Nothing would annoy Putin more than a stable post-war Ukraine. Germany must therefore under no circumstances scrimp or only grant loans.
School in Kramatorsk: We can easily afford to take on debt for the reconstruction of Ukraine Photo: Gleb Garanich/reuters
The Germans have a skill that could now come in handy again in Ukraine: they’ve seen a number of times how reconstruction works. As is well known, Germany was bombed across the board during the Second World War, so that a third of all homes were completely destroyed or badly damaged. Trains also hardly ran anymore because the Allies had deliberately attacked train stations and tracks in order to paralyze the Nazi war machine. The American military later stated with satisfaction: “The attack on the transport routes was the decisive blow that plunged the German economy into chaos.”
However, this chaos did not last long. By the end of 1949, West German industry was already producing as much as it had produced in 1936. Germans like to think that it was thanks to their diligence that the Federal Republic recovered so quickly from the war – but the wise financial measures of the Americans were at least as important. They developed the concept for the D-Mark, pushed ahead with the reconstruction of Western Europe with the Marshall Plan and created a mechanism with the European Payments Union that got intra-European trade going again.
Germans in particular should therefore know that it is worth giving generous support to countries that have been bombed – because they will soon no longer cost anything and will be able to take care of themselves. However, this lesson is not only available in West German post-war history. The development in the former GDR is just as instructive.
In East Germany, it was not only the Second World War that caused great damage – the “central planned economy of the Soviet type” also functioned poorly at best. When the East Germans forced the “Wende” in the fall of 1989, the GDR was largely ruined, as the SED Politburo well knew. The state planning commission determined that the “degree of wear and tear” in the industry was 53.8 percent. In construction it was 67 percent, in transport 52.1 percent and in agriculture 61.3 percent. Many companies produced almost nothing at all because the machines were rotten. It was crumbling everywhere, and in many places the old buildings in the inner cities were no longer habitable.
At first glance, it was extremely expensive to rehabilitate the former GDR. However, the unit was ultimately free
—
–
At first glance it seems as if it would have been extremely expensive to rehabilitate the former GDR. Ex-Finance Minister Theo Waigel (CSU) estimates that around 2.5 trillion euros have flowed from West to East over the past 30 years. 2,500 billion is a lot of money – and yet the unit was ultimately free. A small comparison with other countries in Europe shows this: Before Corona, the German national debt was a low 59.8 percent of economic output, while France came to 97.5 percent and Great Britain to 83.9 percent, although both countries did not have to carry out expensive reunification had.
The tax and duty burden in Germany is no higher than in other European countries and is in the “upper midfield”. German unity was largely self-financing because the upheaval in the east triggered a growth spurt that benefited the entire German economy.
This experience can be transferred to Ukraine. The war damage is already estimated at 750 billion dollars – and yet it would cost Europe nothing to finance the complete reconstruction. It would be an economic stimulus package from which the neighbors would also benefit. Only the opposite would be catastrophic: It is essential to avoid that the Europeans skimp or only grant loans that Ukraine is supposed to repay later. This penny-pinching would not only plunge Ukrainians into perpetual poverty, it would also weigh on the rest of the continent, as this vast country would remain a permanent case of bailout.
Unfortunately, one gets the impression that German politics has learned nothing from its own history. SPD Chancellor Olaf Scholz announced in the Bundestag that Ukraine would need a “Marshall Plan for reconstruction” “like war-torn Europe did back then”. But FDP Finance Minister Christian Lindner has other plans. He absolutely wants to prevent European grants to Ukraine; instead, the country should take out loans from the EU, which then have to be paid off again.
A small calculation makes it clear how fatal this FDP stinginess would be. Since the Ukraine war is far from over, the damage is likely to total at least $1,500 billion. Even this sum is probably underestimated. It could also be $2 trillion.
Before the war, Ukraine’s economic output was 588 billion dollars a year – and at that time factories, houses, roads, train stations or power plants had not yet been bombed. In addition, this figure referred to the entire Ukraine, but the Russians now hold about a fifth of the country.
So it would be lavish if Ukraine achieved an economic output of 250 billion dollars after the war. This means that loans of 1,500 to 2,000 billion cannot be repaid because interest would also be due – and something would have to be paid the Ukrainians are still alive. They can’t use all their money to pay off loans.
Instead of skimping, the Europeans should show what the prosperous and democratic West is economically capable of: We can easily afford to take on debt to finance the reconstruction of Ukraine. The country would soon prosper and Europe would be even richer. Nothing would annoy Putin more than to see his missiles fail to destroy Ukraine. It would be the West’s ultimate weapon, and entirely non-violent.
–
