Contents
The Reporter's Notepad: UK development finance institution British Institutional Investment (BII), which only recently added Ukraine to its mandate, tells URN Daily about plans for after the war.
Just The Facts: US considers $20 billion loan to Ukraine, invasion inflicts $65 billion in damage, IMF review enables $1.1 disbursement, a possible North Korean military presence stirs up international concern, and more.
A Penny for Their Thoughts: Putin may have floated a trial balloon about potential peace talks, says one newspaper column, while another says Putin has little incentive to negotiate.
Sober Second Opinion: An in-depth ongoing social study seeks out, for the first time, the thoughts and feelings of average Ukrainians on reconstruction: "Without recovery and rebuilding, we will lose half the population."
The Rebuilder's Social: Featuring posts by BDO CEO Vira Savchenko, Ukrainian think tank Cedos, the Ministry of Finance of Ukraine and more.
Exclusive
Dear URN Daily subscribers,
Ukraine Rebuild Newswire had an email exchange with British International Investment, the UK development finance institution that extended its mandate to Ukraine last year for the first time. Here's the story:
UK's BII ready to pivot from trade finance to 'rebuilding business' in Ukraine when war ends, managing director says
UK development finance institution British International Investment (BII), which has so far focused on trade finance in its new mandate to help Ukraine, will shift to rebuilding private business as soon as the war ends, its managing director said.
"During the war, we are helping businesses simply to survive," Colin Buckley, managing director and general counsel of BII, told Ukraine Rebuild Newswire (URN). "After the war, BII plans to invest in business rebuilding and expansion."
"We expect BII’s role, alongside other development organizations, to pivot following the war from providing capital to endure the war to mobilizing private investment," he added.
Last month, BII pledged to allocate up to £30 million of support to the European Bank for Reconstruction and Development’s (EBRD) Trade Facilitation Programme in Ukraine, on top of a 2023 commitment of $25 million to the Global Trade Finance Program of the International Finance Corporation (IFC).
Both allocations fall under the £250 million in investments announced in June of 2023 when the UK government added Ukraine to the mandate of the development finance institution. BII has traditionally focused on Africa, South Asia, Southeast Asia and the Caribbean.
Buckley told URN in an email exchange that BII plans to continue working closely with the EBRD, the IFC and other development finance institutions in Ukraine, as we recognize our limited prior experience in the Ukrainian market and the need to align with key partners."
"We are aiming to better understand sectors that are likely to be key during reconstruction"
However, he said BII is prepared to invest more directly in the country as well, even as the war continues.
"Rather than looking at particular investments, we are aiming to better understand sectors that are likely to be key during reconstruction," Buckley said.
The investment focus after the war will "align with our approach in other markets - to invest in private sector businesses within critical sectors to bring about positive environmental, social and economic change.
He said BII will support "private sector investment in green and resilient infrastructure, including digital infrastructure" as well as the energy market to reduce European reliance on Russia and support sustainable growth.
It will also support "financial services, helping to improve lending conditions and enabling access to financial services for internally displaced people; and agriculture, supporting global food security and reducing immediate needs across the country."
Russian invasion has inflicted $65 billion in damage on Ukraine's ecosystem, prime minister says
Damage to Ukraine's ecosystems has totaled $65 billion since the 2022 invasion, including widespread destruction of forests and wetlands, plus pollution, Prime Minister Denys Shmyhal said at a weekend conference in Helsinki.
The war has affected one-third of Ukraine's forests, 20% of its protected areas and poses a threat to 35% of its biodiversity, the prime minister's office said in a communique following the conference, which came amid a Ukrainian government visit to Finland.
The government also said the destruction in June of last year of the Kakhovka hydroelectric power plant followed by widespread flooding, destroyed almost 10,000 hectares of wetland.
