Contents
The Reporter's Notepad: World Bank official says Ukraine has largely dodged "disorganization," an effect that it says is one of the longest-lasting types of economic effects of war, easing the task of reconstruction.
Just The Facts: Labor groups say unions have been depleted of members and workers are vulnerable to exploitation in reconstruction. Danish export agency shifts focus in Ukraine. Ukraine aims to set up a "food hub" in Oman to target East African markets.
Here's What They Think: As the media senses significant changes ahead for the Ukraine-Russia war, the avalanche of opinion pieces continues, particularly in the US. The Washington Post calls for Biden to use his remaining days in office to hit Russia hard, and The Hill wants speedy NATO membership for Ukraine.
Sober Second Opinion: A prominent think tank has published an online tool that lets viewers track daily and cumulative trends of Russian missile attacks, including the types and number of missiles launched and the success of Ukrainian countermeasures.
The Rebuilder's Social: AHK Ukraine posts a position paper to social media explaining its reservations and recommendations about military mobilization, while the American Chamber of Commerce in Ukraine also highlights the issue. And JETRO, which just opened its Kyiv offices, says Ukrainian businesses can now register their products for the Japanese market free of charge.
Meeting Notes
Dear URN Daily subscribers,
URN Daily readers learned on Oct 18 that the Ukrainian bond market was reacting favorably to Donald Trump's vows to end the war in Ukraine.
Now, we'd like to point out that the rest of the world is only just catching up with the story, with Bloomberg covering it only on Oct 23 (viewable in original here or summarized in Just the Facts below).
Expect this to happen often, like when we reported almost two full days before the rest of the world that Ukraine was expanding its Black Sea insurance facility from grain to all other products.
Or when we beat the rest of the media with the news that Kingspan planned to open 7 factories in western Ukraine. And more.
These exclusive news stories are inevitable at URN Daily - we are constantly looking for news related to the reconstruction, even in the out-of-the-way nooks and crannies that the media ignores.
Back to today ...
At URN Daily, we found particularly interesting the comments by Carlis Smit, the World Bank's program leader for economic policy for Eastern Europe, at a seminar this week held by the IMF and World Bank in Washington as part of their annual meetings. Here it is, in news story form:
Ukraine has dodged one of the longest-lasting economic effects of war, World Bank official says
Ukraine has dodged some of the longest-lasting economic effects of war, easing the task of reconstruction, as the government and international institutions have ensured the continuation of services to the populace throughout the Russian invasion, a World Bank official said.
"This is a major outbreak of war in Europe, and we have seen not a single refugee camp," said Karlis Smit, the World Bank's program leader for economic policy for Eastern Europe. "This is a unique aspect, meaning that the response - economic policy and government functionality - played a critical role."
Smit said studies of war in Syria and other countries have shown that the most difficult impact to overcome is the "disorganization" caused by the severing of people's ties with government.
"From the experience of previous conflicts, we see that the damage done to economic structure is not only the outflow of refugees and destroyed productive capacity factories," Smit said. "It's this 'disorganization' - that invisible part - that causes the most significant challenge."
"This disorganization very quickly spills over to the breakdown of government services, you lose capacity, and that is very difficult and very costly to recover," he said.
Smit spoke at a seminar hosted by the World Bank and the International Monetary Fund in Washington DC this week as part of the annual meetings of the international institutions. The seminar, called "How to Stay Resilient During the War," recapped many of the initial efforts by international lenders and donor nations to keep Ukraine solvent and operating during the early days of the Russian invasion of 2022.
"So the first thing to do is to maintain continuity of the government services and functions," Smit said. "An example was when millions of people crossed into Poland to safety, and the ATM system works. So working with the government and the central banks, particularly in Poland, to make sure there is confidence in the banking system that they would honor these transactions. That was the first kind of 'billion-dollar equivalent' backing from the government of Poland."
