Conflict in Ukraine: Europe facing the war economy |  Economy



Three months after Russian President Vladimir Putin’s devastating war against Ukraine, the balance is terrifying. The United Nations has certified the loss of 3,838 civilian human lives. The deceased soldiers exceed 40,000, according to the respective governments. Doubtful figures. What is certain is that more than six million people have fled the country and there are another eight million internally displaced persons.

Putin is preventing the export of grain from one of the world’s leading producers, causing a food crisis. António Guterres, Secretary General of the UN, has pointed out that food insecurity has doubled to reach 276 million people.

The damage caused by the economic slowdown and the destruction of equipment are overwhelming. The Government and the kyiv School of Economics estimate that the reconstruction costs may exceed 560,000 million euros, more than three times the country’s GDP. A CEPR study (A blueprint for the reconstruction of Ukraine) advocates a plan of even greater aid, ranging between 500,000 and one billion dollars (950,000 million euros). The work written by leading economists such as Torbjörn Becker, Barry Eichengreen, Kenneth Rogoff and Beatrice Weder di Mauro, is based on the experience of the Marshall Plan. It is a possible initiative, because remember that the Marshall Plan (1948 -1951) had a budget of 12,500 million dollars, which at current values ​​would represent about 450,000 million euros.

The United States has already committed more than 50 billion euros in economic, military and humanitarian aid to Ukraine. Europe has provided some 5,000 million euros and is discussing sending another 9,000 million. Very insufficient aid, as the head of European diplomacy, Josep Borrell, has been insisting. In Europe there is debate whether the Union should create a new Next Generation with common borrowing for Ukraine. German Finance Minister Christian Lindner has already said no.

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On the advisability of creating a new European fund for Ukraine, Joaquín Almunia, former vice-president of the European Commission, explained at an event organized in Barcelona by the European Commission and the organization Politica & Prosa, that “yes, it should be done, but I don’t know if it will be done”. He specified that Europe needs many more resources than it has, as it must face the climate crisis, the energy transition, defense and respond in solidarity to the famine in Africa.

While Europe hesitates, war multiplies inequalities. The oil companies get rich. The Saudi Aramco has increased its profits by 82%. Oxfam points out that 573 new billionaires have appeared in the last two years, while 263 million people will fall into extreme poverty this year. At the same time, we see how the minimum 15% tax on multinationals is postponed until 2024. Facts that alienate the citizens of Europe.

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The EU cannot hide behind the fact that it has already made an exceptional effort to respond to the pandemic. His credibility now depends on whether he is capable of assuming a war economy to welcome and recover Ukraine. The past is history.

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