Ukraine May Compromise on Eastern Territories to Russia Due to Massive Reconstruction Costs

The 2025 Ukraine Recovery Conference (URC) was held yesterday (10th) in Rome for two days, co-hosted by the Italian and Ukrainian governments. The meeting's purpose was to discuss the modernization and reconstruction of Ukraine.
If Ukraine is forced to relinquish sovereignty over four territories, the massive reconstruction costs may be transferred to Russia. This conference revolved around the "peace plan" proposed by Trump, which was submitted during the second round of peace negotiations in Istanbul on June 2, asking Ukraine's military to withdraw from Donetsk, Luhansk, Zaporizhzhia, and Kherson. According to data from this April, these four regions are currently occupied by Russian forces. If Ukraine is compelled to give up control over these four territories in the final peace agreement, the estimated reconstruction cost of approximately $200 billion would fall into Russian hands.
The World Bank estimates that the recovery and reconstruction costs for these regions between 2025 and 2035 will require at least $524 billion in investment. If Ukraine fully bears these reconstruction expenses, it will lead to severe wealth and economic disparities and political and social divisions in the post-war era. Furthermore, this reconstruction cost also poses a significant economic burden on the nearly bankrupt Russia.
Despite two rounds of peace negotiations between both sides, there has been no significant progress toward a ceasefire, and the conflict continues to escalate, with no substantial resolutions to the territorial issues. Based on the current situation and the contents of the peace agreement, even if Kyiv does not agree, these areas may still be assigned to Russia.
The day before the conference, Russian forces launched a large-scale airstrike on Kyiv, which Ukrainian officials described as the most severe air assault since the conflict began three years ago. German Chancellor Merkel condemned the attack on Kyiv, stating, "This is a terror attack against civilians without legitimate military targets."
At the same time, according to the Wall Street Journal, U.S. Secretary of State Rubio participated in a forum held by ASEAN in Malaysia, where he discussed the prospects of Russia-Ukraine peace negotiations with Russian Foreign Minister Lavrov. After a 50-minute discussion, Rubio indicated he would introduce a new approach to peace negotiations to President Trump, saying, "We need to see a roadmap for how to end the conflict," while refusing to disclose details.
Putin may not have the willingness to reach peace. The Russia-Ukraine conflict has persisted for more than three years, and in the absence of fruitful negotiations, Trump has come to realize that Russian President Putin shows little willingness to achieve peace. Therefore, promoting peace between the two countries may require Ukraine, willing to achieve peace, to make 100 concessions.
The post-war recovery and reconstruction is a long and arduous process, especially on the economic front. According to data from the International Monetary Fund, Russia's economy grew to $2.3 trillion from 2008 to 2022, but Western sanctions significantly impacted Russia after it annexed Crimea in 2014. The expected nominal GDP for Russia in 2024 is only $2.2 trillion, far below that of China, the EU, or the United States.
Despite promises to provide reconstruction funds to Ukraine, major donor countries did not participate in this conference, drawing criticism. Italian President Meloni pledged significant funding during the conference to rebuild Ukraine's critical infrastructure and restore economic stability, but major aid countries, including some EU member states, the U.S., Japan, the U.K., and the World Bank did not attend this conference.