery of Ukrainian officials." Yellen continued: "Ukraine needs budget funding to pay soldiers, employees and pensioners, as well as to operate an economy that meets its citizens basic needs." And Ukraine will have even greater financial needs in the future, she said. "In short order, it will need to turn to repairing and restoring critical utilities and services," she said. "Eventually, Ukraine will need massive support and private investment for reconstruction and recovery, akin to the task of rebuilding in Europe after 1945." Though she did not mention it specifically, Yellen appeared to be referring to the Marshall Plan, under which the United States provided billions of dollars in economic recovery aid to Europe from 1948 to 1951. Cooperation praised Yellen appeared at the Brussels Economic Forum to deliver the Tommaso Padoa-Schioppa lecture, named for the late former Italian Minister of Economy and Finance, considered one of the driving forces behind Europe's conversion to a single currency. Yellen praised the "strong partnership" that exists between the U.S. and its European allies. "The most tangible example is our joint response to Vladimir Putin's unprovoked war against Ukraine and its people," she said. "The war is taking a devastating human toll — with lives tragically lost, families internally displaced or becoming refugees, and communities and cities destroyed." She warned, however, that the commitments made so far would not be sufficient to the task of rebuilding Ukraine. "Ukraine will have to take this one step at a time, but we can help today and acknowledge and prepare for what is coming," Yellen said. "What's clear is that the bilateral and multilateral support announced so far will not be sufficient to address Ukraine's needs, even in the short term." Noting that the U.S. Congress was set to approve another package of aid to Ukraine worth tens of billions of dollars, she said, "I sincerely ask all our partners to join us in increasing their financial support to Ukraine. Our joint efforts are critical to help ensure Ukraine's democracy prevails over Putin's aggression." The Biden administration had asked Congress for $33 billion in additional aid to Ukraine. Last week, though, the House of Representatives approved a $40 billion package, more than 20% larger than the president's request. The Senate, which will vote on the package as early as Wednesday, is expected to approve it. Urgent calls for aid As the scope of the devastation wrought by Russia's attack has become apparent, calls for the creation of a version of the Marshall Plan for Ukraine have been coming from various corners for weeks, including from Kiev itself. Addressing a conference in Warsaw by video last week, Ukrainian President Volodymyr Zelenskyy said, "The reconstruction of Ukraine must now become the same historical example for our time and for the future as the restoration of European countries after World War II." Italian Prime Minister Mario Draghi called for the creation of a Marshall Plan for Ukraine in an address to the Atlantic Council last week. Writing in the Guardian newspaper and other news sites, University of California, Berkeley economist and former International Monetary Fund adviser Barry Eichengreen said, "The Marshall plan prioritized rebuilding export capacity. It recognized the invigorating effects of international competition and the political benefits of European integration. Ukraine almost certainly faces a long road to the nirvana of EU membership. But the journey can be expedited if Western aid is structured to align Ukrainian institutions and policies with those of the EU." Questions about Ukrainian 'Marshall Plan' Some are skeptical that Ukraine can be restored as successfully as Europe was in the wake of World War II. In an article pm Foreign Affairs website last week, Benn Steil, director of International Economics at the Council on Foreign Relations and author of "The Marshall Plan: Dawn of the Cold War," warned that it was a mistake to draw too many parallels between Western Europe in the late 1940s and Ukraine of the early 2020s. "On its surface, Ukraine would appear to be fertile ground for a Marshall Plan," Steil wrote. "It is, much like most of the 16 Marshall Plan recipients of 1948–1952, a market-oriented European country with democratic foundations, anxious to integrate more closely with its neighbors to the west. It has great untapped potential in energy production, chemicals, agriculture, and industrial manufacturing." But the comparison only goes so far, Steil pointed out. The countries that benefited from the Marshall Plan could do so because they had received explicit security guarantees from the United States. This allowed them to avoid diverting much of their productive capacity to rearming themselves. It also prevented the Soviet Union from undermining efforts to implement economic reforms and democratize, as the Soviet Union did in Eastern European countries including Poland and Czechoslovakia, which did not benefit from the plan. "The regrettable but inescapable conclusion is that long-term, credible internal and external security is a precondition for a successful Marshall Plan in Ukraine, and that the United States and its allies are incapable of providing it," Steil wrote. "If the latter were to mount a massive aid program aimed at cementing Kyiv's western orientation, Russia could credibly threaten Ukraine, its officials, its allies, its trading partners, and any enterprises operating there with costly cyber, military, and economic attacks," he added. "To be clear, Russia may never be able to conquer Ukraine, but it is more than capable of making it a hellish place to live and do business."
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