Today, the second most popular issue among Ukrainians after the discussion of military successes is the post-war recovery plan. How to live tomorrow, after our victory? How to restore and to develop Ukraine after the war?
The Ministry of Economy, jointly with Ukrainian economists, Big Four offices and other leading consulting companies, proposed key principles to be introduced in the post-war reconstruction and development plan of Ukraine.
One. Ukraine should gain full access to the G7 and the EU markets.
That is, for our goods, the governments of these countries should cancel all quotas and import duties, including protective and anti-dumping duties. In this way, Ukrainian manufacturers will be able to freely export their products to markets covering 54% of the world economy.
The United Kingdom as G7 member state already sets an example in this regard. In the coming days, following the results of bilateral negotiations, the British will announce full opening their markets to Ukraine.
In the past, access to the markets of developed countries allowed such countries as South Korea to successfully recover from the war.
Exports enable industry to develop and to produce more goods, as well as, first and foremost, to integrate into modern production chains. This is not only export, but also technology transfer to Ukraine, which is no less important for industrial modernization.
Two. Full-scale joining the European Union just in 2024.
We expect to receive the status of a candidate for EU member just in summer 2023. We have already submitted the first part of application.
At the same rapid pace, we will meet all the requirements for Ukraine as a future EU member. This is our path to true democracy and freedom.
Three. Complete deregulation and minimal state intervention in business operations.
From the very outbreak of the russian invasion, the government has already begun a large-scale deregulation. 48 permits, 19 licenses, nearly 500 other public services for business were transferred to the declarative principle. Now our task is to fix this state of affairs forever.
The Ministry of Economy has developed a corresponding bill, to be considered by the Supreme Council in the near future.
Business should focus on basic production processes, not on relations with the state. Therefore, we should replace inspections with insurance or other similar mechanisms in those industries where it is possible.
Four. Fast logistics from Ukraine to Europe, not exceeding 72 hours.
Due to russian aggression, Ukraine has limited logistical capabilities. It is already clear that in the future our goods will move mainly to the west, i.e. to the European Union. Therefore, we will maximize expansion of routes and checkpoints towards the EU, increase railway logistics through dry ports and narrow-gauge transshipment nodes.
Even when we restore operation of the ports, developed logistics with the EU will serve as grounds for economic integration of Ukraine into the European economy.
Five. Priority to export of processed products in industries where Ukraine already has a competitive advantage on world markets.
We mean food and metallurgy.
In late 2020, Ukraine ranked sixth in the world in terms of food exports: 74 million tons. For comparison, Canada exported almost the same amount, i.e. 77 million tons, ranking fifth. Export price of the Ukrainian agricultural products amounted to 22 billion US dollars, wile in Canada it made up 55 billion US dollars. Such a huge difference 2.5-fold is caused by the fact that Canada exports mostly processed products, while Ukraine exports raw materials.
That is why the basis of our industrial policy will be to stimulate further processing of raw materials to be exported.
Corn and wheat are the two main Ukrainian export products.
Given the limited logistics, we have to optimize export tonnage by converting it into finished product exports. That is, to move from a large volume in tons to a large volume in currency. Processed products cost two to three times more than raw materials. In addition, it provides an increase in jobs within the country.
We already have positive experience in processing sunflowers into sunflower oil, which we can extend to corn and wheat. There are opportunities to start processing corn into bioethanol, alcohol, starch, and as feed for poultry, pork, beef, and eggs.
We will also be able to increase the production of high-margin niche products from corn and wheat – specialized proteins used in the cosmetic, pharmaceutical and food industries.
Thanks to the opening of the EU market and the construction of new capacities, Ukraine will process most of its ore into metal. And metals – for finished products. This is how we will achieve economies of scale.
Ukraine ranks ninth in the world in terms of metal exports (19 million tons per year). We export a large amount of ore that needs to be processed domestically. After all, a ton of ore costs 100-150 dollars, a ton of metal – 500-1000 dollars, and a finished metal product – 1.5-2 thousand dollars. If we make power machines from these metal products, the price reaches 15-20 thousand dollars per ton.
The modernization of metallurgy will also contribute to the decarbonization of the economy in the region, in particular through the introduction of modern ore processing methods that reduce the carbon footprint throughout the production chain.
