Blackrock and JP Morgan prepare investments

According to Blinken, the goal is “the country’s economy being as strong and prosperous as possible” in a future when the Russian war of aggression could be over. British Prime Minister Rishi Sunak announced there that he intended to protect private investments from risks with government guarantees. He also wants to provide another three billion dollars in guarantees to invest funds from the World Bank.

Private companies are imperative for Ukraine’s reconstruction and long-term economic recovery, and they represent a lucrative opportunity, says Bruce Stokes, an economics expert at the Washington think tank German Marshall Fund. “Potential new business deals in the billions” are possible. “American companies should secure their share of this early on.”

The US wealth manager BlackRock, which wanted to present an “investment fund to restore the Ukrainian economy” together with JP Morgan Chase in London, was there early on. BlackRock CEO Larry Fink had already predicted in January that Western investors would “flood” Ukraine and that the country could “become a beacon of the power of capitalism for the rest of the world”.

In fact, lobbyists in Washington are reporting a kind of gold rush mood, some of which is affecting the defense industry. Because after the war, according to the assessment, Ukraine could become the largest armaments hub in Europe. But the IT sector and Ukrainian raw material reservoirs are also interesting for investors.

“We can’t do it alone”

Even during the war, Ukraine had “expanded its leading role in cutting-edge industries such as artificial intelligence, fintechs and blockchain,” said Samantha Power, director of the US development agency USAID, at an investor event in Washington. US companies could become “early adopters” in Ukraine, according to Power, and referred to the commitment of the German company Bayer.

Biden’s Secretary of Commerce, Gina Raimondo, spoke at the same event. “We all know that our government cannot do it alone,” she said. “We need you,” she said to the entrepreneurs.

As the largest donor, the USA has a fundamental interest in bringing private investors on board. Above all, since there is no end to the war in sight and the financial means cannot be borne by government institutions alone in the long term. The US government has therefore been making increased efforts to attract private investors to Ukraine for several months:

• In April, the US Chamber of Commerce hosted a US-Ukrainian partnership forum attended by several US departments. The motto of the event sounded like an advertising slogan: “We build the foundation for a dynamic economic recovery in Ukraine.”
• The development agency USAID has joined AdvantageUkraine. The organization in Kiev brings potential investors from abroad together with Ukrainian companies. USAID also provides financial support to the Ukrainian e-government platform Diia and encourages investments from American IT companies.

• At the Select USA summit, the US state economic forum, there was a dedicated section for Ukrainian entrepreneurs in the US. For example, the Ukrainian start-up Delfast, which is equipping American police officers with e-bikes in a pilot project, was presented. As Ukrainian brands become better known in the USA, new business contacts are to be created.

• Representatives from Kiev are increasingly lobbying in Washington. Sergiy Tsivkach, executive director of investment promotion agency UkraineInvest, recently published an opinion piece in Washington-based magazine The Hill. Because of its raw materials and qualified workforce, Ukraine could also be “an important partner for American technology companies,” he said.

In its last report in spring, the World Bank estimated the cost of reconstruction at 411 billion US dollars – that is more than two and a half times as much as Ukraine’s gross domestic product. The World Bank emphasized that the estimates are a “minimum value”. “Demand will continue to increase the longer the war lasts.”

In talks with financiers, they try to “break down the numbers over short periods of time. Anything else is difficult to grasp,” Anna Bjerde, executive director for operations at the World Bank, told Handelsblatt.

The private sector is “expected to make a major contribution to Ukraine’s reconstruction efforts.” What speaks in favor of the Ukraine as an investment location is the high resilience of the companies that are already based there. According to a World Bank study, only three percent of Ukrainian companies have had to shut down their business permanently because of the war.

This is how the Handelsblatt reports on the Ukraine war:

Appeals from the US government are likely to increase in the coming months. Before the reconstruction conference, Blinken tried to address possible doubts about investments in Ukraine and addressed the allegations of corruption against the country. “If Ukraine wants to attract the investments it needs, it needs to create the best possible environment,” Blinken said in London.

$27 billion goes to economic aid

There are also political reasons why the US government wants to convince private entrepreneurs more than ever, because US aid to Ukraine is coming under pressure in the presidential election campaign. “We cannot assume that Western financial support will continue at the current level,” Charles Kupchan, former European director in Barack Obama’s National Security Council, told Handelsblatt.

Since the Russian invasion, the US has committed $113 billion to Ukraine, almost two-thirds of which is for defense purposes. But around 27 billion US dollars flow into economic aid.

The money is used, for example, for food, the social systems or the repair of bombed power grids. According to a US government official, it is precisely in this area that private investors will be dependent in the medium term. Because these economic aids could most likely be curtailed by the US Congress.

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