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We should start thinking about rebuilding the country now, because we are talking about complex solutions, including attracting investment, rapid changes in legislation, and the creation of comfortable modern housing. How to raise funds to awaken the economy, what to consider when pondering the further reconstruction, and whether to rely on the Marshall Plan – these and other questions were sought by experts during the discussion «Rebuilding Ukraine after the victory in the war: challenges, solutions, mechanisms», organized by media hub Tvoe Misto/ Lviv Now.
Urgent issues for cities in the east
Olha Pikula, Deputy of the Mariupol City Council, notes that a real humanitarian catastrophe is taking place in Mariupol today: residents have been living without water, food, medicine, light, gas, electricity and mobile communications for a month and a half. Therefore, in her opinion, the first urgent need is the organization of green corridors.
The deputy emphasizes that it is not too early to think about building a new home. She claims that in Mariupol, 90% of the entire housing stock was damaged, more than half of the buildings completely destroyed.
«When the war is over, people will simply have nowhere to go: there are no homes, no schools, no kindergartens, no hospitals, because the Russian enemy has spared nothing. He simply killed our city from the sky, unfortunately, many more areas of Mariupol continue to be bombed from the sky and from tanks. That’s why we need to think today about where our Mariupol residents will come to live,» – says Olha Pikula.
She also emphasizes that the state needs to return the Ukrainian brains – people who left for Europe – in order to solve the economic problems in which Ukraine is beginning to plunge. «To do this, we need to provide those who have lost their homes, property, their cities. We need to think today about how we will bring these people back to Ukraine to rebuild it,» – the deputy emphasizes.
Is it worth hoping for a Marshall Plan?
Former Minister of Economy and Trade, Pavlo Sheremeta, says the concept of rebuilding Ukraine can be described in three words – blood, sweat and tears. He says that according to current estimates, the Ukrainian economy will be destroyed by half of its GDP.
«Will we rebuild the country?» Obviously, yes. But not with the Marshall Plan. More precisely, not only and not so much with its help, but by our own efforts, the blood we shed now and the later tears. And this must be prepared psychologically. This reconstruction will require no less effort than the current victory on the battlefield,» – said the economist.
The Marshall Plan (a program of economic assistance to European countries after World War II) was a great option in the late 1940s for 15 countries. But if we translate the Marshall Plan into current money, we will have an optimistic estimate of $150-200 billion for the relatively same 15 countries. «And we need $200 billion for one country now. I do not take into account the fact that, starting from April, our budget will be in deficit by about 5-7 billion every month... These are operating expenses. When I talk about $200 billion, it’s an investment expense. That is, hoping for such funds is the same as hoping for the gold of Polubotok [the legend about treasure which Cossack Hetman Pavlo Polubotok concealed from Russian emperor Peter I in one of the European banks and which has allegedly multiplied throughout centuries],» – says Pavlo Sheremeta.
Serhii Mamchur, CEO of the NOVELEX group of construction companies, also emphasizes the need for quick solutions for reconstruction. According to him, in Poland, they do not need bureaucratic decisions to build housing, the company can start working the day after signing the contract, so Ukraine needs to adopt such a transparent model and experience.
«There must be quick solutions. If, for example, there were no changes to the Customs Code, there would be a big problem with the delivery of humanitarian aid. The cost of such rapid changes far outweighs the positives rather than the negatives. As we are in the process of joining the EU, we need to look not only at the reconstruction but also at the development of Ukraine. I am convinced that Ukraine will get the same, and perhaps better, conditions, both financial and assistance, than Poland, which has built a lot in 20 years. The roadmap is clear, the EU has its own standards, they just need to be implemented, to some extent adapted. Therefore, in my opinion, there is no great difficulty in creating such conditions in the areas of deregulation, financing, the judiciary, and the opportunity to protect one’s rights. And all this will build investor confidence,» – he said.
We will need fast construction, so administrative procedures must be just as fast.
The economy must work
To build and get Ukraine back on track, the economy needs to work, says the owner of SMART Development construction company, Oleh Manziy.
«Unfortunately, we have blocked resources to work. We cannot do this until the transactions with assets through our coexistence funds are completely blocked, and we have no other legislation. That is, we now run out of money, savings that were – and we can not work,»- he says.