He also emphasized the importance of carrying out reconstruction work now, even before the war ends, to prevent that "disorganization" that disconnects populations from their government.
"Even if the war is still ongoing, it is important that they are thinking about recovery, that the energy system remains independent, that some of the factories are working in Ukraine, that agriculture is continuing to work," he said. "The bridges that were destroyed need to be quickly repaired for the trains to run and the economy to work. So the lesson is that these phases need to work concurrently."
Workers in Ukraine left vulnerable to exploitation as massive reconstruction needs loom, global labor groups say
The war and labor crisis in Ukraine have drained trade unions of members and membership fees, leaving workers vulnerable as the country prepares for the massive, labor-intense undertaking of reconstruction, said IndustriALL, the Geneva-based global union federation.
The organization, which counts 50 million members in 140 countries as well as 13 affiliates in Ukraine, said trade unions will be vital to protecting workers' rights for the reconstruction who face risk to life on top of low wages and extreme working conditions.
"Raised taxes have worsened the situation, placing additional strain on Ukrainians. Meanwhile, the country is losing highly skilled employees, who are essential for its future restructuring," IndustriALL said. "Unions have also highlighted a lack of internet, electricity, coal, and other essential winter items as major challenges. Women have also been forced to go underground into mines as men are fighting in the war."
Systems are needed to prepare for the involvement of the trade union movement in reconstruction, IndustriALL General Secretary Atle Høie said during a meeting last week with IndustriALL Ukrainian affiliates, as per a statement from the union.
"We are ready to fight the challenges that are in front of us," said Valeriy Matov, president of the Atomprofspilka union. "We completed the repairs at plants and they are being used. The work is very slow and sometimes not of the highest quality, but we will solve problems one by one. We are also creating some protection systems."
Representative of the International Labour Organization (ILO) Casper Edmonds said the ILO is active in supporting workers in Ukraine.
"We are documenting workers' rights violations, we are following the situation in the mining and energy sectors and seeing that the situation is becoming worse for workers," Edmonds stated.
Edmonds further noted it is critical to focus on workers in the energy sector, who will need to be upskilled for the tasks ahead.
Unions' urgent needs include transformers, generators and financial assistance, they said, stressing they must be included in the reconstruction process, not only to protect workers but also to ensure that workers' needs are met.
"If unions are excluded, they fear the reconstruction effort may falter," IndustriAll said.
Ukraine, US sign $20 billion loan deal as part of G7 package
Ukraine's Finance Minister Sergii Marchenko and US Treasury Secretary Janet Yellen on Wednesday signed a deal on a $20 billion US loan commitment as part of the $50 billion loan package to Ukraine announced in June by the G7 group of countries.
The US government is expected to disburse the loan by the end of the year, Ukraine’s finance ministry said in a press release. The loan will be repaid using proceeds from frozen Russian assets.
On Tuesday, the European Parliament approved a loan of up to €35 billion to Ukraine as the European Union's contribution to the G7 loan.
Ukraine's finance ministry said assistance from the EU will now be less than €35 billion. The final amount will be adjusted considering the proposed financing from the remaining G7 countries, so the total will not exceed $50 billion.
Earlier on Wednesday, White House National Security Council officials said the US wants half of its commitment to be disbursed as economic aid and the other half as military aid, Reuters reported. The military component would require approval of the US Congress, the officials stated.
The UK said earlier this week it will provide a £2.26 billion loan to Ukraine as budgetary support for military spending under the G7 loan package. Canada has already provided CAD 5 billion as its contribution to the package, the finance ministry said Wednesday.
The G7 group includes the US, Japan, Germany, France, the UK, Italy, Canada, and the EU.
Danish export credit agency EIFO shifts focus to Ukraine's commercial sector amid funding boost
The Danish export credit agency, the Export and Investment Fund of Denmark (EIFO), is shifting its focus to Ukraine's commercial sector from public projects after receiving a significant funding boost for the country's reconstruction from the Danish state, an EIFO official said.
