Don’t wait until Russia’s war is over to invest, Ukraine’s leaders tell businesses

5 months ago 18

A Ukrainian delegation aimed to convince hesitant businesses on Tuesday (11 June) that the country is safe for investments despite Russia’s ongoing war, as the EU is hoping to boost its efforts with new business guarantees.

Ukraine’s President Volodymyr Zelenskyy, Chancellor Olaf Scholz, and European Commission President Ursula von der Leyen met in Berlin for the third edition of the Ukraine Recovery Conference with 2,000 decision-makers and business leaders aiming to create business relationships for the reconstruction of the country.

Facing costs of $486 billion to account for the damage so far done by Russia’s invasion, according to the World Bank, Ukrainian leaders said Tuesday they want to start rebuilding sooner rather than later, even while fighting is still ongoing.

“I would like to call on businesses not to wait until the war ends to invest in Ukraine. Start working now,” Ukraine’s Foreign Minister Dmytro Kuleba told participants.

“Please trust in the entrepreneurial spirit of Ukrainians. (…) We have people who are keen to rebuild their country. Helping them to access capital loans is of fundamental importance,” he added.

“What has become clear to us, in discussions with Ukrainians, is that the understanding is not that (…) reconstruction begins [after the war], but that Ukrainians see reconstruction as an ongoing task, even during the war,” a senior German government official told reporters ahead of the conference.

However, as political leaders stressed in Berlin that private investment was indispensable for reconstruction, there are concerns that businesses are hesitant to expose employees and funds to the risks of war despite a general interest in the country.

“The number of members of our Chamber of Commerce in Kyiv has increased by more than 60% last year,” Scholz said, adding that businesses are “aware of the potential that Ukraine has to offer.”

He pointed to Ukraine’s strong agricultural industry, growth sectors such as sustainable energy, and the prospect of EU membership.

Yet the country continues to suffer from missile attacks and power outages as Russia targets its energy infrastructure, as Zelenskyy noted in Berlin, renewing his plea for allies to supply Ukraine with additional Patriot air defence systems.

Participants also focused on a general lack of awareness among global corporations that parts of Ukraine are safe for business.

Some pointed out that the US State Department has advised against travelling to the country, reducing the willingness of companies to engage with it, as only one American bank continues to operate in Ukraine.

Wrangling within the Ukrainian government, which saw the head of its reconstruction agency resign one day before the conference while hitting out at Zelenskyy and corruption problems did not help build trust in the country.

New business guarantees

German Economy Minister Robert Habeck noted a lack of business guarantees while emphasising that Germany has extended its investment guarantees to businesses in Ukraine despite the war.

Kuleba pleaded with foreign leaders to provide incentives for private investment into Ukraine.

The EU appears to have recognised the problem, as von der Leyen announced at the conference that the bloc had secured €1.4 billion in funding for business guarantees and grants for private companies investing in Ukraine.

The deal, which Germany had thrown its weight behind ahead of the conference, is part of a planned larger set of guarantees and grants – the Ukraine Investment Framework – due to grow to €9.3 billion.

“That way, we, the European Union, help [companies] remove some of the risks associated with equity investment [in Ukraine],” von der Leyen told participants.

The EU hopes to encourage €40 billion in private and public investment into Ukraine with the help of the framework.

[Edited by Alexandra Brzozowski/Alice Taylor]