“In France, at the end of the First World War 106 years ago, 1,200 square kilometers were identified as contaminated by the fighting," Shmyhal said. "To this day, any activity, including grazing, is prohibited there. In Ukraine, the area potentially contaminated by mines and shells is about 140,000 square kilometers. This means that the Ukrainian scale is dozens and dozens of times larger."
US ready to offer up to $20 billion as part of G7 loan to Ukraine, sources tell FT
The US government is prepared to offer up to $20 billion as part of a G7 loan to Ukraine, with the repayment tied to profits from Russia’s frozen assets, the Financial Times reported, citing unnamed sources familiar with the discussions.
The loan talks are gaining urgency as officials aim to finalize funding for Ukraine before year-end, amid concerns US support might dwindle if Donald Trump wins the upcoming election, the newspaper said.
G7 nations have been negotiating the $50 billion loan, initially agreed in June. The US had planned a smaller contribution due to uncertainty over the EU's ability to keep Russian assets frozen for three years. However, US officials have now indicated they will provide the full $20 billion, even if Hungary continues to block the extension of EU sanctions on Russia.
While the EU has approved a contribution of up to €35 billion for the loan, further guarantees are needed. G7 finance ministers are expected to outline the loan’s distribution later this month. Despite progress, no final agreement has been reached, and the US is consulting with Congress and Ukraine on repayment terms. The UK, Canada, and Japan will cover the remaining funds.
Finnish investment in Ukraine's reconstruction will focus on energy, construction, digitization, Ukraine's PM says
Finnish investment in the reconstruction of Ukraine will focus on the construction and energy sectors, as well as digitization and advanced telecommunications, according to Ukraine's government.
The Telegram channel of Ukrainian Prime Minister Denys Shmyhal, who visited Finland on Friday, said more than 20 Finnish investment projects have received support from the Finnish government.
"We clearly understand in which sectors investments will be particularly successful for business and useful for Ukraine," Shmyhal's channel posted.
These include advanced construction technologies, the development of renewable energy, smart networks and energy storage systems, as well as sixth-generation wireless communications technologies. Education investments will emphasize digitization and synergy between government and private sectors, according to the post.
IMF board finishes fifth review of Ukraine arrangement, enabling $1.1 disbursement
The International Monetary Fund's executive board finished its fifth review of the IMF's arrangement for Ukraine, enabling a disbursement of $1.1 billion to the nation's budget, bringing the total disbursed under the program to US$8.7 billion.
"Ukraine's performance and commitment under the program continues to be strong. All quantitative performance criteria for end-June were met, and those for end-September are expected to have been met," the IMF said in a communique on Friday.
The 48-month Extended Fund Facility arrangement, approved in March 2023, provides Ukraine access to about US$15.5 billion, as part of a broader US$151.4 billion international support package. The program is meant to maintain fiscal, external, and macro-financial stability while supporting reconstruction.
The Ukrainian government said in a separate statement that it met all five benchmarks set out for the fifth review, including developing a methodology to assess the effectiveness of tax privileges, amending the Customs Code and others.
France warns involvement of North Korean troops in Ukraine would mark serious escalation
The involvement of North Korean troops in the war on the side of Russia would be a serious escalation of the war against Ukraine, France's Foreign Minister Jean-Noel Barrot and Ukraine's Foreign Minister Andrii Sybiha said Saturday at a joint press conference in Kyiv, as reported by Reuters.
"It would be serious and push the conflict into a new stage, an additional escalatory stage," Barrot stated.
Sybiha said the risk of escalation from the move was "huge," adding: "There is a big risk of (the war) growing out of its current scale and borders."
Ukraine's President Volodymyr Zelenskiy said on Oct. 17 that North Korea was preparing to send 10,000 soldiers to join Russian forces, as quoted by Kyiv Independent at the time.
South Korea's National Intelligence Service said on Friday that North Korea had already deployed 1,500 special forces troops to Russia. NATO Secretary General Mark Rutte, however, said later that day that he could not "confirm reports that North Koreans are active now as soldiers engaged in the war effort."
