 Good afternoon everybody. It's a great pleasure to welcome all of you to the highlight of our ECB annual research conference which is the Jean Monnet lecture. We are very pleased and honored that the speaker this year is Professor Roger Meyerson, one of the founders of mechanism design theory. Roger earned his PhD at Harvard. Subsequently he taught at Northwestern and he's currently the David L. Pearson Distinguished Service Professor of Global Conflict Studies in the Harris School of Public Policy at the University of Chicago. Great to have you here. So in 2007, as you all know, he was awarded the Nobel Memorial Prize in Economic Sciences together with Leonid Horvitz and Eric Masken. And incidentally, Professor Masken delivered the inaugural Jean Monnet lecture during the first ECB annual research conference seven years ago. I would also like to extend a warm welcome to Roger's co-author, Alexandra Koetl, who will also be available to answer your questions after the lecture. Alexandra holds a PhD from the Free University of Berlin. She's an assistant professor at the Department of Public Policy and Governance at the Kyiv School of Economics. In her research, she focuses on local democracy, social movements and civic engagement, as well as business political arrangements at the local level in Ukraine. It's a pleasure to also have you here. Mechanism design is a part of game theory that analyzes rules for coordinating people efficiently when they have different information and difficulty in trusting each other. Mechanism designs studies which social institutions, that is which mechanisms, may be expected to maximize social welfare in such situations. And since the theory of mechanism design addresses questions of fundamental importance for society, it has numerous applications in economics and political science, such as regulation, auctions and procurement procedures, the provision of public goods, or social choice and voting rules. And just yesterday, as we also discussed before this talk, Roger gave a seminar at the ECB on bank regulation. The topic of today's lecture will be Ukraine and the role of institutions, namely local governments for post-war reconstruction. Each year, the Jean Monnet lecture is dedicated to an issue of relevance for strengthening the European Union. More than 18 months after the unjustified invasion of Ukraine by Russia. The future of Ukraine is inextricably linked with the future of the European Union. Roger has extensively spoken and written about the war in Ukraine, including about the role of propaganda and disinformation in sustaining Russia's aggression, as well as about the post-war reconstruction of Ukraine. And we are all very much looking forward to hearing your insights about how the European Union, its member states and its citizens can help the Ukrainians to rebuild their country after the war. Not yet, give me half a minute more. As we all know, Jean Monnet was a leader in the reconstruction of Western Europe after the Second World War. Monnet emphasized the importance of institutions or mechanisms in the language of mechanism design theory, especially the importance of European integration. It seems very appropriate that in the midst of another horrible war on the European continent, we will hear lecture dedicated to Jean Monnet about the role of institutions in the reconstruction after this war. So the lecture will last for about 45 minutes and thereafter we will have the chance to discuss all together also with Alexandra for around 25 minutes in the Q&A. So Roger, we are delighted to have you here. We are very much looking forward to your talk. Thank you, sir. I'm very, very glad. I'm very glad to be invited to the ECB's annual research conference and yes, to give a lecture in honor of Jean, of the memory of Jean Monnet. The title involves speaking hopefully about the post-war reconstruction. The war is still going on in Ukraine. It is a country I've gotten to know and love. I first went to Ukraine in 2014 as part of work that I had was doing with then Timofey Malovanov offering suggestions about decentralization reforms, which in that old Soviet-style highly centralized system that they had we thought were extremely important. Ukraine demands the best efforts from all of us as it's in this time of trouble for them, of terrible, of war and great hope and our efforts, the efforts of this talk are completely joint with Alexandra Koidal who has, as you say, will be joining us to share her expertise in the question and answer period. I think Jean Monnet, of course, would grieve that that the shadow of war now hangs over Europe and afflicts a great country in Europe even after so much of his grand vision for a peaceful united Europe had been realized. But I hope he would appreciate that we should begin indeed with something, drawing some lessons from the post-war reconstruction after World War II in the 1940s, late 1940s. So I want to start, I think, and I think I learned from Brad DeLong and Barry Eichengreen's 1991 study of the effect of the Marshall Plan that it was that much significantly more effective at promoting growth than the simple transfer of resources and capital and a growth model could explain and the conclusion we draw from that is that foreign reconstruction assistance is most effective when it supports reforms that will be vital for future development, which means that a donor needs to think about what reforms will be important for future development. It is up to the people of the country to decide what forms they will have but a donor in giving money can encourage. For Europe in 1948, the key reforms were reducing barriers to international trade and increasing economic cooperation among the nations of Europe. You should know that perhaps the best thing about the Marshall Plan, perhaps the best thing the United States ever did in its foreign assistance work, was to announce that something like 20 billion dollars over a certain period of time would be made available to the people of Europe to help them with reconstruction. But the United States refused to say how it should be divided among the countries of Europe and insisted that the nations of Europe themselves should have a conference to make that decision. And this was, of course, a very productive conference and the success of that conference and the Marshall Plan that followed generated public support for more such conferences leading to a variety of other international agreements and the whole story of the rise of the European Union and the coming of the Monetary Union, whose Citadel we are now located, is a very long and complex one but I think we can say it begins with that stimulation of well-chosen US foreign aid plans. So there's now today in Ukraine, in the EU decisions being made about the planning an aid facility for helping Ukraine, I want to suggest that for Ukraine today the vital reforms that I think everyone should agree that in Ukraine and in the world that the people of Ukraine aspire to join the European Union and to the extent that collaboration with the process of absorbing the aid can help facilitate that, that's good. EU integration is one vital reform. A second vital reform I want to argue is strengthening the democratic local self-government institutions which were created after the Maidan protests. As I say, affiliation with the EU was a primary motivation for the great popular demonstrations at late 2013 and 2014 in the Maidan revolution of dignity and the establishment of democratic local self-government in Ukraine and decentralization of power of a significant share of power to these locally elected local governments has been a key reform since 2014. You should know right now that between 2015 and 2020 over 10,000 villages that existed as as local political entities with very little funding were they were amalgamated into communities which are called in Ukrainian Hromadas and about four there about 1400 of these Hromadas as a result of this consolidation process over five years and the and they were and a major fiscal reform gave a decentralized significant part of the Ukrainian national budget to the to the Hromadas giving them a reliable fiscal basis, a hard budget constraint, non-political basis for their for their spending. Strengthening democratic local governments of course is my main theme today and and what, what is this, assistance for Ukraine's defense and reconstruction is an investment in world peace and as such is of great value to the donors as it will be to the to the recipients. We should, I want to argue and I can quote an excellent article by Robert Pearson and Michael McFall in the Journal of Democracy 2022 that the best whatever the Kremlin says and it says a lot the fundamental reason for Putin's aggression against Ukraine has been preventing Ukraine from showing people in Russia how democracy can succeed in a kindred Slavic country that is close both culturally and geographically. Putin's armies could be could be militarily defeated and if if Ukraine was left in ruins thereafter Putin's ultimate war goals I think would be realized. So I want to argue that that this is why not only helping Ukraine defend itself but also reconstruction will be worth significant investment by people, taxpayers for taxpayers in Europe and America and it will be a good investment by the standards by which we judge defense spending in terms of making a better world. Ukraine may indeed offer a valuable lesson in democratic development for the world but I would and I would argue that the decentralization reforms of 2014 to 2020 should be recognized as a key part of that but and this is an important thing to say in an ECB annual research conference. Too often foreign aid has implicitly been a force for centralization of power. There are plenty of empirical studies like William Easterly and others