Kaare Stamer Andreasen, EIFO's finance director and a counselor at Denmark's embassy in Ukraine, said in an interview with Global Trade Review that EIFO's capacity in Ukraine is set to jump to DKK 2.8 billion ($405 million).
The Danish government earlier this month said it would allocate an additional DKK 800 million to the agency for medium to long-term deals in Ukraine, and hinted it will likely increase EIFO's capacity by a further $140 million in its state budget next year, GTR reported.
"Export credit agencies are very important in Ukraine as international commercial banks are still hesitant about getting involved," Andreasen stated. "The multilateral development banks are also very important and have a lot of monetary power, though their focus is more so on public buyers … that leaves an empty space for financing of private companies in Ukraine and for foreign companies wanting to invest in Ukraine. Here, I believe, is the biggest role for the export credit agencies to play."
EIFO, which paused operations in Ukraine in the first phase of the Russian full-scale invasion, resumed cover in the market in March 2023, after the Danish government set up a special Ukraine reconstruction scheme that would compensate the agency for losses.
EIFO initially tried to strike an even balance of private and public projects in Ukraine. Now, however, the agency is focused on the commercial sector as "we can move faster and our money goes further," Andreasen told GTR.
For now, commercial insurers remain reluctant to issue even short-tenor cover without state support and EIFO is using its "own books" to backstop commercial underwriters in Ukraine, according to Andreasen.
"We have allocated about €16 million, but it is constantly renewed as this is short-term credit for goods such as food or medicine," he said. "Given (the) credit period is generally between 30 days and six months, we can frequently issue new policies. We do this in partnership with private insurance companies, covering their risk 100%."
EIFO is also in talks with international banks about a large wind farm in Ukraine, with the Danish government having committed €380 million for the project earlier this year. The deal would support Danish technology exports.
Denmark's ECA is also considering a scheme to boost financing in rural parts of Ukraine, Andreasen said.
Ukraine proposes to set up food hub in Oman to tap East African markets
Ukraine Foreign Minister Andrii Sybiha on Wednesday proposed the establishment of a Ukrainian food hub in the Gulf state of Oman to allow the products to enter East African markets.
Ukraine is interested in developing relations with Oman and other Gulf states in a number of other areas, including trade, investment, food exports, and the development of renewable energy and technology, Sybiha said during a meeting with Oman's Economy Minister Saeed bin Muhammad bin Ahmed Al-Sakri, as per a statement from the ministry.
Sybiha said that despite the war and Russia's attacks on Ukrainian port infrastructure and civilian vessels, Ukraine remains one of the guarantors of global food security and expressed the country's readiness to remain a reliable partner for the Middle East and Africa in the supply of critical food.
The two ministers agreed that it is vital that a bilateral intergovernmental commission starts operating and to hold its first meeting. They discussed the possibility of sending mutual business missions to explore opportunities for cooperation and the creation of a permanent business council mechanism for the development of bilateral trade.
The pair also considered strengthening trade relations, concluding agreements on the avoidance of double taxation and preferential trade between the two countries, the statement read.
Prospect of Trump winning spurs rally in Ukrainian dollar bonds, Bloomberg reports
Fund managers have been buying Ukraine's dollar bonds on prospects that Donald Trump will the US presidential elections in November and take decisive steps to end the war in Ukraine, Bloomberg reported Wednesday.
Ukrainian notes have returned almost 6% in October, among the top performers in emerging markets worldwide, with prices nearing 50 cents on the dollar across the maturity curve, the report said.
Warrants that have payments tied to the performance of Ukraine's economy are trading at above 70 cents on the dollar, their highest since Russia's full-scale invasion in 2022, when they dropped below 15 cents.
The Trump effect on Ukrainian bonds was first reported by URN Daily, with Yuriy Butsa, governmental commissioner for Public Debt Management at the Ministry of Finance noting the effect last week.
