Towards achieving ‘strategies of gain’ in post-war Ukraine

On February 24, 2022, the Russian Federation launched an unprovoked and devastating attack on neighbouring Ukraine, a European democracy of 44 million people. Already engulfed in an eight-year war in its Eastern provinces (Luhansk and Donetsk), Ukraine is now battling its way out of what is the largest conflict on European soil since the Second World War. The continuously-evolving situation makes any attempts to provide robust estimates of the total human, economic, and social loss difficult. That said, it is now clear that the conflict will have enormous consequences. It will entail great physical and non-physical damage, meaning that Ukraine emerging post-conflict will have a different set of priorities resulting from the exacerbation of pre-conflict challenges and the emergence of vast new ones. According to UNHCR, the war has already ignited the greatest refugee crisis in Europe since the Second World War. 

Ukraine that will emerge from the conflict faces the challenges of coping with the massive destruction of physical infrastructure and assets (particularly in certain areas of the country), dealing with the psychological damage of the war, and ensuring that the loss of human capital and talent remains temporary and does not become permanent. These challenges will be determining factors in any post-conflict scenario that will emerge once the conflict is over.

Recovery and reconstruction strategies are often testing. Post-conflict areas are frequently beleaguered with sets of very specific challenges. These include (i) the need for coordination between the multiplicity of local, national, and international actors; (ii) increased urgency which demands rapid responses by stakeholders; (iii) sparse resources which need to be efficiently utilised; and (iv) capacity constraints, following the outflow of talent due to the conflict. Addressing these challenges is often easier said than done given the complexity and fast-evolving scenarios of post-conflict areas (UNDP, 2016). 

The importance of the 10 lessons learned in emergency and recovery contexts

In this paper we argue that place-sensitive development policies will deliver the greatest returns in a highly differentiated post-conflict context across Ukraine. We extract ten lessons from other post-conflict situations that will assume heighted importance for a recovery process in stages. The recovery should build on solid foundations and evidence, and involve the largest possible group of stakeholders. The ten lessons are as follows:

Lesson 1: Assessing local conditions

The assessment of local conditions is of great importance for developing both successful local development strategies and recovery policies. For those strategies aiming to incorporate the territorial dimension into the design and implementation of development interventions, it is vital to devote enough time and resources to a thorough detection of sources of local comparative advantage (Swinburn et al., 2006). Similarly, in a post-crisis context the assessment of local recovery and reconstruction needs normally represents the first step towards an effective strategic planning (European Commission, 2017). Past wide-ranging needs assessment exercises, such as those carried out by the European Commission following the 2019 Albanian earthquake, can provide robust foundations for similar types of analyses in the Ukrainian post-war recovery context (European Commission, 2019). In order to avoid one-size-fits-all and off-the-shelf types of interventions, a careful assessment of local conditions should (UNDP, 2016; European Commission, 2017):

• Understand the political environment and existing institutional arrangements;
• Map the in-country partners and their capacity;
• Assess the outflows of talent and the needs of internally displaced people (IDPs);
• Estimate the scope of physical damage to infrastructure and productive sectors;
• Analyse contextual risks, including security, economic and social risks.

This exercise is key to ensure an effective prioritisation and implementation of strategies which respond to place-specific needs and constraints. Moreover, the institutional set up stemming from the recent decentralisation reform in Ukraine can provide the suitable framework within which central and local governments can join forces to undertake such an exercise.

Lesson 2: Ensuring buy-in from local and regional stakeholders

A strong political and civil support for the success of place-sensitive development policies will be key in the recovery effort. Local buy-in is often considered a conditio sine qua non (necessary condition) for the successful implementation of policies solidly rooted in local contexts. Arguably, the relevance of buy-in from local and regional stakeholders assumes an even greater role during recovery and reconstruction processes in a post-war situation. Best practice stemming from post-disaster recoveries around the world points to the importance of identifying needs and priorities of affected communities by creating participatory processes that involve communities themselves in decision-making, service delivery, and recovery (UNDP, 2016). 

Lesson 3: Containing vested interests

Vested interests and corruption already are one of the main barriers to socio-economic development in non-emergency situations. In post-war and post-crisis contexts, the combination of the inflow of a greater amount of funds and institutions that are often left beleaguered in their capacities can create a fertile ground for increased corruption (Transparency International, 2012). 