suggesting that maybe foreign aid doesn't doesn't even help the recipients and if it doesn't what's the mechanism of harm that foreign aid does and the answer I would give at least in part is that foreign aid for public spending increases the power of those who can direct this spending and by our understanding of international rules sovereign any sovereign national government can assert its right to regulate foreign aid therefore foreign aid becomes a resource that is controlled by the central government and and it strengthens the central government in its in its relations with other other people and changes the whole structure of power in a country and that's so so I need to start with at least a short review of basic benefits of of decentralization of power. Why why why do we think it's important theoretically? Actually the first thing I should say is we should recognize that in any country some of the most powerful people are their national leaders and and and centrally connected elites people with connections to the top center of power in in in a nation and all of those people have a vested interest in centralizing power however well-meaning they may be and therefore there is very good reason to believe that decentralization of power is is undervalued and undersupplied. Therefore academics should might be might be encouraged to spend a little more time thinking about the potential benefits of political decentralization. The classic theories emphasize and I'll say something about a few other theories that I think are important and one particularly important this case. One classic theory is that local autonomous local governments can fit public policies to local conditions and learning from different local policy initiatives can generate positive externalities as communities learn from each other we'll see that that has been happening and Luxandra has been studying it. On the other hand one could argue that the central government central this is not an argument for decentralizing everything the central government in particular can take account of inter-regional externalities and that's one of the reasons for centralizing power. What I want to say about the classical theory is that we should also recognize that in every part of this and any other theory I can think of the advantages of decentralization always depend on hardening of local budget constraints. Soft budget constraints that are subject to renegotiation in the capital and the central national politics let those who have good connections in central government dominate local politics. My notes say those the word that let's be more specific in many in much of Ukraine's experience we're talking about oligarchs oligarchs are people who don't necessarily have to do anything they may dominate a district not because they've built they've done anything to build trust to earn the trust of many people who live there but because they have central connections and because through those connections people in the district get the message that if you want any money from the from the government to do the things that your government is supposed to do for you first you have to do what the oligarch says and that's that's what happens when that's an inevitable consequence of soft budget constraints are possible. I want to at least mention that I part of the reason I'm here part of the reason I got involved talking about local government in Ukraine in 2014 as I had theories one of the things I I've argued in a in a paper in 2006 in the quarterly journal political science was that autonomous local governments uh autonomous I should say democratic local governments reduce entry barriers into national politics as successful local leaders can become strong competitive candidates for higher office and you could call this a form of experimentation that national leaders would not want to encourage necessarily they don't need to to encourage their others who to run for the to to to show that they can do a better job for the public than than the current national leadership. I also have a recent theoretical paper in in theoretical economics from 2021 about local accountability can provide better incentives for local public investments. As I say the decentralization reforms ended in Ukraine in 2020 and there is some evidence of better public services as a result of of the decentralization of authority and and that helps to encourage people to believe that the Ukrainian political system is something that that's good for them and maybe to that they should want to fight to defend it against an invasion and to impose Kremlin domination. But another point that I want to argue that's not part of the classical theory of federalism is that decentralization gives local leaders a stake to defend in the state. Uh when a decentralization of power to people who have earned the trust of of large parts of their community means that in every every part of the country in every community you have people you have potential leaders local leaders who one have the trust of the of many of their community who they can mobilize a proven ability to mobilize their community in local elections for political action and secondly have a stake of power in the state that makes them willing to stand up and defend the state. Uh people are more willing to fight for a national state when they're trusted community's leaders have a positive role in it. Uh why do people fight? What does an economic theorist say about the decision to volunteer and risk your life in defense of your country? It's obviously an important one but for from an economic theory's rational choice he's got to deconstruct that that that honor to to a sense among other things that uh if you uh people should hope people should understand uh that that if they if they defend their country that that that their neighbors they'll have more they'll be respected and honored for the for the risks that they've taken uh in defense of the state. If that's true uh that's that becomes a motivation but if your community's leaders don't have anything to do with it then it's not likely to happen. Future rewards and honors for local contributors who help with local with defense efforts can be promised more credibly by a locally elected mayor than by a central who a local elected mayor who has to maintain a reputation for reliably rewarding good service from the community then by a centrally appointed governor who might not be here in a couple of years and who is in any cases dependent on on how he's perceived at the center not on uh on on anything local. This is an important point between in in in March and April of 2014 a small number of uh of lightly armed subversives who are organized and disciplined by by Kremlin agents uh Kremlin led agents uh subverted local government in eastern Ukraine in the in Donetsk and Luhans the Donbas and in 2022 the world saw the Ukrainian people in every part of Ukraine east and west rise up to to and take personal risks at all levels to to fight off a forceful invasion by one of the great most powerful armies of the world. The extraordinary increase in Ukraine's ability to resist Russian the Russian invasion between 2014 and 2022 it's it's it owes too much to many things but I want to argue that a significant factor is the empowerment of democratic local governments. In 2014 Ukraine's government was highly centralized there were democratic elections for national leadership and after the Maidan revolution everybody knew that there would be free elections and that a new government was going to be elected with votes of millions of people in Ukraine but it was understood that the the winners were almost surely going to be elected with votes mostly from western and central Ukraine not necessarily from the Donbas area and then this new government would then take charge of local government in every part of Ukraine and uh and local local leaders in the in the in the cities of in towns of of Donetsk and Luhansk uh had felt alienated from the future political from the political system and offered and and and people who wanted to resist uh the the subversion of the supremans subversion of their of their government uh in those areas and there were many of them lacked the kind of authoritative leadership that they needed to be effective. Since the decentralization reforms from 2015 to 2020 locally elected mayors have been empowered in every part of Ukraine to provide better public services and leadership for local defense and so in February and since then in 2022 every part of Ukraine had recognized local leaders who had a proven ability to mobilize people in their communities for political action that's how they won their elections and who had a stake of in the state that was worth defending and almost all mayors have been loyal to Ukraine and therefore targeted often brutally by Russian occupiers. The resilience also depends and this is something that my co-author has has written about local authorities have innovated in the crisis of war since February of 2022 and and have shared with each other effective strategies to cope with the challenges of war so that part of the advantages of decentralization have been proven. Polls of trust in the government if you think people fight for government because they trust it. Ukrainians are famous for saying that they're not really all that enthusiastic about trusting their government and I'll show you in a moment the the slide actually I'll show it right now this is a series of polls from the axis from I think 2003 to 2020 and the dotted line is expression of polls to the national government and that's how it goes up in election presidential election years but basically it's in the 10 to 15 percent range all the time and the dark lines are polls of your local government which is pretty similar up until the 2015 reforms and then goes up