As top Trump administration officials meet with European officials this week about how to end the war in Ukraine, and as the president and Defense Secretary Pete Hegseth float expectations, lost in this immediate diplomatic drama is the harsh reality that while peace is a necessary precursor, Ukraine’s fate will be determined by what does or doesn’t happen the day after a ceasefire.

Simply stated: Washington needs to make the planning and funding of Ukraine’s economic recovery an integral part of any ceasefire negotiations. 

If we fail to do this, all the lives lost and the aid invested in the war will be for naught. Ukraine will be a basket case ripe for another Russian invasion or face an economic depression that could undermine its fragile democracy. Such a scenario will surely create an opportunity for China to rescue the day, which can’t be in the U.S. or its allies’ interest.

Ukraine’s recovery and reconstruction costs will be staggering: $486 billion over a decade, according to the World Bank, whose estimates are already a year old and thus undoubtedly an underestimate.

Ukraine’s commerce and industry sector alone will need an estimated $67.5 billion over the next decade. Yet in 2024 the public sector provided only about $3.1 billion toward that effort. Similarly, less than 10 percent of estimated international support for Ukraine’s agricultural sector in the 2023-25 period is slated to go to long-term recovery of what had been one of Ukraine’s principal export earners.

Clearly, the cost of rebuilding Ukraine far exceeds the capacity or the willingness of international donors to fund that effort. World Bank economists estimate that at least two-thirds of the needed infusion of capital will have to come from the Ukrainian private sector and foreign investors. 

But potential investors are wary of risking millions of dollars on a bet that the Russians won’t come back in five years. And the major insurance and reinsurance companies that routinely offer risk insurance to investors have made it abundantly clear that they, too, are risk averse. 

Ukraine needs massive and sustained private investment risk insurance. Some is already being provided. The European Bank for Reconstruction and Development recently launched a €110 million reinsurance effort for Ukraine. In November, the U.S. International Development Finance Corporation announced that it will provide $50 million in political risk reinsurance. And Germany, Denmark and others provide limited backstopping for their national companies. 

But Ukraine’s need for investment risk insurance far exceeds the supply. 

To provide the necessary investment guarantees, the G-7’s Ukraine Donor Platform should create an investment trust fund for Ukraine open to all donors. Such a multilateral pot of money underwriting future investment in Ukraine will minimize each nation’s budgetary commitment and potential risk exposure, making their efforts more politically palatable at home while providing private investors in Ukraine the reassurance they need.

Initially, the fund can be relatively modest. The need for guarantees will grow, but compared with the tens of billions of dollars in direct financial support that donor countries now provide Kyiv, the immediate de-risking price tag pales in comparison.

Alternatively, the EU and United States could consign the nearly $300 billion in frozen Russian assets to the Investment Trust Fund. The interest from these assets is already being used to support a one-off loan to Ukraine. But these assets could serve a broader purpose: backstopping investment risk insurance. 

If, in the future, the Russians break the peace and destroy an insured factory or business, then the frozen assets will be there to provide restitution. If the Russians never come back, the assets disbursement can be the subject of a future negotiation with Moscow. 

With significant private investment, Ukraine is capable of economic revival. 

In the first years of the 21st century, economic growth in Ukraine averaged a robust 7.5 percent, making it one of the fastest-growing economies in Europe. After the 2008 global financial crisis, foreign investment, which had been flowing into the country, declined by more than half, contributing to a 15 percent contraction of the economy in 2009. Over the next dozen years, Ukraine’s economy averaged only 2.5 percent growth, impaired by a continued lack of investment due in part to the 2014 Russian seizure of Ukrainian territory. 

This experience demonstrates that the post-ceasefire revival of the Ukrainian economy depends on attracting the money needed to take advantage of its economic potential. But this much-needed flow of funds won’t happen without Western governments backstopping private investment in Ukraine. Creation of an investment trust fund needs to be integral to any Ukraine ceasefire negotiation.

If the Trump administration fails to plan for the day after, China will be more than happy to step in and write checks. How will American taxpayers feel about having helped fund the war but having the Chinese reap the benefits of the peace?

Bruce Stokes is a senior visiting fellow at the German Marshall Fund.