Contents
Reporter's Notepad: EBRD becomes the largest implementing partner of the Ukraine Investment Framework and uses the first €50 million to finance small-scale energy projects with a surprising leverage ratio - more than double the EU's target. Details inside.
Just The Facts: The EU calls for Ukraine investment proposals from the private sector with an eye to cooperation, a court rules that Ukraine can't trademark 'Russian warship, go f**k yourself,' and Ukraine has received a $1.35 billion in grant funding from the US for social and humanitarian expenditures, in particular to ensure the payment of salaries to teachers.
Here's What They Think: As the war in Ukraine enters its third year, the urgency to end the conflict has grown, especially with US President-elect Donald Trump's pledge to quickly bring peace, according to an op-ed in the South China Morning Post. At the same time, it says, it is increasingly evident that there will be no winner.
Sober Second Thought: Investor attention significantly influences return and volatility spillover effects among asset classes, particularly during geopolitical events like the Russia-Ukraine war, a study by researchers from New Zealand's Lincoln University and Auckland University of Technology found.
The Rebuilder's Social: Ukrhydroenergo meets with Canada's AECON to discuss the Kaniv PSP construction project, SuperNova Airlines makes its first charter flight, operated with the company's own Boeing 737-800 cargo aircraft, and Viktor Zinchenko, communications director at DTEK, applauds the film Fight For Light, which "documents the stories of DTEK Energy thermal power plant workers who work under fire."
Dear subscribers,
At the ongoing ReBuild Ukraine event in Warsaw, staff from the European Commission are organizing what they're calling the first-ever EU - Ukraine Investment Conference, with two days of speakers and workshops.
URN Daily is covering the event and aims to pull out, in The Reporter's Notepad, some of the interesting exchanges between speakers. It'll take us a while to fully unpack our notes, but we did find this comment interesting:
Arvid Tuerkner, the managing director for Ukraine and Moldova at the European Bank for Reconstruction and Development (EBRD), said his institution has taken on €500 million of the €2.75 billion in grants and loans the European Commission has sought to commit under the Ukraine Investment Framework so far.
The EBRD is passing on more of the UIF money than any other institution. Not particularly surprising, considering the EBRD is also the largest foreign investor in Ukraine.
Tuerkner said, though, that his institution has already used €50 million of that and has achieved a 10 to 1 leverage ratio. In other words, the EBRD has used that €50 million to stimulate €500 million in investments in Ukraine.
That's well above the 4 to 1 target ratio of the €9.3 billion Ukraine Investment Framework, which seeks to use the overall total of €9.3 billion to mobilize €40 billion in investments in Ukraine.
Tuerkner said the EBRD managed that ratio using "an energy security support facility where the banking sector is helping us to finance municipalities, households, and also medium-sized companies who invest in small scale energy generation, energy storage and energy efficiency in order to address the current energy crisis."
"There are few parameters built into these programs to make sure the guarantees cover a very granular portfolio," he said. "So it's not going into big businesses."
"These are green projects, biofuels. And the pipeline is strong. It really enables financing which otherwise would not happen. It's about safety structures. It's about addressing their own energy needs."
"The demand is huge. It creates a huge leverage."
EU asks private companies for investment proposals of at least €50 million each under Ukraine Facility
The European Commission has called on private businesses to submit investment proposals of at least €50 million each that could form part of the European Union's €50 billion aid package for Ukraine.
The call, valid for businesses from the EU or Ukraine, focuses on investment proposals on six sectors: energy, critical raw materials, construction materials, transport and export logistics, IT, and processing and manufacturing.
"This is a bold new step we're taking which makes it possible for companies established in the EU to directly submit their investment ideas and projects to the European Commission," said Gert Jan Koopman, the commission's director general for Neighborhood Policy and Enlargement Negotiations.
"We will then be assessing this, looking at this, discussing it with you," he said. "The idea is, on this basis, to build a pipeline of transformative private investments that can contribute to Ukraine's recovery and reconstruction."
The proposals must have an overall investment size of at least €50 million and the company or consortium making the proposal has to contribute at least 10% of the total value of the investment project.
