Supporting Ukraine: More critical than ever

EditedbyYuriyGorodnichenkoandVladyslavRashkovan SupportingUkraine:Morecriticalthanever SupportingUkraine:Morecriticalthanever WITHSUPPORTOFCEPRPARISFOUNDINGPARTNERS CEPRPRESS CentreforEconomicPolicyResearch33GreatSuttonStreet London,EC1V0DX,UK 187boulevardSaint-Germain 75007,Paris,France Tel:+44(0)2071838801 Email:cepr@cepr.orgWeb:www.cepr.org ISBN:978-1-912179-70-1 Copyright©CEPRPress,2023 SupportingUkraine:Morecriticalthanever EditedbyYuriyGorodnichenkoandVladyslavRashkovan CENTREFORECONOMICPOLICYRESEARCH(CEPR) TheCentreforEconomicPolicyResearch(CEPR)isanetworkofover1,700researcheconomistsbasedmostlyinEuropeanuniversities.TheCentre’sgoalistwofold:topromoteworld-classresearch,andtogetthepolicy-relevantresultsintothehandsofkeydecision-makers.CEPR’sguidingprincipleis‘Researchexcellencewithpolicyrelevance’.ItwasfoundedintheUKin1983,whereitisaCharity,andinNovember2019CEPRinitiatedthecreationofanAssociationunderFrenchlaw,inordertoprovideavehicleforanexpansioninFrance.ThemembersoftheConseild’AdministrationoftheAssociationareidenticaltotheUKBoardofTrustees. CEPRisindependentofallpublicandprivateinterestgroups.IttakesnoinstitutionalstandoneconomicpolicymattersanditscorefundingcomesfromitsInstitutionalMembers,projectsthatitrunsandsalesofpublications.Becauseitdrawsonsuchalargenetworkofresearchers,itsoutputreflectsabroadspectrumofindividualviewpointsaswellasperspectivesdrawnfromcivilsociety.CEPRresearchmayincludeviewsonpolicy,buttheTrustees/membersoftheConseild’AdministrationoftheAssociationdonotgivepriorreviewtoitspublications.TheopinionsexpressedinthisreportarethoseoftheauthorsandnotthoseofCEPR. ChairoftheBoardSirCharlieBeanFounderandHonoraryPresidentRichardPortes PresidentBeatriceWederdiMauro VicePresidentsMaristellaBotticiniPhilippeMartinUgoPanizza MarReguantHélèneRey ChiefExecutiveOfficerTessaOgden Contents Introduction1 YuriyGorodnichenkoandVladyslavRashkovan 1WhyhelpingUkrainehelpsallhumanity3 AndriyPyshnyy 2DemocracyneedsUkrainetowin7 DaronAcemogluandSimonJohnson 3HelpingUkraineisnotonlycrucialforpeaceinEuropebutalsoforworld peace13 GérardRoland 4ThefiscalcaseforEuropeto‘goDutch’ondefence17 HannoLustig 5ThepeacedividendcanbesavedinUkraine23 YuriyGorodnichenko 6Observingfreedom’svanishingact27 NoamYuchtman 7WhyitisimperativetohelpUkraine31 SergeiGuriev 8HowUkrainecanfinishtheunfinishedtransitionagenda35 TorbjörnBecker 9Russia’simperialwarandtheneedforassistancetoUkraineduringand afterthewar41 JanSvejnar 10WhytheworldneedsUkraineasmuchasUkraineneedstheworld45 HaroldJames 11UkrainehasfinallystartedtoexistonGermany’smap49 KlausAdam 12UkraineisthelatestGuernica.Let’smakeitthelast53 MauriceObstfeld 13WhydoesUkrainemattersomuchtome?57 CharlesWyplosz 14WhytheWestmustnotwaiverinitssupportforUkraine:Threecriticalissues61 AdonisYatchew 15WhyUkrainemustbegivenfullsupport65 AndersÅslund 16SupportingUkrainewithsanctionshasbeenmuchlesscostlythanmanypredicted–weshoulddomoreofit69 BenjaminMoll 17WhyitisimperativetohelpUkraine75 RüdigerBachmann 18PostwarreconstructionassistanceandlocalgovernmentsinUkraine81 RogerMyerson 19WhycentralbanksaroundtheworldshouldbeinterestedinUkraine’svictory85 SergiyNikolaychuk 20Theall-outaggressionrequiresanall-outresponse89 OleksiyBlinovandSimeonDjankov 21TheRussianinvasionandtheriskstoglobalfinancialstability95 StephenG.CecchettiandKermitL.Schoenholtz 22WhytheWestneedsUkraineanditsITbusiness101 MonikaSchnitzer 23LatinAmerica’sdutytostandwithUkraine105 VanessaRubio-MárquezandFranciscoVarelaSandoval 24FromlocalregionsintheEUtothoseinUkraine(andbackagain):HowFDIandglobalvaluechainstieourlocaleconomiestogether111 RiccardoCrescenziandOliverHarman 25Trade,war,andreconstruction117 PhilippeMartin,ThierryMayerandMathiasThoenig 26WhytheWestshouldhelpUkrainewin:Theeconomicarguments121 BasilKalymon 27UkrainedeserveswhatothersofusinEasternEuropegot–theEU125 WojciechKopczuk 28ForeignsupporttoUkraine:Evidencefromadatabaseofmilitary,financial, andhumanitarianaid129 ChristophTrebesch 29Ethicsandenlightenedself-interestpointingtowardsstandingwithUkraine147 RefetS.Gürkaynak 30TheWestbenefitedtremendouslyfromexpandingtoEasternEurope–supportingUkraineislikewiseinitsbestinterest151 MichalWyrebkowski 31ItalyshoulddomoreforUkraine155 TitoBoeriandRobertoPerotti 32WhyUkraine’striumphisimportantforLatinAmerica159 FedericoSturzenegger Introduction YuriyGorodnichenkoandVladyslavRashkovan UniversityofCalifornia,BerkeleyandCEPR;IMF1 INTRTRODUCTION|GORODNICHENKOANDRASHKOVAN RussiainvadedUkraineonFebruary24,2022.Thewarbroughtdestruction,deathandsufferingatalevelnotseeninEuropesincetheSecondWorldWar.Againstverylongodds,Ukrainecontinuestofightforitsfreedomandindependence.ManycountriessupportUkrainebyprovidingdefenceequipment,humanitarianrelief,andeconomicaid.Thewarisfarfromoverandinternationalsupportwillcontinuetoplayacriticalrole.Asweapproachtheone-yearmarkoftheRussianinvasion,itisimportanttoreflectonwhyUkraine’sfateisimportantforallofus. Tothisend,agroupofprominentscholars,expertsandpolicymakershavewrittenessayspresentingth