Against this backdrop, containing and limiting vested interests, lock in, clientelism, and corruption will be essential, if subnational governments are to implement successful recoveries after the end of the war. There are a variety of areas of interventions for local governments to act on. First, rendering corruption practices high-risk, low-reward activities through measures aimed at increasing the risks of effective detection, investigation, and prosecution is a necessary step. Second, it is essential to mobilize non-government actors in order to build a broad front for anti-corruption reforms as it has been found that civil society generally plays the most effective supportive role for corruption monitoring and advocacy in post-conflict settings (Paffenholz, 2015). 

Lesson 4: Assessing complexity and breadth of strategies

Developing effective territorial development strategies requires a careful weighting of their complexity —that is, a function of the number and diversity of the individual elements or interventions by which a broader strategic approach is composed— and their breadth of strategic scope —understood as the narrowness of the development outcomes or objectives by which a strategy is guided (Rodríguez-Pose & Wilkie, 2019). Arguably, this applies in post-war recovery contexts too. 

Recovery strategies will also need to address the most basic needs, such as adequate healthcare, transport infrastructure, and the rebuilding of education facilities. In contrast, territories less affected by the conflict-driven destruction may benefit more from narrow focused strategies, tackling more complex aspects of post-conflict reconstruction, including, for instance, the return of talent and the reconstruction of the industrial ecosystem. Part of a process in stages, the application of the complexity-breadth matrix needs to be informed by the careful assessment of local conditions and complemented by anti-corruption measures, in order to keep vested interests at bay.

Lesson 5: Establishing monitoring systems

The importance of inclusive, locally-tailored and effective monitoring systems has been regularly stressed by the development literature (Marinelli et al., 2019). Even during non-emergency contexts, robust monitoring systems can help support policy learning for both local public administrations and stakeholders, enhance policy communication and facilitate the accountability and transparency of policy actions. In a post-war context of decreased institutional capacity, it becomes paramount to strengthen monitoring systems and increase transparency so that affected populations can hold governments and local authorities accountable for recovery outcomes (UNDP, 2016). 

Systematic tracking of public opinions and concerns adds an important dimension to the monitoring structure, together with the establishment of effective multi-sector and multi-agency databases for the tracking of funds. All this must be complemented and supported by strong political will and high-level leadership (USAID, 2006). 

Lesson 6: Investing in capacity building

Already in non-conflict settings, the adoption of place-sensitive development strategies does not mean that the central government has no role to play. The Ukrainian central government can be most effective here by playing a more supervisory and coordinating role. Central government and international organisations can support local governments that lack institutional capacity to implement complex projects.

In particular, post-war local governance capacity development in Ukraine will need to entail a number of dimensions, including (i) peacebuilding capacity; (ii) state building capacity; (iii) and development capacity (UNDP, 2010). The mediating role of institutions when it comes to the returns of any development and recovery intervention means that outcomes of policy will be heavily affected by the ability of strategies to incorporate institution-building actions. In this sense, the set up by the national government of specific, mission-oriented offices whose aim is to provide technical institutional assistance — perhaps, in collaboration with external agencies involved in the reconstruction of Ukraine — to local government units will enable the design and implementation of far more sustainable and resilient local recovery plans across the whole of Ukraine. 

Lesson 7: Preventing zero-sum competition at the local level

In the context of development interventions, subnational governments have often been found to engage in a race to the bottom and facing a prisoner’s dilemma: although they would benefit by cooperating at the regional level, they act in their own self-interest, trying to offer the best incentives while tilting the playing field towards lower environmental, social, and governance (ESG) standards in the hope of outdoing regional competitors (Rodríguez-Pose & Arbix, 2001). These harmful dynamics can be exacerbated in post-conflict settings. The significant inflow of funds and the multiplicity of donors and actors, which usually follows emergency situations, can give rise to the increased risk of zero-sum competition among Ukrainian municipalities in pursuing efforts to secure additional funds from the national government and international donors. 

Against this backdrop, the national government needs to act as a guarantor of a level playing field. Such a level playing field will give all Ukrainian municipalities a fair chance to access the necessary development and recovery funds, while avoiding duplications and a wasteful use of resources. Decisions around new infrastructural projects, such as the construction of airports, will need to be centralised in order to leverage specific locational advantages and maximise the returns of investments. In this regard, evidence from the EU shows the limited returns of infrastructural projects which are either duplicates or lack locational advantages (Crescenzi & Rodríguez-Pose, 2012). In addition, there will be a need to ensure a certain degree of cross-country harmonisation and regulation for the provision of fiscal incentives in the post-conflict reconstruction. 