so there's just evidence that if trust in government has gone up it's led by trust in local government and decentralization other recent polls decentralization along with army reform which is obviously important in strengthening the country and various procurement and digitalization digitalized transparency of government have our decentralization is considered is still is considered one of the most successful things of the reforms the point is a meaningful accountability of local authority uh has strengthened legitimacy of government for the whole political system uh in an important way and I would argue when I went first went to Ukraine in 2014 lots of people were afraid that decentralization would weaken the country they were if you know the history of the Polish Republic that that controlled much of Ukraine in the in the in the 16 and 1700s um that way it was ultimately fatally weakened by a decentralization system that gave vetoes over national policy to every province and and that's not what modern modern federal decentralization looks like uh and uh and those theories those fears were wrong I I want to argue the decentralization reforms have strengthened national resilience um corruption is important local corruption exists everywhere corruption and local politics exists by the way in Chicago and it certainly exists I I understand in Ukraine I can only speak for Chicago personally but uh I've heard a plenty of evidence um but I want to say that you you should know that they're in the years since the Maidan Revolution of Dignity in 2014 a strong anti-corruption culture has also developed in Ukraine and it has developed alongside the development of autonomous local governments and these two developments are closely interconnected responsible local governments have become primary objects of residents demands for better public service which leads to mobilization of local groups and civil society to to agitate for better government in their municipality and locally elected officials have become more responsive to voters suggestions and complaints because they're locally elected and not centrally appointed um meet but more generally meaningful anti-corruption policies depend on broad empowerment of citizens without which leaders could just use any anti-corruption laws you write to selectively punish their opponents you people have to be involved decentralization has created more opportunities for citizens involvement in local policymaking through formal and informal channels and from there are many municipalities have civic councils the the process of amalgamating those more than 10 000 villages into the 1400 hormadas um brought about a lot of local political debate that then people stayed involved there's also been a lot of peer competition that you can see that there's a web page transparent transparency international Ukraine um from 2017 to 2022 when the war started was publishing annually uh radiant rankings of cities transparent uh public transparency of government and these are publicly ranked number one to whatever 200 or something among the major cities where they that they monitored and municipalities uh didn't like that weren't low on the list didn't like it improved and you can just see the steady increase in the ti says that their their standards stayed the same but the that the ratings went up because the municipalities made reforms they was um local and and digital transparency of government has been important in Ukraine it's been a leader in some ways there is now what's called the the dream platform that has been created for for for publicly transparent monitoring of communities reconstruction programs and local and national civil society groups have helped together to develop and monitor these digital the digital transparency of government um i should say more about the extent and limits of decentralization reform in Ukraine because that you need to understand that locally elected officials have been empowered only at the hormata level and as i say there are about 1400 um uh chromatas in Ukraine that includes Kiev as one city uh one community but many of them are are smaller than 10,000 people uh the fiscal reform that gave a hard budget constraint to these municipalities which was absolutely vital to the success of the reform is that 60 percent of the locally paid personal income taxes go to the municipalities so that by 2021 local governments were getting about a quarter of all public revenue in Ukraine and that hard budget constraint is is why it worked now there exist locally elected councils in each region there are 24 oblasts or regions and each district there are now 140 or so about 140 rayon or in Ukrainian or districts but these locally elected councils have no power the oblast and rayon administrations at the provincial or district level this is nuts uh two and three levels in european line talk um these administrations have remained branches of the central government under the president so when i talk about decentralization i am not talking about empowering the the provincial governments don't get confused they're they're doing a good job they're they're not criticizing them i'm just saying they are part of the national government we should help the national government of Ukraine but it's not decentralization it's it's it's distributed admin centralized administration possible reform of rayon and oblast administrations has been discussed a lot of people in Ukraine want to do it um it remains a question for after the war it's not going to happen during the war of course i want i'm willing to say one alternative that i have recommended is keep oblast administrations under central control letting the prime minister nominate the head of the name the head of the the oblast administration but devolve rayon administrations the lower the district administrations to locally elected councils that should include the local hormata mayors in in in the countryside um kremlin agents promoted an oblast level separatism in 2014 uh in donetsk and luhansk that became peoples republics those those are provinces or oblasts um but the rayons like municipalities are surely too small to be posed as units of separatism and therefore i would not worry about it so the key question would i want to argue we we should be thinking very hard about how to design an aid facility for balanced support of national and local authorities uh i am a great fan of president solensky and i think he's he's he's leading a great government but i think but i want to argue as a social scientist and as someone who i'm not a Ukrainian and i don't speak Russian or Ukrainian so my my but but my my theoretical prejudice and everything i've been able to read and i read extensively what's available in English that's limited i would suggest as a theorist as an outsider who cares about their country that a balanced decentralization and maybe it's three-quarters national government and one-quarter local governments and that's that's what they chose and that's that you can do that but the balanced uh but of power between national and local authorities of at some way is uh is is is good for the people of Ukraine will be and if Ukraine is to be a successful growing country in in decades to come after peace uh i believe it's more that that that that is going to happen because of the decentralization and it is more like is less likely if the decentralization is curbed we are talking about the destruction of this war by Russian missiles and armies is is immense uh estimates of how much it's going to cost to um to rebuild Ukraine are one to i see one to five or six times annual GDP of the country this is a lot of money and i'm also arguing that that's something some some part of that which is a lot of this lot of money is a good investment for both Europeans and Americans to share uh on on the standards by which we we judge defense spending um and all as well as a good thing to do but uh foreign aid so immense amounts of foreign aid going to Ukraine over the next five over five to ten years after after um after the end of the war this could become a force for centralization because foreign aid as i've noted before has often been an implicit force for centralization of power now even with foreign funding even if it's paid for by the taxpayers of the united states of america and the european union and other countries um public spending in Ukraine must be directed by the people's elected representatives foreigners can can offer the money and they can offer the money with some conditions but they can't but the money can only be spent in ways that Ukraine's elected representatives direct but the president is not the only elected representative of the people of Ukraine he is a the most important elected representative he he deserves the most say in how the money is he and his offices his office does deserve the most say but mayors are also elected by the people of Ukraine and it's it's not wrong for the for the for the EU to to let mayors and their and their town councils uh take some share of the power and directing that money atia tarence parents in international ukraine and uh poll in in the spring of 2023 found divided views about which institutions should have final responsibility for the results of of reconstruction spending the the largest number more than half said local authorities people evidently could check more than one box meaning quite rationally that they wanted the the aid to be divided among and the responsible for the aid to be divided among local government and national government the president got almost a half the central executive which means the prime minister and his ministers uh got a slightly smaller half and then the national legislature uh got got got 46 percent to design aid programs that appropriately support national and local authorities donors