He sees prospects in quick decisions and changes in legislation. «We need quick reforms, and they should be as well thought out as possible,» – Oleh Manziy said.
«We are building both in Poland and in Ukraine. I am approached by private companies with questions about whether it is possible to invest. But there is no mechanism yet, we can’t offer them anything. If we can provide housing at twice lower cost that the market average, I am sure that sources of funding will be found,» – he said.
Pavlo Sheremeta emphasizes that a qualitative leap must be made immediately at the national level. In the pre-war period, Ukraine invested 13% of GDP, and economies grow if the level of investment increases and is 25-30% of GDP.
The percentage of our savings is 12% of GDP in peacetime. Now, this figure has fallen even more. «That is, rebuilding will either require a radical overhaul of the values of most Ukrainians, or it will not happen,» – said the economist.
«Without national investment, there will be no reconstruction. The second item that saves money is your own business. Ukraine ranks 130th in the pre-war ranking of economic freedom. Over the past year, it has fallen to three positions. In order to rebuild, it is necessary to send the labor code of 1971 in the direction of the Russian warship, to reject all other regulations, corruption, because otherwise there will be no rebuilding,» – he added.
Victoria Dovzhyk, a representative of the Standing Committee on Finance and Budget Planning of the Lviv City Council, claims that, in addition to savings, production and consumption are critical to the functioning of the economy at any time. It is under these circumstances that the economy works: there is a proper cycle of money, any resources and it is about development.
«The issue of housing construction is only one branch of the economy. The critical decisions that need to be worked on today are how to provide shelter and new life to those industries that must work for the economy. We need to take care of businesses. Each industry does not work separately, it launches around it a lot of related projects in related industries. It is important in each area to create conditions for entrepreneurs to start working. Cities have such resources as land plots, abandoned premises that can be given to internally displaced entrepreneurs who are looking for a site to invest in, to look for investment partners, to set up production, but who are not ready to invest in buying land. Until now, we can only buy land by law. Today, the state can give at least such a resource (land) for free, and it is a real investment without someone’s money taken out of their pockets,» – says Victoria Dovzhyk.
Jan Sheptytsky, who moved his own business from Poland to Ukraine, emphasizes the importance of legislative changes, which, in particular, concern corruption schemes.
«I have been living in Ukraine for two years now, talking to my friends and always hearing that there are problems with corruption. I hear the same thing in Poland: Polish business does not want to come to Ukraine with its business because it has fears. The law should be more important than the official. If there is a good law, there will be investors, because they do not come to the country for 2-3 years, they want to come for 10-20 years,» – says the businessman.
How to build?
Oleg Manziy says that it is better to rebuild destroyed buildings in a way that meets modern strategies and requirements for the development of communities and territories.
«As a builder, I know how technologically it is possible to build a lot of comfortable housing: not temporary «boxes», but really standard housing. It is clear that this is not done for weeks, but in two or three months, you can rent hundreds, thousands of apartments. There are modern methods that allow you to do this, and they are quite cheap,» – says the owner of SMART Development.
He argues that container towns are a temporary means of housing, and it is now important to focus on permanent housing.
«I know what a container town is, because we, the builders, always deal with them. When we build, people live there. It is unrealistic to live there for months. It will not be housing, it will be a method of holding people for two or three weeks. Our discussion is what to do with people who have nowhere to go. Almost 50% of Mariupol residents will not go abroad and have nowhere to return, they are with their families and children. Putting them in a car is not a solution. Let’s pay a little more, but let’s do it from the beginning so that it meets the standards of modern housing. It is possible,» – the builder emphasizes.
Lviv Chief Architect Anton Kolomeytsev emphasizes that container construction is the fastest and most convenient way to provide shelter for several months, six months or longer. According to him, this is a kind of universal designer, from which you can create different structures.
«European cities and countries have a large reserve of such high-quality modules just in case. When we hear that China has built a hospital in a week, we are talking about such «boxes» from which hospitals are built. We are lucky to have the support of partners, in this case Poland, that they are ready to send their reserves to Lviv,» – said the architect.
Anton Kolomeytsev emphasizes that the settlements detached from the city’s infrastructure won’t be created. «We believe that for people who have come for even a few weeks or months, Lviv is home and they should receive perhaps the best conditions after what they have experienced,» – he said.