Funds have been buying into the bonds on a bet that a Trump presidency may bring a quicker ceasefire, Dmytro Bozhko from Dragon Capital, one of Ukraine's most prominent investment firms, told Bloomberg.
"This idea is pretty widespread in the market," Bozhko said. "Especially, contingency bonds due in 2035 and 2036 are in focus," he added, referring to bonds issued after a debt restructuring agreement in August.
"The market is starting to price in the probability of peace talks being accelerated" either under a Trump presidency, or before it, said Thys Louw, a portfolio manager at Ninety One UK. "This has pushed Ukraine to get ducks in order so that they don’t get pushed into a bad deal," he added.
US defense secretary says intelligence shows North Korea has 3,000 troops in Russia
US Defense Secretary Lloyd Austin said he has seen evidence that North Korea has sent 3,000 troops to Russia, possibly for deployment in Ukraine, marking a potential escalation in the conflict.
"We are seeing evidence that there are North Korean troops that have gone to … Russia," Austin said during a visit to Rome on Wednesday. "What exactly they are doing is left to be seen. These are things that we need to sort out."
"We will continue to pull this thread and see what happens here," he said. "If they're co-belligerents — [if] their intention is to participate in this war on Russia's behalf — that is a very, very serious issue."
He said the effects of such participation would be felt in Europe and in Asia.
Earlier this week, South Korea said it may consider supplying weapons to Ukraine over alleged indications that North Korean soldiers are preparing to assist the Russian invasion.
The remarks came after South Korea's National Security Council (NSC) had an emergency meeting on Tuesday to explore responses to North Korea's expanding military ties with Russia.
"Our government called for an immediate withdrawal of North Korean troops, and if the current military collusion between North Korea and Russia continues, we will not sit idle and will respond sternly together with the international community," NCS said in a press release.
EBRD to provide €5 million grant to Ukraine's Kryvyi Rih, city official says
The European Bank for Reconstruction and Development (EBRD) will provide a €5 million grant to the southern Ukrainian city of Kryvyi Rih, the city's First Deputy Mayor Yevhen Udod said.
"These funds will be used to continue important works to restore the heat and water supply systems, which suffered significant damage due to a series of water hammers and corrosion following the collapse of the Kakhovskaya Dam in June 2023," Udod said Wednesday in a post on Linkedin.
Funding will be allocated within the framework of EBRD's program to increase the resilience and recovery of Kryvyi Rih, Udod said, without elaborating.
In June, the EBRD approved a senior loan of up to €12 million to provide emergency liquidity support to Kryvyi Rih.
Since the start of the Russian full-scale invasion in February 2022, Kryvyi Rih has suffered heavy bombardments, including missile and drone attacks targeting infrastructure such as dams, bridges, and industrial sites. The city holds a critical position due to its role as an industrial hub, especially for iron and steel production.
Lithuania to allocate €1 million to support Ukraine's EU integration
Lithuania's government on Wednesday pledged to provide €1 million for the implementation of the European Union-backed project aimed at supporting Ukraine's European integration process.
The project, the EU Integration Support Facility for Ukraine, aims to help Ukraine's public sector institutions manage and coordinate the EU integration processes, translate EU legislation, and ensure that the public is informed about Ukraine’s European path, Lithuania's foreign ministry said in a statement.
The European Commission has allocated €10 million for the implementation of the three-year project. Lithuania will allocate the €1 million from its Development Cooperation and Humanitarian Aid Fund.
"I really know that Ukraine, just like Moldova, will definitely join the EU," said Lithuania's Foreign Minister Gabrielius Landsbergis. "The process will not be easy. Thus, Lithuania will work shoulder to shoulder with the European Commission to help Ukrainian ministers, vice-ministers, parliamentarians, and negotiators understand the scale of the challenge and prepare for it properly."
The funding from Lithuania will be allocated in three stages: €330,000 in 2025, €330,000 in 2026, and €340,000 in 2027.