should talk not just to the national government but also to the local governments they should solicit solicit mayors views there are three associations are of of the ukrainian cities association of ukrainian cities association of national association of ukrainian promadas and and uh these associations have leadership they don't represent you know that and and the EU people who are planning the EU facility can get a good start on finding out what they think well let me just say i am here to to say what local government is important they are the most the primary the the mayors certainly the number one experts the people of ukraine have something to say about it also that's why i i quoted the ti ukraine poll but uh but if anything i say is contradicted by what by consulting the the representatives of the of the association of ukrainian cities or one of the other organizations they're right and i'm wrong and i concede it but i want but i want to suggest some some things that they might be asking for if they need that's a good start that's only the beginning the the the the ukraine facility should have local offices at least in every province and every oblast uh maybe even in every district if you if you're willing to do it to help local authorities plan projects and manage them with appropriate controls they need help the dream platform is up and there are very few proposals going on to it because that uh because mayors of small towns need a lot of help learning how to fill out the forms to make a good proposal for uh for funding staffing field offices to support the development of of municipalities project management capabilities is an investment in strengthening local self-government it's an investment in strengthening ukraine and it's an investment worth paying for the the european union already has a program called you lead it's jointly sponsored by the EU as a whole and several member nations germany i think in sweden are important in it i put up their website they already have regional offices uh is the ukraine facility planning to expand to take to join to take over those offices and extend enlarge them that would be entirely appropriate i have no idea what this discussion is going on i would argue that some fraction of foreign aid and uh i've i i'll toss just toss out a number a quarter why do i say a quarter that i say some fraction of foreign aid perhaps a quarter could be budgeted for allocation by mayors and then locally elected officials work and that that quarter of of foreign aid uh could be by some simple form reasonable formula could be sub subdivided into target uh totals of grants for each district of ukraine and you can take into account population and and damage and war whatever else you want in those formulas and then the local eight officer working out of the facility's local local office could work with the the mayors in in each district to try to work out a plan um the the the eight officer could encourage the local mayors to cooperate in developing a joint plan for local reconstruction of the district or they could just figure out reasonable ways to divide it up among the projects proposed by the various municipalities the key is that the budget should not be dependent on national political approval because remember a soft budget constraint means it's ultimately up to central control and this and and perhaps uh in some some districts uh the people of ukraine might get a an opportunity to see what locally accountable district level uh authorities can can do for for them just as the people of europe in 1948 got to see what uh international assistance what international cooperative economic cooperation could do for the people for for them uh the oh there's the that's the poll i think it's too small to read so i'll go on let me say something important aside bar on on the structure of aid uh grant we should you should recognize generous loans i believe that the the current draft document that one can read online of for the for the eu aid facility has words like 78 percent is going to go to the what they call pillar one which is the aid to ukraine and it'll be in the form of non-repayable financial support and loan support i guess non-repayable financial support probably means grants and uh and loan support means loans that you have to repay okay i uh i don't it doesn't say i didn't find anything where it said what the mix was going to be generous loans which means you know long-term and low interest and you know it's it's really great to get this loan because it's better than what you can get at anybody could get at a bank the generosity of those loans reinforce centralization when leaders when lenders i should say uh require national guarantees which is pretty standard in in the development world in the international development assistance world because then approval of loans becomes a valuable resource which is controlled by the central authorities and i do know of stories in kenya and elsewhere the where where it seems like a really good program actually is bad because the key question was in the capital they made the decision of actually who got the anyway who got the aid and then and that's really where the control was so we have to watch for the soft budget constraint local credit worthiness could be promoted by a a law in a non-political way that enables municipalities to pledge some fraction of their future personal income tax revenues but if if that's a significant fraction then we raise the possibility that foreign aid in some towns somewhere could let could end up allowing some corrupt officials mortgage the future of their their towns future revenues then running away with the proceeds and the result being those towns are left ruined without any means for for recovery because they they've lost their future revenue so that there's a there's a limit to how far i want to go in uh we should think about going there's real reasons not to go too far in in in generating credit and just saying the towns are credit worthy for these loans the risks of such harm can be minimized by assisting local governments with grants which of course can be matched by local contributions from their current revenue i should say that if there's if we learned anything from the post world war one settlement of europe after in 1919 it's the shell games of creating debts to write off later can have real costs and that's a point i shouldn't have to emphasize any further in germany the european union provides grants to local governments in disadvantaged regions of europe ukraine is the one part of europe to have been invaded and bombed for applying to join the eu so although ukraine has not yet been admitted to the european union perhaps ukraine's local authorities could be treated as parts of a very disadvantaged region of europe and in terms of repayment they want to sign up and start paying taxes to the european union as soon as they can so let me say i think it's important and i've tried to argue it's important for the the ukraine facility of the european union this mech this this this institution which which is being planned to mediate aid at least from the european union and perhaps also uh i'm willing to go home and tell and advocate that the united states should channel its aid through through it as well but that'll that's a washington decision uh but um let me say something about the the the advantages the many advantages of donors working with local and national officials first of all if the eu's aid facility is which is a network of of of of of staff officers working for the for the european union if they are if they are themselves working regularly both with national officials and local officials then they're going to be more able to monitor how well aid is used at each level because the communication with with local mayors is likely to to generate complaints about abuse of of funds that were given to the national government and the national government has anti-corruption bodies which are going to be actively looking at at potential corruption by by the by the uh by the local governments both of which will in a big country occur with probability one somewhere and maybe in many places but um the political autonomy the separation of powers the separation of accountability means that it's easier it's easier to for for for somebody who works for the president to complain about uh his what what he sees about corruption at some of the mayor then then to complain about somebody else who who also works for the president um of course uh the monitoring of corruption the the the donors can and should monitor corruption they ultimately they should be working with anti-corruption bodies in ukraine at all times and any information about abuse of of resources should be shared with the with the with the property proper ukrainian authorities but better monitoring is good for the donors goals and it's good for ukraine um even with the best oversight contractors should express should expect profits for managing risks we're talking about enormous projects normal and political leaders uh may steer lucrative projects to business people whom they've relied on whether that's corruption or just wanting to make sure the job gets done but well by somebody who i know i can rely on uh either way um we should expect the contractors and they should be contractors in ukraine we don't need to enrich people in in in the beltway around washington dc or in in in in other countries other countries to uh to rebuild ukraine that the ukranians can do it with our help but either way we should expect even without any corruption a lot a lot of business people make a lot of money on on on the reconstruction if it's all done through the president's office then we should expect the relatively small number of business people who have um good connections with that office will