Lesson 8: Designing coordination mechanisms

Recovery encompasses a plethora of different activities. Successful recovery interventions require excellent multi-sector coordination across different tiers of governance. In emergency and post-conflict settings, the national government retains the role of facilitating coordination of recovery efforts at local government level and empowering local leadership in their interactions with national and line ministries and with international partners (UNDP, 2016). 

For this purpose, the setting up of an ad-hoc, dedicated agency can help in facilitating vertical and horizontal coordination dynamics. In other post-crisis contexts, this has proven to be a successful strategy. This was the case of, for example, Indonesia, where, following the 2004 Asian Tsunami, the government took the leadership in the recovery effort and established a special, mission-oriented Agency for the Rehabilitation and Reconstruction under a four year sunset clause. The Agency oversaw a coordinated, community-driven reconstruction programme, where duplication was minimised and coordination among stakeholders was maximised (UNDP, 2016). In Ukraine, a similar coordination and mission-oriented agency — adapted to the specificities of territories following the conflict— should be considered as a way to build adequate platforms for facilitating a coordinated recovery.

Lesson 9: Redefining regional development clubs

Before the invasion, different groups of Ukrainian regions and/or municipalities faced similar challenges. Many of them could be classified into development clubs for which similar policy guidelines were required (Storper, 2018). In contexts of limited institutional capacity of subnational governments, the identification of development clubs, or territories or regions within a country with similar socio-economic characteristics, development constraints and/or potential, and the extent of war-related destruction is crucial for the implementation of place-sensitive strategies. These development clubs can then propose generally applicable policy guidelines informed by economic theory (Iammarino et al, 2017).

In post-war Ukraine, the formulation of policy guidelines for regional development clubs can remain useful in a variety of ways. First, it will enable a relatively rapid and efficient process of recovery policy-making, by avoiding the formulation of strategies ‘from scratch’ by local governments. Second, the definition of regional development clubs can aid in the identification of those regions and/or municipalities which display both similar levels of pre-war socio-economic and institutional development and comparable degrees of war-related destruction. Third, the division of territories in development clubs may allow for a relatively straightforward incorporation of the complexity-breadth matrix in a dynamic and comparative way: as municipalities and/or regions move towards higher levels of development vis-à-vis their past performance and peer territories, and they remedy to conflict-associated destruction, development and recovery policies will allow for greater complexity and more targeted interventions.

Lesson 10: Retaining a strategic focus

Ultimately, while local governments need to contribute to detailed project planning based on the requirements of local communities, national governments retain the task of leading and coordinating overall recovery. In particular, among the many tasks which fall under the national government clout, the national government should coordinate efforts to prevent policy choices by subnational authorities from becoming disjointed from local capabilities. 

The risk of policy incoherence and mismatch between local conditions and recovery priorities needs to be addressed at the central level. To do so, greater use by senior national leaders of filters and criteria, such as feasibility and peer support would alleviate such distortions to a considerable extent. Evidence from other post-crisis settings shows that the focus on policy coherence across the whole national territory is often more theoretical than real (NYU, 2011). Finally, the national government is also better positioned to retain a clear picture of how local comparative advantages complement each other and, consequently, how local bottlenecks may be tackled creating broad-based synergies across municipalities and regions. A cooperative and collaborative effort in this sense is likely to make or break attempts at an effective prioritisation and harmonisation of interventions across post-war Ukraine.

Concluding remarks

This short policy brief has highlighted the heightened relevance of place-sensitive policies in emergency and recovery contexts. Even in post-war, post-conflict recovery settings, geography matters. Whereas it is still early for an overall assessment of the physical and non-physical damage produced by the war, it is clear that the conflict will have differentiated territorial impacts across Ukraine. Some cities and municipalities will have little left standing once the conflict is over, while other territories will hopefully be for less affected by physical and infrastructure damage. These latter territories will, nevertheless, still face the consequences of the psychological shock and scars of the invasion, the loss of talent linked to the massive displacement of people, loss of internal and external markets, and a serious disruption of basic services and industrial production. The table below connects the lessons learnt from previous post-disaster and post-conflict to the specific challenges Ukraine will face in the post-war recovery period.

Although the current Russian invasion is causing large-scale destruction, Ukraine has already demonstrated resilience and some degree of success in delivering development outcomes under instability and emergency conditions. A concerted, across-the-board effort by national, regional, and local policymakers together with the strong sense of national unity that Ukrainians have so far demonstrated will help leverage the difficult road that lies ahead and to use post-war reconstruction as a springboard to greater economic dynamism, setting the foundations for a sustainable, inclusive, and multi-dimensional recovery and reconstruction. 

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