Koopman announced the call at the opening of the two-day Rebuild Ukraine conference and exhibition in Warsaw, which has drawn 538 exhibitors from 32 countries as well as 5,000 participants in an effort to boost private investment ins Ukraine’s recovery, reconstruction and modernisation.
At the annual event this year, the Koopman launched the first EU - Ukraine Investment Conference, consisting of two days of panels, workshops and briefings focused on private investment in the reconstruction of Ukraine. The Rebuild Ukraine event also includes other segments focused on energy, civil society, water management and other aspects of the reconstruction.
The call, which is meant to boost private sector involvement in the reconstruction of Ukraine, is valid until March 1 of next year, the EU said in a separate press statement.
"Proposals will be reviewed and connected to the best-suited investment projects funded the Ukraine Investment Framework, which is an integral pillar under the EU’s €50 billion," the EU said.
The call for proposals document says that, after assessment of the proposals, the private companies may be placed in contact with a financial institution for "potential financial cooperation."
In the energy sector, the commission is seeking proposals for sustainable energy solutions and, in critical raw materials, it's looking for investments in processing key minerals and resources needed for high-tech industries and renewable energy technologies
It's also seeking investments that modernize the manufacturing sector, support reconstruction with construction materials, strengthen the digital infrastructure with IT and digital investment and modernize and rebuild transport and logistics infrastructure.
Lviv SMEs shape demand for city's office space, CBRE analysis finds
Local small and medium-sized companies in Ukraine's western city of Lviv are driving demand for office space in the city, with these tenants choosing small areas that do not require additional capital investments and are ready for use, an analysis by real estate firm CBRE ukraine found.
At the start of the Russian full-scale invasion, Lviv's office market saw high demand as companies moved from central and eastern regions to the safer west.
By early 2023, however, as the security situation stabilized, this demand declined, and traditional leasing patterns resumed, CBRE said. Rental activity continued to decrease in 2024, influenced by the market's reliance on local IT and telecom companies.
The IT sector had been the main driver of office space absorption, prompting new office developments tailored to its needs. However, post-2022, demand from IT firms dropped due to hybrid work and the war, leading tenants to reduce space requirements, and putting pressure on the market.
In 2024, small leases of 100-300 square meters (sqm) were most common, with large deals scarce as international companies stayed put to avoid relocation costs and maintain stability, according to the analysis.
The volume of new office space supply that has entered the market in 2024 is about 12,000 sqm, which is 75% less than in 2023. Thus, the total supply of competitive office space in Lviv increased by 3% and amounted to 417,500 sqm, the analysis said.
Development activity in the office segment has slowed down significantly, but those objects that were already in the final stages before the start of the full-scale invasion, continue to be built. According to the developers, about 47,000 sqm will be completed next year.
In the coming years, significant growth in new office real estate supply is unlikely due to high vacancy rates, economic instability, and security risks, CBRE noted. A slight increase in vacancies could occur if the 47,000 sqm planned for 2025 comes to market.
For new high-quality projects to be viable, market conditions need to improve, including reduced vacancy rates and increased rental prices to levels profitable for developers. Office rental rates are expected to stay relatively stable unless major economic shifts occur, CBRE concluded.
Trump plans to end Ukraine war through negotiations, says nominee for national security adviser
Newly elected US President Donald Trump plans to bring Ukraine and Russia to the negotiating table to end the war, Voice of America reported, citing Trump's nominee for national security adviser, Michael Waltz.
"The president has made it clear that he wants to bring both sides to the negotiating table," Waltz said, adding: "He is focused on ending the war, not continuing it."
The sentiment was echoed by Finland's President Alexander Stubb, who said during an interview with Bloomberg that he believes Trump is committed to achieving peace in Ukraine.
Discussing his call with Trump, Stubb stated: "We in Europe, as well as in the whole world, need to understand that Trump is very serious about getting a peace deal sooner rather than later."
Commenting on the news, Ukraine Presidential Adviser Mykhailo Podolyak wrote on X that "forcing Ukraine to negotiate on any unfavorable terms (about which the Western media constantly publish marvelous insights) looks extremely strange," adding that achieving peace at the expense of Ukraine is an "absurd moral imperative."