make the most money we'll make and and even if they're not the current class of recognized oligarchs of ukraine it is very possible that the post-war recovery period could become known in ukrainian history as the birth of the second cohort of ukrainian oligarchs uh and that's not been good for the country uh aid that's steered to the localities that that's controlled by and and allocated by and directed by uh the the municipalities yet it's going to go uh some of the best contracts are going to go to business people who have connections with their mayors but i believe that that is likely to be thousands of business people scattered all across ukraine and if and that class of business people will be much less destructive than than than four or five uh well connected in the center there are other burdens of foreign reporting should not be so such as to disqualify anything the locally trusted suppliers and again i've got a note here that about the the soft the dangers of the soft budget constraint if the allocation of funds to one locality uh depend on to a locality's projects depend on a central government office allocating them then even if it looks like it's being done by by local planners the local planners could be pressed uh to use contractors who have connections at the center and it's that's why it's important that the european facility should think through how much money do we want to send to these different areas of ukraine maybe not every hormata but at least every district uh disaggregate guidelines to the district level so that the the mayors at the district level should have some confidence and that that among themselves they'll be able to divide money uh that the european union is making available to them without necessarily worrying about pleasing a specific agency in in in kiev they have to obey the laws of the country they have to be but they don't have to to do politics we donors fiscal controls should support not displace accountability to people of ukraine local civil society can be more meaningfully involved in local in locally directed projects let me say as a general theoretical point that yes i understand that promoting civil society which is is is common a common mantra in the development communities is a worthy goal i support that but foreign supported civil society groups uh may ultimately become accountable only to foreign donors i guess you could go to samalia if you want a good good example of that civil society can be supported through its involvement with elected local governments and in ukraine you have a local governments that are accountable to their people through a process of free election i've argued also the people of ukraine deserve an opportunity to see what locally elected officials can do to provide public goods at the rayon district level and a cooperation in some districts among the mayors and in organizing a district-wide plan uh if the european union facility can encourage that that would do that and i've argued that that's similar to what the american what what mark what general marshal did for europe when he insisted that the europeans divide the money at the international level one last important point there's a terrible war going on in ukraine as i speak and it's nice to talk about post-war reconstruction and and i hope that that time may be may be not so far away but while democracy is limited by war in ukraine we understand that many of the forms of democracy may need to be curtailed they may not hold elections they may suspend certain forms of public reporting that are part of good transparent government if they think that that some of that reporting can also help the russian invaders so there's a problem with democracy in war and and the people and governments of ukraine are going to work that out but while democracy is necessarily limited by by full-scale war in ukraine the national leaders support for engagement for donors engagement with local governments can be a vital expression of the national leaders commitment to constitutional democracy so i would urge president zolensky and his office to consider that the european union can set up mechanisms to talk to mayors only if ukrainian law allows foreign donors to do that and i don't know i'm not an expert on what it says in ukrainian law but the the national government should not stand it away but but if it's good for the ukrainian people they should do what's good for the ukrainian people decentralizing something like 25 percent of the funds uh that the european union was going to offer by to to to local government support is is consistent with the balance of of of the fiscal balance that the ukrainians politics has already negotiated and so it's not it we can hope that it's not disturbing that balance adversely but it is 25 less than 100 that the president could and the president's office could dream about allocating if they insisted and i would argue they should not insist and they should they they should great they should graciously offer invite the european union and the united states and other major donors to have some fraction not a majority but some fraction of assistance negotiated directly with made available for direct grants to the to the to the constitutionally elected local governments so let me without prior political approval from the center so let me conclude and say first of all post-war reconstruction of ukraine should aim to fulfill its people's hope for a better future for which they have given so much uh i that i don't know how to say that that those are just words but they that's that's everything decentralization reform has been a key component i have argued in ukraine's democratic promise ukraine's recent history has shown how democratic decentralization can help to increase people's trust in government broaden government's accountability to civil society and strengthen national resilience against an armed invasion of the worst sort local self-government in ukraine how it did the last is that local self-government in ukraine has ensured that every part of the country has local leaders who can mobilize people in their communities that's how they got elected and have a stake in the state that is worth defending and that has made a difference i've argued uh democratic development in ukraine can indeed be a model for other nations to emulate and i'm sorry that that the kremlin has worried that it would be a model that would make it harder for them than the kremlin to rule russia the russian people as autocrats so putin's goal of war goal of preventing this could be achieved if even if putin's armies are defeated if ukraine thereafter is left in ruins uh and so post-war recovery assistance should be valued also as an investment in the defense of peace and democracy for others in europe and throughout the world decentralization but let me let me emphasize at the very end that decentralization reforms are a domestic development in ukraine i i was going there as as a foreign expert in 2014 to advocate it the way they did it is completely different from the way i was recommending i you know that i don't have any i was just i was just watching it was done by people in ukraine but there has been foreign assistance there have been programs such as you lead were which have matched and the congress of regions of the council of europe um that have enabled new ukrainian cities to learn how to do democratic municipal government from from other countries in europe which have longer traditions of democratic municipal government foreign assistance can provide valuable assistance when donors provide when donors actively work with local authorities so to support ukraine's resilience both in the war and in post-war recovery i would argue that aid donors in eos ukraine facility should reach out to the locally elected local governments as and treat them as full partners with funding and authority to plan and direct local recovery efforts thank you so thank you so much roger and i'm also glad to welcome alexandra uh now here on stage so if i may i would like to ask two short question in the meantime you can think about your your questions um and of course alexandra can also come in if she likes so my my first point is the following i mean you uh you argued quite convincingly that part of the aid should be given to local authorities and also that kind of aid should be given in a way that promotes further uh development and so when i think about that i mean i i would probably think of this aid being used for things like building i mean local capacity because that is something that is is very important and that also when you think about this question centralization versus decentralization there's often uh also a bit of a lack of of competence at the local level and this has to be built and so for this you need money but this kind of seems to be a bit in a tension with what you said at another point of your talk which was that kind of the how the money is used should be up to the uh entirely to the uh to the elected representatives so how can we combine the two i was i was saying that yes i i look there there are schools and local roads that uh that need to be improved and and and and local clinics uh uh uh that all of which have in some measure been destroyed in different parts of of of this country because of the war um and i of course anticipate that that that but it's up to the mayor so of course the local the local elected local people have are going to make the shopping list of what they most want to rebuild for any given fixed amount of money that they can get tomorrow uh and i would assume as i say a school is going to be is maybe maybe on the um the um yeah maybe my point is it's not it's not necessarily that decision there are big things look the port rebuilding port facilities in odessa rebuilding bridges and major highways