This report identifies the opportunities and challenges present in post-war reconstruction programs of Ukraine, and provides implications for the participation of Korean companies. The study comprehensively analyzes past post-war reconstruction cases and recent international community discussion trends through review of literature on the subject, statistical analysis, expert interviews, and attendance at international conferences. While there is great interest in post-war recovery in Ukraine throughout the international community and Korea, it is difficult for governments and businesses to expand their participation due to the continuing uncertainty surrounding war conditions, and the lack of specific information on funding methods or investment profitability. As large-scale investments will certainly be made for Ukraine’s recovery after the end of the war, it is necessary to carefully design the government’s participation in international community discussions and the direction of corporate investment, considering the current war situation and overall conditions.

Chapters 2–4 of this report conducted research on three major topics to provide reference materials for the participation of the Korean government and businesses in Ukraine’s post-war reconstruction programs.

In Chapter 2 we conduct an analysis of major past post-war recovery cases to present the main principles and precautions for participating in reconstruction projects. More than simple restoration of destroyed infrastructure, post-war reconstruction should be seen as an opportunity for a comprehensive overhaul of economic and social systems. This was evidently observed in cases such as the Marshall Plan after World War II, U.S. aid after the Korean War, and the reconstruction of the West Balkans in the 1990s. The Marshall Plan contributed to European economic recovery and the establishment of a market economy system, while in Korea’s case, U.S. aid laid the foundation for a liberal system. The Balkans are still undergoing reconstruction with EU-centered support, but challenges remain. Lessons learned from these cases are as follows: First, economic aid is effective when linked to improvements in the recipient country’s political and economic structure. Second, support tailored to the recipient country’s situation is necessary. Third, support that benefits both donor and recipient countries is important. Fourth, international cooperation enables the mobilization of funds to meet reconstruction needs and build international order. Korea’s participation in Ukraine’s reconstruction should also consider these points and participate not only in facility restoration but also in institutional improvement and international peacekeeping efforts.

Chapter 3 examined the current status of international community discussions on Ukraine’s reconstruction, the costs and direction of Ukraine’s reconstruction projects, governance, and key contents of core projects. Since the outbreak of the Russia-Ukraine war in February 2022, discussions on Ukraine’s reconstruction projects have been active in the West. Major Western countries and international organizations intend to modernize social infrastructure and integrate Ukraine into the EU economy. This will be enabled through attracting large-scale investments, EU integration, and application of digital and net-zero technologies, which are the main topics discussed in a series of international conferences on Ukraine’s recovery. As of the end of December 2023, the total amount of damages sustained by Ukraine and its needs are estimated at $486 billion, about 2.8 times Ukraine’s nominal GDP in 2023. The reconstruction costs are expected to increase as infrastructure continues to be destructed due to the war. Energy, transportation, housing construction, and health are the key areas that should be most urgently recovered. We summarized major projects and implementation plans for each area at the end of this chapter.

In Chapter 4, we examine the magnitude of support toward Ukraine’s reconstruction by international organizations and major countries, and discussed how to mobilize public and private funding considering sustainability and risk management. As Ukraine’s fiscal instability deepens due to uncertainties from the prolonged war, it heavily depends on support from international financial institutions such as the IMF, World Bank, EBRD, and major countries including the EU, G7, and Poland. To this end, the Multi-agency Donor Coordination Platform (MDCP) was launched in January 2023 to coordinate short- and mid- to long-term Ukraine support directions and mechanisms among various donors. This reflects the international community’s common understanding that international support alone is clearly limited for Ukraine’s stable recovery and reconstruction, and that attracting private capital is essential. The international community now discusses ways to utilize frozen Russian sovereign assets as reconstruction funds within legally possible limits, and an agreement has been reached at the G7 level on how to use the annual interest income from frozen Russian assets. In addition, discussions on practical risk management measures such as strengthening public-private partnerships (PPP), compensation for losses due to political and commercial risks, and customized policy support are deepening to activate private funding.

Based on these research results, Chapter 5 presents the current status of Korean companies’ participation in Ukraine’s reconstruction projects and future support measures. Korea is paving the way for its companies to participate based on the EDCF basic agreement with the Ukrainian government and six leading projects. The One Team Korea Ukraine Reconstruction Cooperation Delegation includes not only government ministries such as the Ministry of Land, Infrastructure and Transport and the Ministry of Oceans and Fisheries, but also public enterprises such as Korea Land and Housing Corporation (LH), Korea Water Resources Corporation, and Korea Overseas Infrastructure & Urban Development Corporation (KIND), as well as some private companies exploring the possibilities of reconstruction projects. To facilitate their smooth participation in reconstruction projects, this report proposes six support measures: first, establishing a pan-ministerial support organization under the Prime Minister for formulating reconstruction participation strategies and overseeing related ministries; second, supporting the development of integrated public-private partnership (PPP) projects throughout the project lifecycle; third, providing investment information in six key areas: energy, transportation, housing, infrastructure, industry, and complex fields; fourth, mitigating investment risks through the development of insurance products, participation in consortiums with major donor country companies, and utilization of MDCP; fifth, joint entry into reconstruction projects using Poland as a base; and sixth, strengthening bilateral cooperation with Ukraine, including KSP projects, and joint participation in multilateral cooperation.

The war will end someday, and regardless of how it ends, massive resources will certainly be poured into post-war recovery. Korea needs to set the right direction and prepare now so that it can contribute to this historic post-war reconstruction. The economic benefits gained by participating companies will be given as a bonus.