Earlier last week, Zelensky said he had been briefed on the "actual involvement" of North Korea in his country's war with Russia, without providing further details.
The Kremlin and Pyongyang deny the allegations.
US grants $9 million for fight against corruption, reparative justice and UN Women in Ukraine
The US State Department said it will grant a total of $9 million for various initiatives in Ukraine to support the fight against corruption, reparative justice for Ukrainians, and advance the position of women via the UN Women office.
Of the total, $5 million will be directed towards supporting civil society organizations and investigative journalists whose work focuses on combatting corruption in the government, the State Department said in a press release on Sunday, following a visit of Under Secretary of State for Civilian Security, Democracy, and Human Rights Uzra Zeya to Kyiv.
The State Department also awarded $2 million to the International Organization for Migration to support reparative justice for Ukrainians, and a further $2 million to to UN Women for a new partnership to advance Women, Peace, and Security in Ukraine.
Almost a third of EBA Ukraine businesses say they're prepared for business with the EU
Some 31 percent of businesses in the Ukraine-based European Business Association said they are ready to operate within the European Union market, while 38% said they are mostly ready, the EBA said.
About 26% said they were partially prepared to do business within the EU and only 5% said they are mostly unprepared for it, according to the survey results. The EBA includes 900 mostly influential businesses.
However, member companies were less certain of the country's progress as a whole toward meeting EU standards. 52% rated the progress "satisfactory," while 5% consider it "significant." However, 42% rate it as "insignificant," and 2% see no progress at all.
Longer reads
The Washington Post: International telecom deal a sign of hope for Ukraine’s battered economy
The Washington Post covers at length the backing of the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) for a deal supporting the merger of Ukraine’s Lifecell mobile provider with the fixed-telecom network Datagroup-Volia.
The institutions, which are each providing $217.5 million in loans to a consortium led by French billionaire Xavier Niel for the deal, are effectively delivering a "vote of confidence" in Ukraine's economy even amid war, the article states.
“If [investors] see that others are buying, that’s social proof or business proof that someone has done their due diligence, the regulatory framework worked out, the financing is there — that you can buy things in Ukraine and you can invest in Ukraine,” Tymofiy Mylovanov, head of the Kyiv School of Economics, says in the article.
“And frankly that’s exactly what Ukraine needs — it needs some confidence.”
Zn.ua: What's wrong with the gambling industry and what the government wants to do about it
The legalization of the gambling market in Ukraine, which started in 2020, has fallen short of expectations, leading to a chaotic and opaque industry rather than a regulated one, Ukrainian newspaper Zn.ua writes in an analysis piece.
Instead of developing a transparent framework with safeguards for players, the industry has become increasingly toxic, with gambling operators exploiting legal loopholes, resulting in substantial financial losses for citizens, estimated at around UAH 200 billion ($4.9 billion) annually, the article states.
Public sentiment reflects dissatisfaction, with a recent survey indicating that nearly half of Ukrainians believe the legalization decision was misguided. The lax regulatory environment has not only facilitated corruption but also failed to provide adequate protection against gambling addiction.
In response, Ukrainian authorities plan to overhaul the gambling sector, including new licensing and taxation rules, aimed at transforming the industry into a responsible and regulated environment to mitigate the harmful effects of gambling, the article says.
Why should Putin negotiate?
An opinion piece in The Spectator sums up the pros and cons of continuing the war in Ukraine, from Russian President Vladimir Putin's point of view, and suggests he is more likely to continue fighting than negotiate piece.
The article, written by Sergey Radchenko, the Wilson E. Schmidt Distinguished Professor at the Johns Hopkins School of Advanced International Studies, says that the financial strain of the war, plus the mounting loss of lives and the risk of involving NATO are points that could lead Putin to sue for peace.
