The United States and European Union have drawn up a long-term plan to mobilise up to $800bn in public and private investment to pay for the reconstruction of Ukraine should a peace deal be agreed.

The so-called "Prosperity Package,"  outlined in a document obtained by Politico and dated January 22, forms part of a broader 10-year roadmap to stabilise Ukraine’s economy and fast-track its path to EU membership, but the deal will be impossible to implement unless the hostilities in Ukraine end.

The outline of potential funding comes as a string of investment funds have been raising money from private investors to start reconstruction work. On the sidelines of the World Economic Forum (WEF) last week in Davos, Ukraine secured €200mn in a private infrastructure fund to support post-war recovery committed to Amber Dragon Ukraine Infrastructure Fund I (ADUIF), the first dedicated infrastructure equity fund focused exclusively on the country. Dragon Capital is Ukraine’s preeminent investment bank and broker-dealer.

The larger Reconstruction Package draft was circulated by the European Commission to EU capitals ahead of a leaders’ summit in Brussels this week. It includes an initial 100-day operational phase to get the initiative off the ground with early-stage projects. However, officials and investors warn that meaningful reconstruction efforts can only start if the fighting stops.

“Think about it. If you're a pension fund, you're fiduciary towards your clients, your pensioners. It's nearly impossible to invest into a war zone,” said Philipp Hildebrand, Vice Chairman of BlackRock, in an interview at the World Economic Forum in Davos cited by Politico. “I think it has to be sequenced and that's going to take some time.”

The first ever three-way talks between Russia, Ukraine and the US kicked off in Abu Dhabi on January 22 to try and bring the war to an end. While a lot of progress on negotiations was made in December, resulting in a 27-point peace plan (27PPP) agreed at a Moscow meeting on December 3 between Russian President Vladimir Putin and the US envoys, following a second Moscow meeting with Putin on January 22 significant sticking points remain, topped by Putin’s insistence that Bankova give up control over all of Donetsk in the Donbas region that remains under Armed Forces of Ukraine (AFU) control.

The US fund BlackRock has been playing a leading role in advising the Ukrainian government on the reconstruction programme in a pro-bono capacity. Previously, it announced a $400bn Ukraine Reconstruction fund last year that was later shelved for the lack of progress towards peace. At the end of last year the idea of the fund, that would source private capital from the global financial community, was revived and Trump has since called for the size of the fund to be increased to $800bn.

The amount of investment Ukraine needs to rebuild remains debated. The World Bank has estimated the cost of the physical damage to Ukraine at just under $200bn and the overall damage to be on the order of $526bn. However, as bne IntelliNews reported, if a peace deal leaves the five regions Russia currently occupies under Russian control, as the worst damage has occurred in eastern Ukraine, the Kremlin will be responsible for repairing those cities and infrastructure, not the Ukrainian government. That will reduce the cost to Bankova for repairs by roughly half as western Ukraine has suffered much less damage. Given the International Financial Institutions (IFIs) have committed some $75bn to Ukraine over the next five years in various programmes and development banks such as the European Bank for Reconstruction and Development (EBRD) and European Investment Bank (EIB) have significant programmes in place, the amount of money the reconstruction fund will have to raise could be significantly less than the headline numbers.

Blackrock’s involvement underscores the strategic role the private sector is expected to play in Ukraine’s long-term development, but Washington and Brussels are positioning themselves as strategic economic partners not donors. Both allies remain very reluctant to use their taxpayers money to pay for Ukraine’s recovery.

The recovery framework assumes security guarantees will already be in place and forms part of a wider peace initiative led by the United States.

The EU and its financial institutions aim to provide €100bn ($108.7bn) through 2040, mainly via budget support and investment guarantees. This is expected to unlock an additional €207bn ($225bn) in investments. Separately, the US will establish a Ukraine Reconstruction Investment Fund targeting sectors such as energy, infrastructure, technology and critical minerals that Trump wants to fund by using some of the $300bn of Russian central bank reserves currently frozen in Brussels.

Amber Dragon Fund

Ukraine remains one of the best investment stories in Europe, having largely forgone most of the post-Soviet catch-up growth enjoyed by its peers, thanks to decades of corruption and mismanagement.

A large and populous country with significant retail, real estate, manufacturing, metallurgical and agricultural resources it is, on paper, a very enticing investment prospect. However, in conversations between investors and bne IntelliNews over the years, potential partners have always said they are unlikely to invest unless there are significant reforms. They point in particular to the venal corruption in the judicial system, weak property rights, lack of transparency and poor corporate governance, amongst other things. They also worry about political and policy instability and the looming threat of a second Russian invasion.

“It’s going to take years for confidence to grow to the point where people are sure Putin will not invade again. It’s a great story, but until then I think most people will be standing on the sidelines,” one prominent emerging markets investor told bne IntelliNews.

However, the brave are already taking a punt. A landmark deal was signed in Davos when the Amber Dragon Ukraine Infrastructure Fund I (ADUIF) secured nearly €200mn ($217mn) in commitments. Amber Dragon is the first dedicated infrastructure equity fund focused exclusively on the country.

The fund is jointly managed by London-based Amber Infrastructure and Kyiv’s Dragon Capital, one of Ukraine’s leading investment firms. It aims to channel private capital into projects critical to Ukraine’s long-term reconstruction and economic resilience, including renewable energy, logistics infrastructure and digital connectivity.

Initial investors in the fund include the EBRD, EIB, the International Finance Corporation (IFC), Swedfund and the Impact Fund Denmark.

“Ukraine has just hit a historic milestone in its post-war recovery finance,” the fund’s backers stated, noting that the launch “marks a shift from traditional aid and public financing toward private institutional investment.”

The EBRD, which invested a record €2.1bn ($2.3bn) in Ukraine in 2023 and is now Ukraine’s biggest single investor, said it views the fund as a strategic tool to crowd in further private capital and accelerate reconstruction. EIB Vice-President Teresa Czerwińska added that Ukraine’s “recovery must be green, digital and inclusive,” and that private investment will play a central role in this transition.

The ADUIF is targeting both greenfield and brownfield projects aligned with Ukraine’s reconstruction priorities, and is expected to complement broader multilateral financing mechanisms such as the EU’s €50bn Ukraine Facility. According to the Kyiv School of Economics, Ukraine will require an estimated $486bn in reconstruction financing over the next decade.

Dragon Capital Chief Executive Officer Tomas Fiala said the fund will “offer investors access to opportunities that deliver both impact and return,” while helping rebuild Ukraine’s economy from the ground up.