Marshall Plan 2

In the context of Ukraine's post-war reconstruction, there are increasingly more ideas to develop a Ukrainian Marshall Plan and effectively use the funds from Western partners. One should note that this idea is not new. The idea of Ukraine becoming a pro-Western example in the post-Soviet space emerged immediately after the first Maidan in 2004, shifting the country's foreign policy course from a pro-Russian to a pro-Western vector.

The first document of this kind was the program Microeconomic Development and Social Enterprise in Ukraine: A "Marshall Plan" for Ukraine, developed in 2007 by the British organization People-Centered Economic Development. After the second Maidan in 2014, French journalist, writer, and philosopher Bernard-Henri Levy also wrote a strategy for a better future for Ukraine. 

At the same time, British historian and expert on Eastern Europe Timothy Garton-Ash developed a draft program of financial assistance to Ukraine. He proposed a "Merkel Plan," with Germany as the primary financial donor. This program, however, failed to address the justification for an akin project. It did not specify the benefits of the plan for Western countries. Nonetheless, the idea was followed by a draft from a group of Bundestag deputies called the "Marshall Plan for Ukraine," written in 2016, but it did not come to fruition.

Is the Marshall Plan a Myth or a Reality?

The program developed in the United States was called the European Recovery Program. It received its name after the American Secretary of State George C. Marshall. In this regard, Germany was far from being the top aid recipient. Out of the $13 billion allocated by the United States, the largest amounts, $2.8 billion and $2.5 billion, were received by the United Kingdom and France, respectively. West Germany received aid similar to that of Italy, $1.3 billion. The Netherlands received about $1 billion.

The program launched in 1947 coincided with the so-called Truman Doctrine, a system of checks and balances used by the United States against the USSR that launched the Cold War. Hereafter, Central European countries were cut off from the program. Moreover, the United States banned France from buying Polish coal, even though its price was the cheapest at the time, amounting to $12 per ton. France had to buy American coal for $20 instead. 

One of the conditions for providing aid was to prevent communist politicians from entering European governments. Finland was the only one to abandon the Marshall Plan. Helsinki began to build its model of relations with its eastern neighbor based on neutrality.

In the Marshall Plan, much of the aid constituted food rather than new technologies and equipment so the United States could sell its surplus agricultural products. In return for the aid, America demanded uninterrupted supplies of raw materials from European countries. 

The True Plan

The German economic miracle was not so much due to the Marshall Plan as to the economic reforms of Ludwig Ehrhard, a prominent German economist, politician, and author of the welfare state theory based on liberal reforms that eliminated the dominant influence of the state on the economy and turned paternalistic Germans into individualistic entrepreneurs. 

Postwar Japan also had a distinct plan to overcome the crisis. The new policy, developed by the American banker and advisor to the US President Joseph Dodge, was called the Reverse Course. The primary element of the plan was the de-monopolization of the economy, as before the war, only nine financial and industrial groups controlled more than 30% of the Japanese economy. The reforms preserved the regulatory role of the state. Japanese FIGs (zaibatsu) had to "open up." Some of their shares went on public sale on the stock market, with employees of enterprises and residents of the regions where they were located having the preemptive right to buy. 

As a result, more than 70% of the share capital was dispersed among millions of private shareholders. The possibilities for building horizontally integrated companies were severely limited: cross-ownership was not allowed to exceed 25% of the authorized capital. 

The state bought large tracts of agricultural land from agricultural landlords and sold it to small and medium-sized farms. By 1950, almost 60% of the land was in the hands of small and medium-sized farms. Thus, the recovery plan of post-war Japan included de-oligarchization, business unbundling, price and currency stability, and high-quality public management with a stimulating effect on the economy. 

A Plan for Ukraine

The true "Marshall Plan" for Ukraine from the US and EU would be to open their domestic markets to Ukrainian goods, as they once did for Japan and Germany. As a result, Japan's annual exports to the United States grew to $180 billion and Germany's to $120 billion. Before the full-scale war, Ukraine's exports to the United States amounted to about one billion dollars.

The Marshall Plan is not a metaphorical free fish for Ukraine but a conditional fishing rod to catch it. In particular, it is a preferential trade program without duties and quotas on everything but arms that the US and EU have opened for countries such as Cambodia or Bangladesh. As a result, these countries export to the US and European markets footwear and textile products (with a high level of added value) worth billions of dollars and euros per year, with the supplies to the US and Europe exceeding 50% of their total trade turnover. 

The strategic partnership is primarily about trade and investment. Politicians in Washington and Brussels should consider opening markets for Ukrainian goods, removing protective duties/quotas, and ending anti-dumping investigations. Today, such a preferential regime is active only during the war. However, this model should last for at least 10-15 years so that it becomes part of business planning in Ukraine, affects long-term forecasts, and becomes a magnet for foreign investment in the production of Ukrainian goods.

Ukraine should start every conversation with its international partners with a discussion of trade preferences for the period of postwar recovery. Ukraine's independent growth will reduce budgetary support asked from its Western partners, thus saving their taxpayers money. Earning money instead of requiring loans is a favorable balance between Ukraine and the free world.