Ukraine can't trademark 'Russian warship, go f**k yourself', EU court rules
Ukraine cannot register the phrase "Russian warship, go f*** yourself" as a European Union trademark because it is a political message, the EU General Court ruled on Wednesday.
"That phrase, which has become a symbol of Ukraine's fight against Russian aggression, is not perceived as an indication of a commercial origin," the court said in a press release.
The phrase gained fame when a Ukrainian border guard directed it at the Russian cruiser Moskva during its attempt to seize Snake Island, a small islet in the Black Sea, at the very beginning of the Russian full-scale invasion.
The court upheld a lower tribunal's ruling, saying: "The Court observed that a sign is incapable of fulfilling the essential function of a trademark if the average consumer does not perceive, in its presence, the indication of the origin of the goods or services, but only a political message."
The Administration of the State Border Guard Service of Ukraine sought trademark registration for a wide range of goods as well as for publishing, education, entertainment, and sports services, the court said.
Ukraine receives $1.35 billion grant from US for social, humanitarian spending
Ukraine has received a $1.35 billion in grant funding from the US for social and humanitarian expenditures, in particular to ensure the payment of salaries to teachers, Ukraine's Finance Ministry said.
The US government provided the funding through the United States Agency for International Development (USAID) and in coordination with the departments of Treasury and State, the ministry said in a press release on Wednesday.
The funds were directed to Ukraine's state budget through the World Bank's Public Expenditures for Administrative Capacity Endurance (PEACE) project.
"Since February 2022, direct budget support from the United States has reached $28.2 billion, marking the largest financial assistance to Ukraine from any country in the world," Ukraine's Finance Minister Sergii Marchenko said.
For this year alone, budget support from the US is set at $7.8 billion, of which $5.2 billion has already been disbursed, as per the statement.
Ukraine reconstruction hindered by corruption, Neo Eco project manager says
French firm Neo-Eco Project Manager Bart Gruyaert said that he has faced corruption when working on rebuilding destroyed apartment blocks in Gostomel, outside Kyiv.
During an interview with AFP — syndicated by Barron's — Gruyaert said that the local military administration demanded that Neo-Eco transfer project funds into its own account, under the pretense of overseeing the project directly, a request the company refused.
Following Neo-Eco's refusal to make the bank transfer, local administration started adding new conditions to the contract to incentivize the company to "give envelopes" to the right people, Gruyaert alleged. After the company abandoned the project in September 2023, Ukrainian investigators uncovered a system of "embezzlement" in the Gostomel military administration and accused its head Sergiy Borysiuk of appropriating UAH 21 million ($470,000) that was directed for the reconstruction of houses and apartments.
Borysiuk was later dismissed by Ukraine President Volodymyr Zelensky after allegations surfaced, but the case highlighted broader issues of corruption that have emerged during the war. While Ukraine has stepped up its efforts in combatting corruption, the ongoing conflict presented officials with new opportunities for illicit enrichment.
Despite its experience in Gostomel, Neo-Eco is still working on several other projects in Ukraine, and encourages other foreign investors to get involved. However, the firm now prioritizes working in cities where it is confident it will not face any setbacks. Ukraine is "making a lot of projects" on corruption, Griyaert commented, adding that his company had to learn how to "zigzag between the various obstacles."
Around 500 corruption cases have been investigated this year and 60 convictions secured, according to the National Anti-Corruption Bureau.
Blinken says North Korean involvement in Ukraine requires 'firm response'
US Secretary of State Antony Blinken said on Wednesday that the involvement of North Korean troops in the war in Ukraine "demands, and will get, a firm response," without elaborating.
Speaking to reporters beside NATO Secretary General Mark Rutte at the alliance's headquarters in Brussels, he also stated the Biden administration would increase its support for Ukraine and work to strengthen the alliance in the months leading up to Donald Trump's return as president.
Rutte said more has to be done to ensure Ukraine can stay in the fight.
"Particularly, this is something we also discussed this morning, because now with the North Koreans being active in Ukraine. And this is coming at a cost," Rutte said.
Rutte added that, apart from North Korea, China and Iran have also been active in supporting Russia's war effort in different ways.