Ukraine’s security depends only on us. We demonstrated to Europe and the democratic world that we are capable of defending ourselves. But for this we need weapons. And we have to make it ourselves.
For this, there are launch pads in the form of industrial complex enterprises. We ask our Western partners about the transfer of military technology in order to establish the production of all major types of weapons as quickly as possible. From air defense to armored vehicles, missiles, small arms, ammunition, aircraft and ships.
Six. Our task is to form a powerful military-industrial complex that will become a base for the further development of aerospace technologies.
IT will play a crucial role in this sector, as Ukraine will be bound to military-tech. For this purpose, Israel can serve as an example, which demonstrates how high military technology can be the engine of civilian economy.
Seven. In order to implement this program, Ukraine should increase its energy capacity.
By European standards, our electricity is already cheap today. We have great competences in nuclear energy, which we can use for the further construction of nuclear blocks and the increase of clean energy.
Ukraine is able to build nuclear power plants mainly by its own forces, from design to production of power equipment, except for the reactor body itself. But these skills can also be developed on the grounds of existing industrial enterprises.
Eight. Next step in power supply is to achieve energy independence.
Within extremely short period of 3-5 years, we should fully provide ourselves with gas from our own production.
Ukraine is the runner-up in Europe in terms of blue fuel deposits, so this is a completely achievable goal. However, it is necessary to reduce energy consumption of our economy by means of thermal modernization program.
As for petroleum products, we should build processing facilities to fully cover our own needs.
Also we should take into account the experience of Brazil, where significant part of the fuel is produced through agriculture: by adding 15% bioethanol to gasoline and 20% biodiesel to diesel fuel.
Nine. A core idea of economic transformation should be climate modernization.
This is a clear concept for our Western partners. Significant financial resources are already available for Ukraine under this program. In addition, construction of new industrial capacities in metallurgy, food processing and power supply is immediately possible based on the principles of green economy, i.e. minimum carbon trace and low dependence on fossil fuels.
One should understand how to implement it all. Ukrainian companies need two things:
- The first is partnership with Europeans and Americans in the mode of technology transfer.
- The second is access to financial resources.
In a narrow sense, we propose the Marshall Plan 2.0 for restoration of Ukraine. In the original Marshall Plan, the US government bought up specially issued shares of European companies in order to grant them capital aimed at investment in their own production in Europe.
Given that the global financial market has come a long way over the past 70 years, we can offer our European and American partners an updated approach.
Partner governments can issue state guarantees to their companies in order to involve funds for investments in Ukraine. Such guarantees will cover the country risk and will allow investments in launching significant industrial projects in Ukraine.
The concept of nearshoring is promising – it will facilitate turning Ukraine into the nearest industrial zone for Europe. This will also actively stimulate development of the service sector.
It is important for us to secure maximum restoration of transport and social infrastructure of Ukraine within 24 months. That is, all destroyed facilities should be rebuilt within two years, without wasting time for further development.
Last but not the least, ten. Key requirement is localization of at least 60%.
We mean involvement of Ukrainians in the reconstruction process and maximum use of domestic resources: building materials, cement, metal.
The Ukrainian side continues is still insisting on damage recovery by Russia for all destructions it has caused. Violations of international law by the russian federation are so significant that the frozen assets should be subject to seizure.
We are working upon the issue that the states that froze assets of the russian federation should also remove the immunities that still protect such assets and direct these funds to restoration of Ukraine.
We also propose imposing a special import duty on all goods and services from russia for those economies that, for various reasons, are not ready to implement a full embargo.
Since the russian federation mainly supplies exchange goods, such a duty will not burden the buyer, and the aggressor country will reduce the price of supply by its size. Such charged funds can be transferred to Ukraine for the purpose of financing reconstruction projects.
Therefore, economic aspect of restoration plan should include full opening the G7 and the EU markets for Ukrainian goods, large-scale development of military-industrial complex by transferring technologies and military-tech, a focus on export of finished goods in the traditional industries of agriculture and metallurgy, as well as rapid development of power supply and logistics based on the principles of green economy.
https://www.pravda.com.ua/columns/2022/04/21/7341214/