that that that enabled the communication that that's the kind of thing you want the national government to be to be i'm saying that any public goods that it's that certainly the you should not be deciding which schools to build but they can decide and and local governments are going to are going to have local public goods that they uh that they want to build i would argue that i believe that in many parts of rural ukraine um hospitals will be something that exists not at the hermada level every every hermada doesn't have its own hospital in a district level uh and there but it's clearly a local public good and the people of that region will understand how they would prioritize repairing and rebuilding the hospital versus other other things that they want uh the fact that there that there is no local accountability for executive authority at a high any level higher than the municipality is why i think it might be very helpful to have some degree of cooperation be uh at among the the the mayors and their and their local town councils um be encouraged by the e use aid officers in order that they might identify we would prefer if we share with several other municipalities the rebuilding of a clinic which will be located in only one of us but will serve all of us if that's the way they feel they should be able to do it and they shouldn't be and will that clinic be otherwise that clinic has to be done at the national level and we're talking about a clinic in a district in a you know maybe one of the harder to get to districts in rural ukraine is that going to be on the top of the shopping list in Kiev that's and will it depend only on political connections uh in the president's office to get a particular region particular districts uh clinic to come that's the kind of thing i was thinking about maybe let me add a few more points on the tensions between the capacity of the municipalities and the uh giving them the autonomy to decide what they need we should differentiate between capacities the the capacities of urban municipalities and rural municipalities in the urban settings it's about more than a hundred cities actually it's a lot of people and they started to build a so-called city institutes which are municipal offices municipal enterprises for project management and these entities have been able to mobilize foreign funding for the projects way before the full-scale invasion so that the capacities are there and what is happening now in the regions is that this so let's call them city institutes for for the simplification they started going let's if they are located in Lviv they started going to the municipalities in the Lviv region in order to help them design the development project plans there are also a interesting story one such agency has been relocated because of the Russian full-scale invasion now to a city in the central Ukraine and they are helping now the authorities in the smaller municipalities exactly to do that design the the project plans with which they could apply for for the funding and on top of that Ukraine has a very strong civil society to which i also put my academic institution kiv school of economics which is not common that in i know in in the EU academia tends to be a part but in Ukraine we are a part of the resistance resilience and recovery and what we have done we have piloted a four-month training on project management for ramadas of 20 000 people in less and what i see is a great desire to learn they may not be able to fill out the ECB forms tomorrow but let's say they will be able to apply for projects which can be made accessible to this kind of size right so it is also a step on the side of the donors that should account for for this and not disregard the the smaller municipalities as incapable and if there is a possibility what we have would like to do as our next step we will unite our training with the real funding from the donors so that our trainees which were project teams that they will be able to then use it for for the for the funding and i think in the pillar three in the capacity building of the Ukraine facility it is a space to put such kind of instruments exactly to resolve the tensions that you've been speaking about thank you very much so i would like to open the floor for questions i think we have someone with a mic right so who would like to ask a question okay people are still thinking so i ask my second question please i mean i can ask more questions i have many many interesting aspects in your in your speech so the you mentioned that the the current support to Ukraine is a good investment yes so how sure are you that this is kind of the official view of the of the US under any administration i'm more uncertain you asked that i was hoping you would ask a question that i could defer to alexandra but but but i i cannot dodge a question about american politics and i'm sorry i have more variants about the future of of of the united states of america than i've ever had in my life and i'm an old man um it's no it's it's it's it's of course extremely uncertain uh i think the look the the republican party has a long history of being uh the party that was more distrustful of of russia um and stronger on national more willing to spend money on national defense issues so uh but this is a different republican party times have changed i think many many in the republican leadership uh i still understand the importance of supporting ukraine i suspect most people in the republican party who are attacking the the whole idea of aiding ukraine are doing so because there's a democratic administration that is responsible for foreign policy and the democratic administration is doing it and if a democratic administration is doing it then they want to criticize so i'm not sure that if if there were change in um in party control after the next election which is certainly possible and i worry i have i have strong feelings about that um but uh if it happens i still wouldn't necessarily assume that uh that american policy towards you american policies would change but i don't but i think it's possible that support would would remain it's also possible that there would be a complete uh change of the of the of the i'm not sure which which betrayal of by an an ally of uh of of um i don't know uh russia's when russia changed to change sides in the uh the war the war the third salision war was it was a big surprise that that with this change of succession i don't know i think it's it's it's like it's but it's it's shocking to the allies and and we it is something worth worried about i i think it's a small probability event but it's possible and today i just saw the the public opinion poll in the u.s. that the majority still support support support support to ukraine so it's a good sign you remember the numbers uh unfortunately not yeah i just but maybe we should also think um how do we maintain uh germany's and the u support to ukraine because there are enough um actors in especially on the right radical side of the political spectrum in germany and elsewhere in the u who actively try to go against this and uh maybe just time for the u not always also to look at the support of the united states and maintain its position based on that but develop its own vision for the for the foreign policy and here i think roger's point that this is an investment in own security is very strong and i have to say currently i'm based in stockholm and um at the serda turn university and in sweden there is no question that this is a a matter of their security so you can speak to anybody on the street you can speak to anybody in the academia there's a very very clear understanding that the it is a matter of their security not because they will be attacked or anything but because they understand russia is trying to to kill their institute their their democratic institutions from within with cyber attacks with funding right right wing populace and so on and so forth and um why do we not see that in germany so that is like a very good starting point where we should also discuss that and not always look at the united states no no i think you're yeah you're perfectly right but i mean let me assure you that very large part of germany understand that very well i think look the kremlin wants to divide the the allies who are supporting ukraine and they're they'll work for it but they hope they have hopes for it by in american politics they hope for it in other countries we we've seen in the last couple of last week or so the success of their black sea blockade on ukraine and grain the crane has been feeding a very large fraction of humanity in mainly in africa and the middle east uh and and with the black sea when the when when when when russian blockade prevents that from being exported the obvious thing is to send it through europe and an obvious thing i guess is is to let it stop early in europe and then have the grain the the polish and german great go let's send it be it's closer to to atlantic ports that can can where you can send it to africa but that changes the profits and now so the polish and and and and hungarian uh resistance to it to refusal to import uh to allow the import of ukraine and grain is exactly what the kremlin wanted uh i think you know better than i and i would i i certainly remember a day when when when when the european union was only in the western part of europe and people are knowledgeable europeans expressed to me a doubt that uh the the the german farmers and french farmers would ever tolerate the the accession of polish agricultural exporters into the european union it happened and and i think everyone's glad that that it happened in the end but uh we're talking about ukraine joining the european union at some point everybody's saying that the EU leadership is certainly hoping for it as saying it's it's not now