Why can’t we talk about full reconstruction of Ukraine without private funds and what is required to attract investors? 

One more session of the Ukraine Recovery Conference in London clearly shows how strongly the Western world supports Ukraine in its fight against russian aggression. 

Inspirational speeches by top officials of the UK, the US and the EU, promises to finance restoration of Ukrainian infrastructure just today give us confidence that we will not be left alone with our most painful problems and the Western world will do everything possible in order to prevent humanitarian crisis in Ukraine. 

Western officials and businessmen, either modestly or actively, talk about their love for Ukraine who protects the entire Western civilization from inadequate Eastern tyranny at the cost of thousands of lives of its soldiers. 

Therefore, Western governments manage to convince their taxpayers that it is necessary to invest their costs into the victory of Ukraine. 

It means that they will help us to win and to provide minimum human needs. And what about investments into development of Ukraine? It is no secret that funds of Western governments, i.e. taxpayers, will not be enough for such investments. 

Even costs that we can theoretically receive in the form of compensation from the aggressor state will not be enough. Therefore, only private capital can become the most important source for investments into proper recovery and rapid economic growth of Ukraine. 

One should not be naive: no matter how much Western investors love Ukraine, they love their money much more. It means that they will make their investments into our state only when they are sure that such funds will result in much more earnings. 

First, they should make sure that assets they will create will not be destroyed. 

Insurance against such events is a vital issue, but with high risks of an insured event it will not help so much, because insurance payment will only return invested costs. Therefore, without NATO-level security guarantees, there is no sense to talk about an investment boom. 

Next, Western investors should be convinced that their investments will not be threatened by a corrupt official, law enforcement officer or judge. After all, russian propaganda created for us an image of the most corrupt European country. 

There are certain reasons for this, based mainly on numerous cases when a foreign investor faced arbitrariness of the Ukrainian authorities. And every such case is gladly spread by the Western media. Moreover, even experienced Ukrainian business entities are ready to flee the country in view of arbitrariness of law enforcement officers. 

Based on this, I see that the answer to the question asked by one of the top Ukrainian speakers, why the Europeans should not build one of the four planned gigafactories in Ukraine, will be disappointing. 

It is also not surprising that at the London Conference, almost every speaker not related to the Ukrainian authorities mentioned the need to secure the rule of law and freedom from corruption in Ukraine. 

The main German diplomat on the sidelines of the conference spoke about Ukrainian nepotism and corruption in a completely undiplomatic way, because corruption and selective justice cause not only risks of relations between business and state. 

They cause also unfair rules of market game, i.e. situations where a business operating in accordance to high ethical standards always loses competition to a less responsible business. 

Therefore, responsible business entities have little chance of development. As a result, we will face regress and will move far from European standards. 

Perhaps the best marker that we have overcome most of the barriers to investment will be our accession to the EU and NATO. Only then we can really rely upon a frenzied influx of Western investment. 

While we are still doing our homework for the fastest possible European integration, we can seriously rely only upon investments into Ukrainian business. After all, our business is much bolder and more determined than foreign investors for whom Ukraine is only one of several hundreds of targets for their capital investment. 

Therefore, first and foremost for the government to start its way to major investments in Ukraine is to facilitate comfort for Ukrainian investors. Although they are not so big as Western ones, their financial capabilities are smaller. 

But it is the local investor who will be the litmus test, the signal for foreigners that it is safe here and that one can invest and earn here. In other words, it will be extremely difficult to attract foreign money here in the absence of local investors. 

Here, the government can help by actively attracting Western state and quasi-state funds for local investment projects, as well as by developing effective incentives and investment support measures. Sincerely, the Law of Ukraine on investment nannies was a failed attempt. 

Is there any benefit to conferences similar to those held in Lugano or in London? Of course, there is, because it is probably the best platform for Ukrainian officials to receive objective and unbiased feedback from potential foreign investors regarding up-to-date investment climate in Ukraine. Then they will better understand how this climate can be changed. 


Leave a Reply

Your email address will not be published. Required fields are marked *