Gdansk and the Future of Ukraine’s Reconstruction
When delegations from nearly 100 countries gather in Gdańsk later this week for the 2026 Ukraine Recovery Conference, the debate at the heart of reconstruction will have decisively shifted. Since Russia’s full-scale invasion in 2022, this debate has largely centred on whether Ukraine’s European and transatlantic partners will continue funding its recovery. The more pressing question now is whether they can help Ukraine build enough security, transparency and investor confidence to unlock private capital at scale. Although public and multilateral funding remains indispensable for underpinning macroeconomic stability, donor finance alone can no longer fund reconstruction at the level it now demands.
The scale of the task is immense. The latest World Bank-led assessment, RDNA5, puts Ukraine's reconstruction needs at roughly $588 billion over the next decade, almost three times the country's GDP in 2025. With Ukraine's civilian budget already heavily dependent on external support to cover essential public spending, its public-sector finances cannot meet a recovery bill of this magnitude. Instead, public funds should be used strategically to lower investment risk, strengthen trusted institutions and crowd in the private investment that will have to do much of the heavy lifting.
The binding constraint in Ukraine’s economy is now predominantly one of financing rather than productive capacity. This is evident in Ukrainian firms’ continued ability to expand output under extremely difficult wartime conditions, enabling the country to enter reconstruction from a position of surprising resilience rather than collapse. Nowhere is this clearer than in the defence technology industry, where Ukraine has become the world’s largest producer of military drones, manufacturing an estimated 2.5 to 4 million in 2025 with a target of around 7 million this year.
Yet, this capacity now exceeds what the state can afford, and by 2025 the government could no longer procure everything domestic firms were capable of producing. The financing gap is clearly illustrated by DREAM, Ukraine’s main transparency platform for reconstruction projects, which showed that by mid-2025 barely 9% of the substantial funding required for registered projects had been secured. The limits are therefore no longer talent or technical capability, but access to capital and further integration into European and NATO procurement ecosystems.
The continuing security environment remains the largest obstacle to mobilising that capital. Ongoing destruction raises investment risk, while uncertainty over whether assets and supply chains can be protected deters private commitment. Governance is the second major obstacle. Procurement rules are too often circumvented, projects are poorly specified and competition for contracts remains limited, inflating costs and creating corruption risks. Structural weaknesses compound the problem, including Ukraine’s large informal economy, weak access to finance for small and medium-sized enterprises, and inefficient state-owned enterprises that control almost 15% of the business capital stock while crowding out private investors. A shrinking, ageing workforce creates a longer-term constraint, with nearly three-quarters of Ukrainian firms reporting significant staff shortages while the country must also support a growing veteran population.
The upcoming conference in Gdańsk looks to be explicitly designed around this challenge, as a high-impact investment-facilitation platform for international, sovereign and private capital actors to accelerate transactions and catalyse investment in Ukrainian businesses. Stakeholders can expect risk-sharing instruments to take centre stage, including war-risk insurance, guarantees and blended finance mechanisms that allow public institutions to absorb a limited share of risk while mobilising far larger volumes of private capital. This approach is already visible in practice, from the European Bank for Reconstruction and Development's €110 million war-risk reinsurance guarantee to the €2.3 billion in agreements signed at last year's conference in Rome, expected to leverage up to €10 billion in investment.
A further €1.2 billion package, unveiled in April under the EU’s Ukraine Investment Framework, is also likely to underpin the discussions, alongside renewed funding for an energy system that has been degraded by repeated Russian strikes. Notably, this is the first recovery conference to include a dedicated dimension on security and defence, reflecting Poland's proposal to integrate security directly into reconstruction discussions. Further talks are also expected to cover governance and transparency reforms, a more decentralised approach that strengthens local delivery through Ukraine’s cities and regions, and Ukraine’s progress on its path to EU accession.
For Europe, the stakes run well beyond charity. While a secure, economically viable Ukraine is a core element of European security policy and an essential deterrent against future Russian aggression, the imbalance in strategic commitment remains stark. Although Europe's NATO members command a combined GDP of around $23 trillion compared to Russia's $2 trillion, the Kremlin and its allies continue to devote a proportionally greater share of resources to the war effort. A rebuilt Ukraine, with its battle-tested expertise in drones and electronic warfare integrated into European defence, would be an asset to the continent's security at a moment when American guarantees look less certain.
The question for Gdańsk, then, is not whether it can produce another declaration of solidarity, but whether it can turn Ukraine’s resilience into a credible proposition for private capital and, with it, a more secure European future.
By Jay Fleischmann - Analyst Intern at St James’ Foreign Policy Group