Earlier in October, Lithuania's government approved the allocation of €13 million to finance reconstruction projects in Ukraine.
Biden has a 76-day window after the election to get Ukraine right
US President Joe Biden, in the 76 days he will still have in office after next month's election, could alter the course of the war in Ukraine by allowing Ukraine's military to use US weapons to strike Russia, according to an opinion piece in The Washington Post.
"On Ukraine, he’d be wise to use the interregnum as an opportunity to turn the tables on Russian dictator Vladimir Putin in a war tilting in Russia’s direction," writes columnist Lee Hockstader.
"Under a scenario much discussed among Washington’s NATO allies in Europe, Biden could immediately authorize Kyiv to unleash long-range strikes using U.S.-supplied Army Tactical Missile Systems, known as ATACMS, deep inside Russian territory."
The column argues that the UK, France and Germany would likely agree to such a move and possibly contribute with similar actions of their own, further ramping up pressure on Russia.
Invite Ukraine to join NATO and win the peace in Europe
The West should invite Ukraine to join NATO as the surest way to secure peace in Europe as the war with Russia approaches its third anniversary, according to an opinion piece in The Hill by University of Ottawa law professor George Monastiriakos.
"If the West ups the ante by inviting Ukraine to join NATO and imposing a no-fly zone over western Ukraine, Russia will either buckle with indecision, as it did when Evgeny Prighozin marched toward Moscow, or do nothing, as when we crossed all the other so-called 'red lines' drawn by Putin," the article states.
It also argues that Putin will not deliver on his repeated threats to go nuclear if the war escalates.
"Despite the Russian government and its mouthpieces threatening to nuke the West, Russia is unlikely to use nuclear weapons in a conflict over Ukraine. First, the annexation of Ukrainian territory — mostly depopulated and destroyed villages in eastern Ukraine — is not existential for the Russian Federation. Second, a nuclear exchange would be the end of Putin, who seeks self-preservation above all else."
CSIS: Assessing Russian Firepower Strikes in Ukraine
The Center for Strategic & International Studies (CSIS) has published an "interactive dashboard that explores the daily and cumulative trends of Russian missile attacks," including the types and number of missiles launched and the success of Ukrainian counter-measures: https://www.csis.org/programs/international-security-program/futures-lab/russian-firepower-strike-tracker-analyzing.
"On average, 23.2 missiles were launched daily, with the median number of daily launches recorded at 17 missiles," the think tank says in launching the tracker. "This indicates that while the daily launch rate typically hovered around the mid-20s, there were numerous days with significantly higher activity. Notably, there were 17 days during the study period when missile launches exceeded 82 missiles in a single day. These high-intensity launch days correspond to specific military operations, strategic offensives, or responses to critical developments on the battlefield, reflecting moments of heightened conflict intensity."
AHK Ukraine - German-Ukrainian Chamber of Industry and Commerce published a seven-page position paper outlining "critical issues with the employee reservation process and proposing urgent solutions to protect businesses during mobilization."
At the same time, the American Chamber of Commerce in Ukraine highlighted that 84% of its members have employees in the Ukraine armed forces, adding that "military service deferment is the top challenge for businesses in Ukraine."
The Ministry of Finance of Ukraine said it received the $1.1 billion tranche it was expecting after the fifth review of the International Monetary Fund's arrangement with Ukraine, adding that the country has now received $11.3 billion from the IMF since the 2022 Russian invasion.
The Ministry of Economy of Ukraine announced it will co-host an event with the Kyiv School of Economics, funded by the European Union, on Nov 6 to update stakeholders on the "Implementation of the Ukraine Plan Indicators for 2024."
The Kyiv office of the Japan External Trade Organization (JETRO), which opened earlier this month, posted that it has launched a dedicated page on its "e-Venue" site, allowing Ukrainian businesses to register their products for the Japanese market free of charge.