"So what you see here, and this is what we discussed this morning, that the Euro-Atlantic and the Indo-Pacific: these are not two separate theatres. This is all getting more and more combined," Rutte said.
On Tuesday, US State Department spokesperson Vedant Patel said at a press briefing that he could confirm that over 10,000 North Korean soldiers "have been sent to eastern Russia, and most of them have moved to the far western Kursk Oblast, where they have begun engaging in combat operations with Russian forces."
SCMP: Trump might end Ukraine war, but there won't be any winners
As the war in Ukraine enters its third year, the urgency to end the conflict has grown, especially with US President-elect Donald Trump's pledge to quickly bring peace, founder of London-based think tank Global Political Insight Alexander Clackson wrote in an op-ed for South China Morning Post.
At the same time, he wrote, it is increasingly evident that there will be no winner.
Trump's diplomacy could bring certain gains to all parties, Clackson argued. Framed as a historic peace deal, it would be touted as saving lives and restoring stability. For Russia, securing Ukraine's neutrality and recognition of annexed territories would achieve some goals.
Yet, despite these gains, the war has fallen short of Putin's ambitions for regime change in Kyiv. Even with a peace agreement, Russia's political and economic isolation would continue, hampering growth, the author wrote.
For Ukraine, peace would end immediate suffering but at a significant cost, according to Clackson.
The loss of up to 25% of its territory would be a severe blow, and the road to economic recovery would be long. A neutral status, likely part of any settlement, would prevent Ukraine from pursuing NATO membership and limit EU prospects. This tragic outcome might have been reached without war, sparing the widespread devastation, Clackson wrote.
The West, particularly the US and Europe, must face the reality of a neutral Ukraine as a compromise for peace, Clackson noted.
Investor attention drives return and volatility spillover effects during geopolitical events such as Ukraine war, study finds
Investor attention significantly influences return and volatility spillover effects among asset classes, particularly during geopolitical events like the Russia-Ukraine war, a study by a group of researchers from New Zealand's Lincoln University and Auckland University of Technology found.
The analysis groups 26 asset classes across six markets to assess the spillover effects before and after the Russian invasion. In the pre-war period, stock markets were the largest contributors to volatility spillovers, followed closely by currency markets. Post-invasion, currency markets overtook stocks as the primary source of volatility, highlighting the increased sensitivity of these markets to geopolitical upheaval. This pattern was observed for return volatility as well, emphasizing the impact of such events on financial market stability, according to the study.
The authors created a proxy to capture investor attention toward the Russia-Ukraine conflict and found that attention spiked on the day of the war's outbreak, later receding to pre-war levels. Notably, heightened investor attention was positively correlated with increased volatility spillovers, particularly at extreme levels. This suggests that greater investor focus amplifies market risk across various assets and reflects how market uncertainty can drive attention peaks, the study found.
The findings also indicate reverse feedback, where market turbulence heightens investor attention. By recognizing the influence of investor attention on market interconnections, policymakers can implement strategies to mitigate potential vulnerabilities. This would enhance market resilience and contribute to a more stable investment environment during periods of geopolitical and economic uncertainty, the authors noted.
Ukrhydroenergo, the Ukrainian hydro power generator, said general director Ihor Syrota met in Warsaw with Canada's AECON and the UGP project institute to "discuss the roadmap for implementing the Kaniv PSP construction project."
Kristina Mikulova, head of the Regional Hub for Eastern Europe at the European Investment Bank (EIB), said she met with Internal Affairs Minister Ihor Klymenko to discuss next steps in a €52 million investment that will bring Ukraine into the EU's unified #112 emergency system.
Maksym Maksymenko, co-head of Energy at Ukrainian law firm Avellum, announced a "Tips for Investors" series of articles exploring the "landscape of the electricity market" and the roles of its key players.
Viktor Zinchenko, communications director at DTEK, the largest private investor in Ukraine's energy sector, applauded the launch of the film Fight For Light, which "documents the stories of DTEK Energy thermal power plant workers who work under fire."
Viacheslav Klimov, co-founder of NOVA Group, announced the first charter flight of the new SuperNova Airlines, operated with the company's own Boeing 737-800 cargo aircraft.