For further prospects, it is important to consider market capacity. The intensity of construction over the past 5-7 years has been quite high. Now, it will be necessary to build not only housing, but also production sites, offices. «We built 500-600 thousand square meters of housing a year. For the 50,000 residents who can view Lviv as their home for the next few years, at least we have a figure of about a million square meters. According to the pace of pre-war construction, it is two years,» – the chief architect emphasized.
He emphasizes the need to build places that are comfortable to live in. «By building cheaply and saving on spaces, playgrounds, the same schools, infrastructure, we are creating a time bomb. Therefore, construction, financial models should contribute to quality construction. We need to prevent excessive motorization, to form short-distance cities – these are the things that are laid down in the strategic plan of every European city.»
Volodymyr Hlashchenkov, Chairman of the Supervisory Board of «Molokiya» nutrition company, notes that today, it is important for us to understand and decide which country to build.
«In any case, the world will potentially help us. The big question is how to keep our understanding of which country we, Ukrainians, want to build with this help. When you receive some funding, it is clear that sometimes you are helped to decide which country to build. And in my opinion, after the victory we will all have to think, unequivocally attracting broad assistance for reconstruction, to preserve our understanding of the country we want to build,» – Volodymyr Hlashchenkov commented.
It is worth taking care of business infrastructure and microbusiness.
Victoria Dovzhyk is convinced that special programs, laws and conditions are needed for businesses that will invest in the development of production and the business environment.
«Investments are needed for the development of the business environment, and for housing I am calm. We went through this in 2014: demand generates supply. In fact, there are some people who have saved their savings and will invest in the purchase of certain housing. But this saving of consumption is not a saving of development. Therefore, businesses that will invest in the development of production, business environment, need special programs, law, conditions so that people who now have savings, have an interest in investing in business development. If such conditions are provided by the state, then everything will be fine. The state is forced to buy housing for those who lost it, but the business infrastructure is something we all need to take care of,» – said a representative of the Lviv City Council’s budget commission.
Mariupol City Council Deputy Olha Pikula says that we should not forget about small and microbusiness, which has an important impact on economic development. «We still have access to cheap money. Today we are talking about the «5-7-9%» program, it needs to be developed, expanded, and we need to work with state guarantees. I worked as the head of the center for small and medium business support in Mariupol for a year and a half. In 2020, residents of Luhansk and Donetsk regions had limited access to this program, so today we have many entrepreneurs from Mariupol who left with savings and backpacks. They have no housing, entrepreneurs have no equipment,» – she said.
She emphasizes that in order for entrepreneurs to invest money and people to save money to improve their living conditions, we now need help with cheap money for entrepreneurs and cheap mortgages for residents. «This is a very complex issue. I am convinced that we should not wait for the end of the war, we need to solve it today, simplify the legislation, make all procedures as transparent as possible, minimum opportunities for corruption – and then, foreign investors will believe in us. «
Victoria Dovzhyk is convinced that the legislative changes should affect simplified access to resources (state-owned land, enterprises or territories that have been in bankruptcy for years, abandoned premises) and tax incentives for investment, as well as access to resources for domestic investors.
«If someone wants to set up a factory with fabrics that are not available in Ukraine, I believe that such assistance should be provided by the state and such a promise in every invested hryvnia that it would be interesting even for a foreign investor who is afraid to come here – tax holidays. all reinvestment without taxation, so that he could come and build a plant here,» – said the official.
At the same time, the chief architect of Lviv Anton Kolomeytsev emphasizes the need to give more initiative to places where options for clear, accessible rules of construction and management would be considered.
Chief Architect of the State Institute of Urban Design «Mistoproekt», Yurii Stolyarov, summed up that for the development of cities that have faced challenges, it is important to change three areas of legislation: land, architecture and construction. In the architectural and construction sphere, it is a question of transparency, simplification of many moments both in designing, and in construction.
«I think we need to give something to the insurance industry: business insurance procedures regulate many things better than the state,» – he added.
You can watch the full video from the discussion here:
By Olha Katsan, translated by Vitalii Holich
Photo: Ivan Stanislavsky / Tvoe Misto
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.
