The shock has passed. How to rebuild Ukraine with common efforts after the victory

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What pillars should be basic for rebuilding Ukraine, what projects will help us and how the country is already recovering from the military invasion and aggression of the Russians. These topics were discussed at the Spring Business Forum, organised by «HD Partners Law Firm» in Lviv: «Ukrainian DREAM – Ways to renew the state after the war.»

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Six principles for the reconstruction of Ukraine

Yulia Mincheva, project leader of Vox Ukraine, talks about six basic principles for rebuilding Ukraine. The first is European integration. The second one is the creation of a separate, independent agency under the auspices of the EU, which will coordinate the flow of funds and projects for helping Ukraine.

Third, Ukraine must own and be responsible for the program. The fourth is the maximum help not only with money but also with technology and new transitions. The fifth point is that grants should take precedence over loans. The sixth is the needs of the future: green energy and digitalization.

Read also: «Ukraine must feed the world again.» What may change for the country in June

Iryna Kravchenko, Deputy Head of the European Bank for Reconstruction and Development (EBRD) in Ukraine, points out that the EBRD has been one of the largest investors in recent years. The bank allocated approximately 1 billion euros to Ukraine annually.

«We announced our first package in March, and identified areas of assistance for Ukraine. For Ukraine, this amount amounted to 1 billion euros. We have signed 2 projects, one with «Ukrenergo» [Ukrainian energy company] for 50 million euros to support their liquidity and also 30 million for food security with our guarantor banks «Otp» and «ProKredit» to help them finance farmers,» – said Iryna Kravchenko.

Also, according to Iryna Kravchenko, the bank is in the final phase of negotiations to provide a loan to Ukrainian oil and gas state company «Naftogaz» for 300 million euros, and support the liquidity of the Ukrainian railway «Ukrzaliznytsia» for 50 million euros. The EBRD also has two large transactions worth 100 million euros to finance agro-industrial, pharmaceutical companies and food retail. The bank’s main priorities are food and energy security, trade support, municipal projects and logistics.

The shock has passed

According to the First Deputy Governor of the National Bank of Ukraine, Kateryna Rozhkova, after the shock of the first weeks of the war, economic activity is intensifying in relatively calm and liberated regions. In March, hostilities engulfed 10 regions and Kyiv, which together accounted for more than 55% of GDP in the past. In April, their number decreased to six, which previously formed about 20% of GDP.

The decline in economic activity was also observed in relatively calm areas due to supply and production chain disruptions, uncertainty and increased risks, labor outflows, and additional costs. But even in such conditions, business is gradually adapting.

The number of enterprises that have completely ceased operations has almost halved since the start of hostilities (from 32% to 17%). However, 60% of enterprises work below the pre-war level of workload, almost 23% – more than twice as low. According to the National Bank of Ukraine, at the end of April, most enterprises worked in agriculture; transport and processing industry also resumed operations. The most difficult situation is in the construction and mining industries. At present, the congestion of enterprises in the liberated territories has improved, but the situation in the regions of active hostilities and the occupied regions remains difficult.

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By the way, the sowing plan was implemented by 70%, and weather conditions were favorable for the development of winter and early spring crops. In Ukraine, 11 million hectares of land have been sown, farmers continue to optimize the structure of crops: reduce the land under corn, instead increase the crops of wheat, soybeans, buckwheat. At the same time, losses in the occupied territories are growing: according to the Ministry of Agriculture, the occupiers exported 500,000 tons of grain, tens of thousands of tons of sunflower oil, large amounts of vegetables, and continue to steal machinery and fertilizers, destroy elevators.

Demand for workers has picked up, says Kateryna Rozhkova, but supply far exceeds demand, leading to lower wages. After a significant decline in March-early April, the decline in the number of vacancies stopped. However, despite the revival of activity, the demand for workers is now weak, while the number of job seekers is growing rapidly.

According to the UN, the flow of refugees has slowed down, while the number of citizens returning to Ukraine is increasing. According to the UN, as of May 17, the number of refugees from Ukraine exceeded 6 million, including almost 3.4 million to Poland. At the same time, the rate of departure from Ukraine has slowed down, while the rate of return is accelerating. 