On the other hand, though, Russia has a military advantage and has made strategic gains recently. Putin also expects support for Ukraine in the West to decline as time goes on and the war is strengthening his influence in Central Asia and Europe.
"A practitioner of realpolitik, Putin sees this war as an important investment that is just beginning to pay dividends," the article states. "The chips are down. He does not need halfway solutions. He has spent money and lives. He is hoping to reap power and glory, and to secure his historical legacy as the czar who brought Ukraine back home."
A Tacit Peace Proposal from the Kremlin?
Anders Aslund, senior fellow at the Stockholm Free World Forum and Adjunct Professor at Georgetown University, points to an article in the Russian newspaper Nezavisimaya Gazeta as a possible "trial balloon" for a possible Kremlin proposal for peace negotiations in Ukraine.
The article, by newspaper owner and editor Konstantin Remchukov, who's close to the Kremlin, hints that Russia is open to negotiations about the nuclear threat, specifically addressing US President Joe Biden, Aslun writes.
In the article, Remchukov signals three tentative Russian concessions, Aslund states.
First, he dismisses the idea that Russia’s greatness depends on control over Ukraine. Second, he suggests Russia’s territorial ambitions are now limited to the Donetsk, Luhansk regions, and Crimea. Finally, Remchukov acknowledges Ukraine's right to statehood.
"Remchukov is no Kremlin decision-maker, but he is one of its top and most nuanced publicists," Aslund wrote. "His key point is that Russia wants negotiations, but with the West, not with Ukraine, and preferably Biden because he is so afraid of nukes."
As war continues, many Ukrainians feel dismissive of reconstruction, study suggests
Many Ukrainians feel reconstruction is pointless while the war continues, while others are reluctant to discuss the possibility of recovery while Russia still occupies part of Ukraine's territory, and others say reconstruction simply will never happen, according to a 114-page report by Ukrainian think tank Cedos.
Even when the war ends, according to many Ukrainians, corruption may pose an obstacle to reconstruction, as well as a lack of labor as refugees abroad refuse to return and a possible lack of funding from international donors.
Since the 2022 invasion, Cedos has interviewed Ukrainians across the country and abroad in an attempt to capture their changing "emotional states, everyday lives and routines, public opinion, interpersonal relationships, socioeconomic situations, employment, civil activity" and more.
In the latest round of interviews, the sixth since the invasion, interviewers for the first time asked questions about the reconstruction and, more often than not, found a reluctance to address the issue or apparent pessimism.
Among those concerned with reconstruction, "critical infrastructure and other facilities or structures necessary for people's lives were mentioned as priority areas," the report found. "One of the key factors in determining what to rebuild was the proximity of settlements to the front lines and the potential threat of occupation or the front line moving closer."
Attitudes toward reconstruction were often marked by dismissal:
Or urgency:
BDO in Ukraine CEO Vira Savchenko posted a white paper her team has prepared along with the country's European Business Association on "proposals for changes in legislation for sustainable economic 🇺🇦 recovery and integration into the EU 🇪🇺 single market."
Ukrainian think tank Cedos published the "sixth wave" of their studies of the thoughts, feelings and everyday activities of Ukrainians, both in the country and abroad, since the 2022 Russian invasion. (As covered above in The Sober Second Thought).
The Ministry of Finance of Ukraine celebrated a number of milestones it says were set when Ukraine passed the fifth review of the International Monetary Fund's Extended Fund Facility Arrangement for Ukraine.
The Ukrainian Chamber of Commerce and Industry posted about a meeting between French and Ukrainian businesses earlier this month in Kyiv that included representatives of Alstom, Engie, Schneider-Electric, Egis, Destinus and others on the French side and DTEK, Ukrzaliznytsia, Ukrenergo and others on the Ukrainian side.
The official Telegram channel of Ukrainian Prime Minister Denys Shmyhal posted a review and photos of his recent trip to Finland, including discussions with investors and government officials about the reconstruction of Ukraine.
