Ukraine Presses West for Billions in Economic, Military Aid

In Washington, a group of 30 House Democrats on Tuesday retracted a letter they had sent to President Biden urging him to seek direct talks with Russia to end the war in Ukraine, following intense backlash within the Democratic Party and disavowals from some signatories. Republican leaders in the House have already signaled they might pull back on Ukraine aid if they win the House majority in November, as most analysts predict.

Speaking by video link at the opening of the Conference on the Recovery, Reconstruction and Modernisation of Ukraine in Berlin, Mr. Zelensky said Ukraine had an urgent need to rebuild housing, schools and power plants, and couldn’t wait.

“Russia destroys everything,” he said.

The conference is convening at a moment when Ukraine is in greater need of economic help than perhaps at any moment since Russia began its invasion in February. In recent weeks, Moscow has hammered Ukraine’s civilian infrastructure, leaving much of the country with only intermittent electricity as winter approaches. More than a third of Ukraine’s electric stations have been hit, Ukrainian officials said.

Speaking at the conference in Berlin, Denys Shmyhal, the Ukrainian prime minister, said the war had wiped out at least 35% of the country’s economy. He called on the West to provide an immediate economic relief package of $17 billion. He also asked for $1.5 billion in economic aid a month from the European Commission next year, and another $1.5 billion a month from the U.S.

Mr. Zelensky’s economic adviser Alexander Rodnyansky, who attended the Berlin conference, asked the German government to provide €500 million a month, equivalent to about $494 million, for 2023 to help keep the Ukrainian state afloat.

The demands for economic aid come at a delicate time for Western leaders. Russia’s decision to cut the flow of natural gas to Europe has plunged the region into an energy crisis that is fueling inflation as well as protests across the continent. Germany has unleashed hundreds of billions in subsidies to cushion the blow for consumers and businesses, but other European countries lack the financial firepower to spend at a similar scale.

Europe has seen little ebbing of political support for Ukraine despite rising protests across the bloc over living costs and high inflation, but its assistance has consistently lagged behind the U.S.

The EU is promising monthly support of $1.5 billion a month for Ukraine in 2023 but has failed to chalk up a third of the $9 billion it promised Ukraine in May. The bloc has also recently added another $500 million to its plan for reimbursing member states for weapons deliveries to Ukraine, taking the total to $3.1 billion.

France and Germany have both announced new military support for Ukraine in the past two weeks, especially for air defense, with Germany delivering its IRIS-T air defense system to Kyiv. Britain, which is going through a period of political turbulence, remains easily the biggest contributor of economic and military assistance for Ukraine among European states.

Still, according to the Kiel Institute for the World Economy in Germany, U.S. assistance to Ukraine has continued to outstrip Europe’s.

“The U.S. is now committing nearly twice as much as all EU countries and institutions combined,” said Christoph Trebesch, research center director at Kiel Institute. “This is a meager showing for the bigger European countries, especially since many of their pledges are arriving in Ukraine with long delays.”

German Chancellor Olaf Scholz, the Berlin conference’s host, said the rebuilding of Ukraine would be a task for generations to come. A close aide to Mr. Scholz said it would take decades to rebuild the country’s infrastructure and economy once the war ends.

“This amounts to no less than the creation of a new Marshall Plan for the 21st century,” Mr. Scholz said, referring to the large aid package that the U.S. provided to help to rebuild Germany and Europe after World War II.

“This can only be achieved by the entire global community, which is now lending its support to Ukraine.”

In a report last month, the European Commission, the Ukrainian government and the World Bank said that the current cost of reconstruction and recovery in Ukraine amounted to $349 billion and was likely to grow in the coming months.

European officials are also concerned about corruption and inefficiencies in the Ukrainian economy that could potentially lessen the impact of foreign aid.

“The EU is looking at this at scale,” a European diplomat said of the request for budget support to Kyiv. “However, there’s an underlying question about how much to tackle or get the Ukrainians to tackle the structural reforms that have long been needed in the Ukrainian economy and the extent to which that can be done when you’ve got a war economy.”

EU officials have said in recent months that they hope to drive reforms in Ukraine and reconstruction through the yearslong process of Ukraine seeking EU membership. The bloc accepted Ukraine as a candidate member in June and the accession process requires sweeping changes in economic policy, judicial independence and state administration.

Since Russia’s invasion in February, the U.S. has provided $8.5 billion in budget support to Kyiv, which the Ukrainian government is using to pay salaries, meet pension obligations and maintain hospitals.

Meanwhile, the House Democrats’ reversal on direct talks with Russia showed the sensitivity of the issue on Capitol Hill, where Congress has approved more than $65 billion in aid for Kyiv since the Russian invasion, and Mr. Biden and party leaders have said that any peace talks or terms of a cease-fire should be driven by Ukraine’s government.

The letter had created a controversy within the party, as it appeared to raise questions about whether progressive Democrats remained on board with current administration policy.

House Republican leader Rep. Kevin McCarthy, who likely would be House speaker if Republicans take control of the chamber, said last Tuesday that Congress wouldn’t “write a blank check to Ukraine” under GOP leadership. Mr. McCarthy’s remarks reflected unease over Ukraine spending among some rank-and-file Republican lawmakers and their political base.

Congressional aides say Republicans are more inclined to support military aid to Ukraine than economic or humanitarian aid, which has the potential to raise questions domestically about whether the Ukrainians are using the funds for their intended purposes.

“It’s always a bigger ask—they’re just fundamentally less inclined to support any of that,” one aide said.

Last week, Mr. Zelensky met with a delegation of U.S. lawmakers, who said that in addition to his usual requests for weapons, he also pressed for economic support. One member of the delegation, Rep. Jim Himes (D., Conn.), said Mr. Zelensky told them that Ukraine is running a monthly deficit of $5 billion.

“President Zelensky actually made a real point about the economic situation, and the need for direct economic aid,” Mr. Himes said. “That money would go to pay salaries of soldiers and keep the government afloat.”

In an interview with The Wall Street Journal, Volodymyr Kudrytskyi, chairman of the management board of NPC Ukrenergo, which runs Ukraine’s long-distance electricity-transmission system, said thousands of repair workers are fanning out across Ukraine’s power grid and operators are imposing blackouts to prevent the system from collapsing under a Russian bombardment.

Mr. Kudrytskyi said workers can return damaged substations to basic functionality within a few days if they have the right spare parts and the damage isn’t extensive. Full restoration, however, can take months. Ukraine is drawing down on its own supplies of equipment, he said, and needs fresh supplies from the West.

“It’s much easier for Russians just to strike with missiles than for us to restore,” Mr. Kudrytskyi said. “The most needed and effective countermeasures would be to get additional air-defense systems from the Western countries to protect civilian infrastructure and to prevent humanitarian catastrophe,” he added.

—Vivian Salama, Ian Lovett, William Mauldin and Joe Wallace contributed to this article.

Corrections & Amplifications
Volodymyr Zelensky is Ukraine’s president. An earlier version of this article misspelled his last name in a photo caption as Zelenskiy. (Corrected on Oct. 25.)

Write to Bojan Pancevski at bojan.pancevski@wsj.com, Laurence Norman at laurence.norman@wsj.com and Lindsay Wise at lindsay.wise@wsj.com