Ukraine is engaging with international institutions and other investors to start rebuilding the country, while the end of current conflicts are not yet in sight, and uncertainties surrounding the county’s post war settlement continue.

The European Bank for Reconstruction and Development (EBRD) has been discussing options with stakeholders, particularly with the European Union, to bring back investors to Ukraine through partial guarantees offered on green bonds to kick-start the market, said associate director Denis Gaiovy.

Key priorities for the war-torn country are keeping up economic growth and establishing a defence industry, he added during a panel discussion at the IPE Annual Conference and Awards in Vienna.

EBRD invested €1.5bn at the start of the war to support energy security and vital infrastructure, transport, the agricultural sector and private business. It has reached its €3bn financing target for 2022-23, it said in a statement in October.

“Building back better is happening now,” Gaiovy said, adding that investments so far have helped the Ukrainian economy adjust to the reality of war. Ukraine’s gross domestic product will grow 4.8% this year, and 3.7% next year, according to the European Commission’s economic outlook.

Referring to agriculture and food security, Gaiovy underlined that the harvest for this year is bigger than last year’s, and that the export of grain from the Black Sea port of Odessa continues.

The Ukrainian government has also engaged with BlackRock and JP Morgan to set up a development fund to steer public and private capital into projects to rebuild the county.

The European Investment Bank (EIB) has opened a regional hub for Eastern Europe, based in Kyiv, approving a €450m recovery facility under the EIB’s EU for Ukraine Fund, it said this week.

The European Parliament recently endorsed a proposal to create a €50bn for Ukraine’s recovery and reconstruction from 2024.

According to Yuri Poluneev, international economist and former deputy head of the supervisory board of the National Bank of Ukraine, funds less sensitive to risks, like government grants or concessions loans provided by Ukrainian allies, would help rebuild the country in a first stage, and private capital in a second stage.

He added that Ukraine’s EU accession will drive and speed up reconstruction efforts but, realistically, he does not expect an unlimited amount of funds ready to flow into the war-torn country.

Ivan Krastev, chair of the Centre for Liberal Strategies, said Ukraine is betting on private investments to also  send the message that the country is investable, despite the war.

Investors might face challenges, for example when investing in infrastructure or businesses that can come under attack from Russian shelling, or because of difficulties monitoring corruption during the war.

Meanwhile, the war has entered its third phase, after the invasion of Crimea and the failed ’special operation’, as Vladimir Putin called it, launched to conquer Kiev in a few weeks. Now it is a “war in Ukraine but not about Ukraine”, defined by an unending stand-off with the West similar to the Cold War, Krastev said.

This means that a reconstruction based on a formal end of the war might not start soon, he added. “[Instead], keeping Ukraine functional and an economically growing country, in a moment in which the war has at least not formally ended, should be one of the priorities,”  he said.

For example, establishing safe economic areas, so that investors perceive an environment secure enough to deploy capital, he concluded.

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