but and when it comes ukrainian grain could come into european markets and the other producers of grain will have will have competition uh so why is i do not understand why this has happened um but it's giving the kremlin exactly what it wants a a breakup in willingness to support ukraine for reasons that that don't detract from the original argument that the world will be a very much worse place if the kremlin achieves its goal yeah so you've also worked on on russian propaganda so what what do you think is the the role of russian propaganda in the strengthening of right wing uh parties in in europe who also uh it often uh oppose the support of ukraine i i i i don't think i can comment on that i i'm sure that look i know in my country they they've done clever things that that that influenced politics but uh at some point in in 2016 we started learning how to read a web page or or you know or or a twitter post to recognize something that had been written by someone whose primary language was russian into bad english uh and uh and was you know disinformation campaigns um i i have been look the i the number one thing i have said about russian propaganda is that they are trying to mobilize the russian people by telling them that um that nato that the west has a conspiracy to destroy russia uh that is that ukraine and ukraine joining into a middle into an alliance with with europe and america is an existential threat to russia that is not true and one of the proofs that it's not true is precisely the things people have been complaining about uh that american aid for example has has held back weapons that have cost lives in ukraine precisely because the amer the u.s government did not want to supply ukraine with weapons that could be used again for offensive action against russia because we have no interest in that uh i think my question is is there anything that well not my question i i think putin is able to control the the media that people watch in russia and putin is quite capable the kremlin is quite capable of lying to the russian people i've seen lies on russian state tv uh regularly uh but that doesn't mean we should stop trying to send the message regularly that this is a war for that that that our interest the european union and and the united states government should regularly try to communicate that that there is no interest in in weakening russia there's only an interest in defending the the rights of a nation ukraine to have its sovereign independence and democratically elected government uh and that the principle of protecting that is something that's worth a lot to us because the world will be a much worth place if countries if we set the precedent that countries can get away with it doing what what but putin did in february 2022 but the and so i just i've called for doing whatever we can to send the message uh of rest of restraint even while helping the the ukrainian people to defend themselves so luke would like to ask a question and then claus luclav and ecb so first i want to say i am very proud to work for an organization that devotes an entire session of one of its flagship events to ukraine thank you um so the question i have is as follows i completely subscribe to to the main argument you put on the table here roger having worked for one of these four and eight institutions in the past that will be greatly involved in this whole endeavor i think there's a important wrinkle which is that these institutions have their own constraints and capacity constraints in particular that lead them to favor uh large projects and to go through central governments yes yes you mentioned that typically they require state guarantees that are at federal level but they also have their own incentives the often because of capacity constraints to divide up this pot of money and it will be very large a pot of money among a few very large projects and so i was thinking whether given all of this there will be a lot of reluctance on the donor side to go with any plan that will reach out directly to the municipal level whether you could think with your game theory had of another mechanism where yes the money goes to the federal level but there's an automatic mechanism that would be triggered where it would go then immediately to oblast or lower level obviously part of why i wanted want to give give this talk why i greatly appreciate the opportunity to speak at this important economic institution of europe about this this question is because raising the the understanding that uh there could be adverse effects to doing what's what seems easiest in the short run and and you you have said it while i didn't say that one of the biases is simply foreign aid likes to have one office that that they can go to to author to authorize everything they do and that that just simplifies things i think it's why in in in reconstruction of when countries make a transition to democracy foreign aid when there's foreign aid involved they typically try to first elect a national government and then that national government has a vested interest in not decentralizing power and uh but the one country in in in Africa Somaliland that's not recognized by anybody and therefore gets no foreign aid has has its own problems but that but but they've had a great advantage that the first thing they did was elect local governments then they elected a president then they elected a legislature they didn't work the right order uh um the uh um they did in the order the united states did it in and uh for example in its history which had local governments before elected a hundred years before that it was ever a national government but far but there is a bias so so first of all i'm trying to suggest as a theorist that that that's that's a start um i think what it i think the best mechanism if if if the if the allocation formula is reasonably mechanical and reasonably transparent uh an objective then um a formula can be approved by the national government that then is is really is creating hard budget constraints um the uh there are many countries that that uh that have centralized collection of revenue and decentralized allocation and and and they have to negotiate the formulas on a base on regular basis but but as long as they do that and and the and there are no the the number of of uh the percent of wiggle room that you have for for politically politically subjective to determine factors is is minimized then politics national politics is taken out of the process one of the ways to do that is for the EU to itself say here is the money that we want to go to local municipalities and here's how we anticipate it being distributed as i say i can't imagine it being distributed with a number for every chromata but i can imagine it going to the to the to the districts there's enough statistics about that and once it's at the district level cheating the you know certainly if one can imagine a conspiracy to to to steal the benefits from everybody by saying we're going to we have control over with this this cabal this conspiracy set conspiracy has control over which chromatas are going to get how much and you're all going to have to give back to us the the you know the corrupt cabal in order to get get any share at all or we'll give it to the other one and we know where the where the equilibrium bid and that one is they get they go to epsilon they go to almost zero i have also suggested from so so that those are those are formulas i should i should defer to alexander can you hold it because i think i would have an empirical evidence for something that you described that had worked in ukraine it is an education subvention uh after the descent so along the decentralization reform there has been also sectoral decentralization ukrainian municipalities are responsible for maintaining the schools so teachers are paid by the government as government employees the schools how walls and so on that is the municipal responsibility and based on a very long formula which you all will definitely really like because it has even a criteria like whether the municipality is located in the mountain region or flat region how many kilometers is there between the schools how how many children with disabilities there are and the lots lots lots of other criteria they have calculated how many based also on the amount of teachers and students of course and the model size of the of the class that it cannot be between it cannot be less than 28 but not more than i think 35 but i may be wrong here and so based on this formula the state subvention for the municipal budget for the education has been distributed that's why one of the ways could be to look at how this has been done and i had i had a chance to talk with the ministry of finance people who worked on this formula so it it looked like there has been a lot of thought and what is good it has been upgraded after every year to learn from the mistakes from from the past so it is one chance but also as a political scientist i can cannot argue for completely removing politics from these decisions because we are living in a political world and one of the ways is to ensure that there is a between municipal levels a district regional and the national government that there are meaningful feedback loops regarding any decisions that are being there to be made and the european union actually played a critical role in the facilitating such dialogue when the municipalities were being amalgamated and when they were because they could amalgamate voluntarily but these plans had to be approved at the regional level and the the EU actually facilitated all of this so it is very much in the position of the EU now also to be this actor of facilitation that can put all stakeholders and all stakeholders i mean municipal authorities i mean regional authorities central authorities civil society