As for inflation, the price pressure remains high, says Kateryna Rozhkova. The reason for this is disruption of supply chains, nervous demand and rising costs. In addition, the acceleration of inflation is due to a significant increase in prices in partially occupied areas due to the blocking of Russian suppliers of goods. The biggest contribution to accelerating inflation was, in fact, rising food prices.

Business view

The owner of the Meest group postal service, Rostyslav Kisil, shared his own experience of how the company is holding the blow. He points out that the biggest challenges for the company at the beginning of the war were the reduction of income: 6-7% from the same period before the war, and that many cargo and vehicles remained in areas where active hostilities took place. 80% of Meest branches in Ukraine suspended their work due to other businesses. At present, foreign consumers have refocused exclusively on humanitarian aid, so C2C shipments from abroad have decreased. Ordinary EU citizens sent their belongings: parcels of various sizes to help Ukraine, because our plight affected not only the political level of the EU countries, but also the personal level – the citizens.

Currently, Meest’s income in Ukraine is 30%, compared to the same period before the war. It is also helpful that 50% of international online stores have resumed delivery to Ukraine with Meest, and volumes remain at 20% of pre-war levels. Rostyslav Kisil says the company has resumed deliveries of parcels to and from Europe, Canada and America. 2,900 Meest branches and 300 post offices were also reopened.

«Every week, we renovate about 100 branches and open about 80 specialized branches for small businesses,» – said Rostislav Kisil.

According to Rostyslav Kisil, reorienting and adapting its processes to the current needs of the market will help keep the business going. Rostyslav also advises creating new products and services based on innovative technologies.

Ukraine must seize its chance to become strong

Vadym Denysenko, director of the Ukrainian Institute for the Future (UIF), stressed that Ukraine should use its chance to become a strong state. The first thing to start from is the probable scenarios of war.

The first is that after the «great battle» in Donbass, which did not find a winner, the states move to a positional war, and Ukraine de facto remains within its borders. This version is not about freezing the conflict. The duration of the active phase of this scenario is 3-6 months. The second scenario is that after the battle of Donbass, Russia consolidates itself in certain newly conquered territories, a certain agreement is concluded and the war enters a positional or even frozen phase (lasting 2-6 months). According to the third scenario, after the battle of Donbass, Russia is trying to capture the territory of Ukraine along the Dnieper and create a land corridor to Moldova (duration 6-18 months). In the fourth scenario, after the battle of Donbass, Russia will try to seize the entire territory of Ukraine and establish its own puppet government (lasting several years). However, the last two scenarios are unlikely, Vadym Denysenko emphasizes.

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For effective post-war reconstruction, Ukraine needs to change its system of government, return Ukrainians, change its approach to foreign policy, and build a new economic model based on a non-Soviet legacy.

According to Vadym Denysenko, the concentration of power through the introduction of a state of emergency can be a tool for the transition period, but only until the next elections are announced at the end of 2023, because we need control, not a dictatorship.

The Ukrainian Institute for the Future sees the new system as a powerful presidential republic (similar to the time of De Gaulle and the reign of Park Jeong-hee in South Korea). The Accounting Chamber should become a key body that knows about the state of the state. Deoligarchization and maximum liberalization of the economy are also needed to stimulate small and medium-sized businesses. UIF also proposes to give maximum powers to local self-government. Government programs should become growth points.

Vadym Denysenko calls lawsuits against Russia and the conclusion of a peace agreement with security guarantees for neutral status a priority for Ukraine in foreign policy. It is also important to establish contact with foreign diasporas and bring refugees home.

Ukraine needs to create jobs in the country, and new infrastructure. We also need analysis, forecasting, and planning of migration flows of Ukrainians. In addition, it is necessary to support Ukrainians abroad. 

By Kateryna Bortniak

Follow us on Facebook and Instagram. Lviv Now is an English-language website for Lviv, Ukraine’s «tech-friendly cultural hub.» It is produced by Tvoe Misto («Your City») media-hub, which also hosts regular problem-solving public forums to benefit the city and its people.

 



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