The Reconstruction Trap: The Next Failure in Gaza and Ukraine?

With only a series of brief respites in long-term conflicts, Ukraine and Gaza present a familiar dilemma: how to rebuild in active conflict zones. Given Russia’s apparent commitment to a forever war, Ukraine has been forced to carry out a piecemeal reconstruction as the war grinds on. In Gaza, both Israelis and Palestinians may see reasons to resume hostilities. The countries which will fund efforts to rebuild in these conflict zones should keep in mind that reconstruction brings its own kind of minefield, and any missteps will be costly.

Despite a persistent belief about the winning nature of development, it would be a mistake to imagine that reconstruction could prevent the return of violence. Past misadventures in the Middle East are a stark example of the limits – and even the dangers – of heedlessly pouring money into a war-torn land in the name of stability. Of the roughly $5 trillion the US spent on the wars in Iraq and Afghanistan, $141 billion went to Afghanistan’s reconstruction, and at least $220 billion funded reconstruction in Iraq – with little lasting effect. Yet much of the institutional knowledge gained through these costly failures has since been lost due to federal restructuring and the defunding of NGOs with relevant expertise. The result is a diminished capacity to apply the lessons learned.

Still, money will flow into both, and it will not be a panacea. Gaza’s reconstruction needs are estimated at $53 billion over the next decade, compared with $524 billion for Ukraine. Despite being an order of magnitude more affordable and taking place in 0.06% of the land area, the reconstruction effort in Gaza has a worse long-term chance of success – but both are gravely at risk if key lessons from past reconstruction efforts are ignored.

The Money Pitfalls

For reconstruction funders operating in unstable environments, several challenges emerge. First, ensuring the security of personnel on the ground. Second – especially in Gaza – how to inject money into local communities without inadvertently strengthening the hostile elements embedded within them. Third, mitigating economic risks such as inflation, prolonged dependency and inhibiting the creation of local capabilities. Fourth, avoiding the creation of high-value targets that invite attack. How these risks are managed will shape the prospects for both reconstruction efforts.

Security: the Prerequisite, Not the Result

To the question, ‘Why did reconstruction efforts so often fail to meet their mark?’ the US Inspector General for Iraq responded:

'Security. That single explanation has been offered up thousands of times since the 2003 invasion as the prevailing reason for shortfalls, large and small, in the U.S. program. But this explanation leads to a further question. Why was an extensive rebuilding plan carried out in a gravely unstable security environment? This question underscores an overarching hard lesson from Iraq: beware of pursuing large-scale reconstruction programs while significant conflict continues.'

This factor poses the greatest threat to reconstruction in both Ukraine and Gaza. In Gaza, it is highly unlikely that armed factions (of which Hamas is only one) will suspend hostilities long enough to enable sustained development. These groups are more deeply entrenched than the insurgent networks in eastern Ukraine, have thoroughly integrated local infrastructure into their war effort and maintain a long list of foreign allies and sponsors.

Although the continuation of active hostilities poses the most immediate barrier to reconstruction in Ukraine, longer-term risks persist. Even in the event of a ceasefire, Russia would almost certainly revert to irregular and covert tactics. In this respect, Ukraine and Gaza face the same challenge: the insurgencies that predated this period of open warfare could once again become primary combatants. Because neither set of actors is likely to view any negotiated outcome as meeting their ideological objectives, the prospects for a durable peace remain limited.

Feeding the Violence

Insurgencies are costly, typically requiring broad local support and/or sustained foreign sponsorship. Hamas enjoys both: Gaza’s militant factions are richly sponsored and profoundly enmeshed with the local economy, profiting off of nearly every type of transaction. The risk of grift and financial missteps is enormous: the estimated cost of constructing the ‘Gaza metro’ subterranean network (between $90 million and $1 billion) is the same amount that the group is alleged to have profited from transfers of UNRWA funds. Hamas’ financial network is still operational, albeit at a reduced level, and taxation and extortion remain core revenue streams. Research has shown that, under conditions resembling those in Gaza today, large inflows of development funding inadvertently strengthened insurgent organisations – making rigorous monitoring, third-party auditing and external financial control mechanisms a prerequisite for any reconstruction programme.

