Chancellor Friedrich Merz of the CDU advocated for a multi-million Euro reconstruction fund for Ukraine during the Ukraine Recovery Conference held in Danzig, Poland. Speaking on Thursday, Merz stated that while the idea for a European Flagship Fund for Ukraine’s reconstruction had been outlined in Rome, the commitment was being fulfilled there in Danzig.
The plan calls for Germany, Poland, Italy, and France to initially invest 220 million euros into the fund, with the hope that subsequent millions will flow from private investors. Merz explained that this initial public package is necessary to establish the confidence and risk-sharing mechanism that private investors currently require.
In addition to discussing funding, the Chancellor cautioned that reforms within Ukraine are essential. Merz emphasized that “Trust is based on strong institutions,” stressing that continuous progress in combating corruption and strengthening the rule of law is crucial for maintaining the confidence of citizens, international partners, and investors alike.
The reconstruction of Ukraine is considered one of Europe’s largest economic and political challenges since the Second World War, with damages from the Russian invasion estimated to be in the hundreds of billions of euros. Public aid alone will not be sufficient to rebuild the country’s infrastructure, industry, and energy supply.
The “European Flagship Fund for the Reconstruction of Ukraine” was first presented at the Ukraine Recovery Conference 2025 and is scheduled to become operational by the end of 2026. Unlike traditional reconstruction programs which provide grants or loans, this fund will primarily operate as an investment vehicle. It plans to make equity and equity-like investments in strategic sectors of the Ukrainian economy, including energy, infrastructure, digitalization, industrial modernization, critical raw materials, and the production of so-called dual-use goods. The capital contributed by the participating countries serves as a risk buffer; consequently, private investments would only suffer losses after the public capital has been entirely expended.
