Using Foreign Aid to Respond to Russia’s Invasion

This quick take is part of our Crisis Crossroads series, which highlights timely analysis by CSIS scholars on the evolving situation in Ukraine and its security, economic, energy, and humanitarian effects.

Russia’s invasion of Ukraine last week underscores that the United States’ development strategy cannot be one-size-fits-all, especially when dealing with strategic competitors. Both Russia and China have moved over the last decade to challenge the prevailing world order, but they have done so with distinct strategies. Putin’s Russia uses a coercive mix of diplomacy, propaganda, military threats, and cyberattacks to reverse the Cold War settlement, and the rivals it seeks to influence are former Soviet satellite states with relatively robust industry and government sectors. China, on the other hand, uses huge development investments in infrastructure in the developing world to grow its sphere of influence. Russia’s economic power remains limited—largely constrained by the rise and fall of energy markets—and it poses a more specific challenge to the United States than the People’s Republic of China. The U.S. approach to Russian aggression in Ukraine should be reflectively targeted.

Recognizing that Russia does not provide a compelling economic development vision cedes much ground to the United States and its partners. The United States can offer a compelling development alternative by focusing on (1) continued reform of the energy and power sector; (2) democracy, human rights, and governance; (3) continued reform of the state sector; and (4) economic reforms to build greater linkages with the West.

Since the Maidan uprising in 2014, the United States has obligated $3.7 billion in foreign assistance to Ukraine, helping make critical reforms in that time. In the immediate short term, the U.S. government will need to provide significant amounts of humanitarian assistance to address the growing refugee crisis. Already nearly 400,000 Ukrainians have fled the fighting, and estimates suggest that anywhere from 1 million to 5 million Ukrainians might ultimately be displaced. The administration has proposed an initial package of $6.4 billion in foreign assistance as a supplemental request. The United States will need to develop a more robust assistance package to help Ukraine rebuild its economy and strengthen and consolidate reforms after the conflict, but additional assistance will likely be needed between now and then. Much of this work should be done in close partnership with multilateral institutions including the European Bank for Reconstruction and Development (EBRD), EU aid institutions, the European Investment Bank, the World Bank, and the International Monetary Fund.

Robust assistance to Ukraine today will demonstrate that the United States can use its foreign assistance to help finally deliver on the promise of a Europe that is whole and free. Ukraine demonstrated after 2014 that it wants to be a part of the West and, at least while Putin remains, wants to limit its economic and political engagement with Russia. The United States and its partners should meet this moment and ensure that they provide the economic assistance needed to provide a viable alternative to Putin.

Daniel F. Runde is senior vice president, director of the Project on Prosperity and Development and Americas Program, and holds the William A. Schreyer Chair in Global Analysis at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Conor M. Savoy is a senior fellow with the Project on Prosperity and Development at CSIS.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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