Although corruption remains a challenge in Ukraine, there is no nationwide financing system sustaining pro-Russian insurgents. This is why Russia paid the separatist governments’ salaries in eastern Ukraine prior to the 2022 invasion, underscoring their dependence on external support. Should proxy warfare re-emerge along the current front, it would require Russia to rebuild an insurgent ecosystem from the ground up, offering Kyiv a critical window for reconstruction.

Aid Economies

Wartime Afghanistan ‘enjoyed double-digit GDP growth . . . largely because foreign aid account[ed] for roughly 40 percent of its economy and the opium trade . . . for another 40 percent.’ Incautious foreign aid can fuel corruption, suppress local enterprise, distort prices and create long-term economic dependency. Institutional knowledge of how to manage these risks is essential, and the erosion of the foreign aid ecosystem is degrading the West’s ability to stabilise conflict zones.

Ukraine approaches reconstruction with real economic advantages: solid fundamentals, integration into global markets, a growing start-up environment and strong investor interest driven by its accelerated path toward EU membership and a favourable reputation in the West. Gaza faces the opposite, in all respects. Since Hamas’s 2007 takeover and the subsequent Israeli and Egyptian blockades, its economy has ranked among the weakest in the world. Under Hamas, or any group with comparable economic policies, there is no clear path to economic self-sufficiency – and no alternative can develop while Hamas is actively eliminating those who would threaten its hold on power.

Creating New Targets

Construction in insecure areas is a pitched battle: it is far easier and cheaper to destroy than to build. Every stage of an infrastructure project creates opportunities for sabotage that require only a fraction of the time and resources invested in construction. That asymmetry is well-known to combatants in both theatres.

New infrastructure also creates psychological vulnerabilities. The destruction of a freshly-built project has a far greater impact than the loss of pre-war assets that have already delivered some return on investment (and may have already needed some updates). New construction is a tangible symbol of hope for the future, and its destruction can engender a profound sense of futility in a war-weary and traumatised population. The effect on foreign donors can be similar: high-profile losses erode domestic public support and jeopardise future funding commitments.

The Takeaway

Reconstruction in active conflict zones offers no assurance that what is rebuilt will endure. Donors to Ukraine and Gaza must impose strict accountability and defensive safeguards to manage the risks of this precarious phase.

Policy innovations and commitment to a democratic future, combined with donor discipline, are keeping Ukraine on solid footing. Gaza faces the opposite reality: there is no stable or remotely popular government capable of administering the nearly $20 billion required in the first three years, nor any sovereign borrowing capacity to share the burden. Aid will come almost entirely from foreign donors, and without reliable security guarantees, billions will be sunk into assets that can be destroyed again (or eventually repurposed into arms) at a fraction of the cost. How well oversight mechanisms can function in Gaza’s political environment is an open question – but long-term success is impossible without adhering to them. There is no good option: Political pressure will make donor engagement in Gaza difficult to avoid, but another failed overseas reconstruction effort could trigger a disproportionate backlash and erode support for foreign aid more broadly.

In both Ukraine and Gaza, an influx of cash without security, strategy or strong guardrails would only replicate the failures of Iraq and Afghanistan. Donors must prioritise durable outcomes over the short-term political appeal of rapid disbursement. We have been given another chance to win the peace, and both strategic self-interest and moral duty demand that we do not squander it.

© Emma Sage, 2025, published by RUSI with permission of the author.

The views expressed in this Commentary are the author's, and do not represent those of RUSI or any other institution.

For terms of use, see Website Terms and Conditions of Use.

Have an idea for a Commentary you'd like to write for us? Send a short pitch to commentaries@rusi.org and we'll get back to you if it fits into our research interests. View full guidelines for contributors.