and if it comes to and then stakeholder groups to whom all of this reconstruction will be who will be the end beneficiaries so yeah politics should be there and i think EU is the the actor that can bring these consultations on a very uh on the organ here on the same level of life so could we connect one other question just before because claus also wanted to say something and then we actually also have to come to a close relatively soon but claus adam university of manan so you laid out the conditions that would sort of make a post-war ukraine recovery and reconstruction more likely or more successful so i just wonder you know what we're still in the midst of war and obviously we are hoping for the rafting army to collapse but it's proved to be very difficult so how much would you think that the clean victory that sort of reinstates the borders of 2014 is actually a precondition for having a successful recovery and reconstruction of ukraine i mean we could easily imagine a messy situation where parts of the country remains occupied and that would create various sorts of instabilities political and other and so how much do you think this is really a precondition for successful recovery i think first i say history of the world and particularly history thinking about the world war one there's nothing more we should be more frightened of it than when we start hoping for a decisive military victory because much decisive just ukraine could win decisive military victory next week it's possible but hopes of decisive military victories are on typically on both sides of a war and and and there's no we've the worst damage in into civilization has been done when when two great nations were in conflict and both hoping for next week a decisive military victory against each other i do hope for a decisive military victory for the ukraine and i'm a supporter of ukraine and that but but i but i pinch myself about that i think a good environment for the the real condition for the best hope for for a peaceful ukraine is a change in the kremlin's attitude and the kremlin the kremlin is telling its people they must they should be willing to make any sacrifice this isn't the kind of propaganda that's coming out of out of russian state tv now that rush the russian people should tighten their belts and give up all material goods for to to to divert more to to building a war machine that can utterly destroy ukraine and as long as they are telling because they are committed to telling those lies to their people ukraine will be in serious danger obviously the the there is a the net so i'm not saying that putin has to fall from power although i don't it seems unlikely that he would change his tune on this question but he could i mean what i he can lie to his people and say whatever i said yesterday that we can really live with a democratic ukraine no problem he could say that and and his his propagandists would support it uh so uh so but i know it's not likely but i want to say more yes ukraine wants its territory back and it's right uh i would suggest another goal is also the end of russian political internal political pressure to try to build a to to to to to turn the whole country into into a machine for for making war on ukraine and i should say when people talk about corruption of course this corruption ukraine but russian corruption is ukraine's secret weapon because obviously there's much more corruption in military procurement in russia and god bless them let them keep stealing a large fraction of it but it's dangerous i would say that um a likely scenario that ends the war speaking realistically setting aside my hopes for these are what i would hope for these are the two things i hope for most a decisive military victory and or a change in the way russia talks about ukraine that they say oh just give us donbas and crime yet of course we can live with that uh if they that that that then the rest of ukraine could have a very successful trajectory without that it can still have a very successful trajectory but there'll be high defense expenditures and israel is a good example of a besieged country that that devoted a large fraction of its resources to defense but managed to to grow uh given peace uh and the the the uh the the plans for the ukraine facility include talk about encouraging investment in ukraine that that is is existing under threat of russian attack by offering insurance to investors against the possible loss due to a future russian war and uh that will create connection in the event of that second war that that will make it a much more complicated international situation but but the the most likely path is one of of growth that is a good way of encouraging international investment in ukraine uh in a ukraine that exists thankfully with with with a large fraction of its original territory intact and but under military pressure from a highly aggressive highly hostile russian government i think that that can be that is can be a scenario with or without foreign investment the people of ukraine themselves given peace and given substantial assistance can grow and i think that's a realistic hope uh that there'll be they will have a very large defense expenditure but they will spend that money extremely well and if they're confronted with a russia the the titans its belt and taxes its people thankfully the the logic of putans political regime is is that he allows his his cronies to steal lots from the government budget and uh they will waste a large fraction of that and and that that can be a scenario i wish i wish for a better scenario but that's maybe if i make a few more points yeah i think it's very important so the the the victory of ukraine what we call a military victory it doesn't have to be there precluding for the beginning of their recovery we need a fast recovery it is already now and the the ukraine controls biggest part of its territory which is let's say it's not in the undangerous but it is possible to use the insurance and so on it is possible to develop businesses and if the united if the european union is able to support ukraine in the transformation that is what we want from the recovery transformation of ukraine then this is what we can start yesterday actually and this has been started and the european union is already providing some of their supports and basic by the way the german development bank is already supporting even some housing the kaifwe bank on the other hand we have to know that the the goal of international foreign assistance has to be that ukraine returns to its gets a just peace just peace is not just getting to the territories of the 1991 which are all everybody seems to agree that this is our sovereign territory but also reparations also the punishment of the crimes of the war crimes by russia and more other things and that was what the just peace was will look to ukraine and maybe i know we're short of time but i would like to draw your attention that ukraine fights in a very unconventional way so we shouldn't expect a victory of kind of a 1945 style maybe it's just enough to put russian army so much hidden in Crimea that they cannot move anywhere anywhere more and that would be enough i'm just saying that we can be a bit more creative here so and i think what we all should on our wherever we have influence we should be thinking how do we make sure that ukraine wins faster than longer because every day of war is more people dying but we also cannot be realistic as some people tell us that we should give up some territories because people died there too there is a lot of evidence of the torture chambers of deportations of children the killings of children and other war crimes so that is also not an option the only option is how do we put all our energy together to help ukraine to win faster and actually one of these is also what banking industry and finance system can do is to make sure that the russian money does not corrupt the the financial system and i i came just back from the uk where this was also discussed and the and the amount of the russian influence and the inclusion of the russian elites and their children who have been part of the russian regime in the uk society are really extraordinary so maybe that is this way what we can do on our side in order to help ukraine attain the victory which we deserve with the death of our soldiers and at the same time recovery can and should start already now where that makes sense of course okay just i take one one one important criticism i'm i'd have was this joint work but i was responsible for the title and you've just suggested that that the first word in the title is wrong i should have said the first word was post-war and i could have simply said perhaps the title should be reconstruction assistance and local governments in ukraine the project may begin even before a hope for post-war begins yes so thank you thank you so much i think you have given us so much food for thought you're of course both part of the already now ongoing reconstruction we value very highly that you put your intellectual power into into thinking about this so thank you very much thank you for being here today for enriching us with with your work and your thoughts it was a real pleasure to have you here i'm very happy that we devoted this session to ukraine which is in in all of our minds we very much hope that the outcome will be what you described as the ideal scenario here at the ecb we we try to also help as as much as we can within our remit but if you have ideas there what we could do more of course we are very open to that so thank you very much thank you all for coming we're now going to to move to to dinner there will be people guiding us and so after a long i think very interesting day we have a deserved and nice dinner thank you very much thank you very much thank you very much