Today's Contents
Reporter's Notepad:
- The 'early-mover' advantage lures building materials makers
Just The Facts:
- After speaking to Putin, Trump says talks on ending Ukraine war to start 'immediately'
- US Defense Secretary says Ukraine's return to pre-2014 borders 'unrealistic,' rules out NATO membership
- US Treasury Secretary visits Kyiv, presents economic partnership deal to Zelensky
- Swiss government sets aside CHF 500 million for Ukraine rebuild projects involving Swiss companies
- EBRD to provide portfolio risk-sharing facility to Ukraine's Oschadbank to support energy investments
- Ex-Polish central banker, an audit expert and a development finance specialist to form Ukraine Facility Audit Board
- Ukraine's sole graphite miner illustrates potential for US investments and low likelihood of quick profit: Reuters
Here's What They Think:
- New York Post: Time to get realistic about Ukraine with Trump now in power
- Eurasia Review: The Ukraine war is transforming Russia just as profoundly as it is Ukraine
Sober Second Thought:
- War-time ban on flights over Ukraine and Russia has increased global flight CO2 emissions by 1%, study finds
Dear reader,
It's a US-centric day in Ukraine today - read all about it in the Just the Facts section below. We thought we'd take a little detour first to the Baltics though, via Ukraine:
URN Daily attended a webinar yesterday afternoon organized by Ukrainian law firm Integrites and Latvia-based TGS Baltic. Such events rarely generate hard news, but they usually produce interesting and useful observations.
Here in Reporter's Notepad, we relay those comments. The interesting points of the Integrites-TGS Baltic webinar seemed to center on the "early mover advantage" - the arguments for investing in the reconstruction of Ukraine now, rather than when the war ends.
Even busier now than before the war
"We are supporting, today, more than five projects for the construction of plants in Ukraine," said Illya Tkachuk, senior partner and head of corporate and M&A at Integrites. "I must say that we never had that many construction projects before the war."
Many of those plants will manufacture "construction materials and everything that relates to constructiona because evidently there will be high demand. To build the plant, you need to invest time and effort. You have to spend the time now if you want to reach the market when it's open."
Although Tkachuk didn't detail the projects Integrites is working with, Anna Pogrebna, a ,partner in real estate, construction and infrastructure, said Finland's Peikko Group, which manufactures slim floor structures and construction connection technology, is an Integrites client.
"They have established their presence in Ukraine, and they have cooperated with an industrial park located in the Kyiv region to construct production facilities. That is developing very, very actively. They have seen the opportunity to invest in the production of construction materials locally and they are using it."
State asset sales
Another area where the first-mover advantage is obvious is in privatization. Local businesses are taking advantage of the temporary lack of foreign competition in privatizations. When an asset is sold, an opportunity is lost:
"We see increased participation of Ukrainian businesses in privatizations at the moment," said Pogrebna. "Foreign businesses are hesitating to enter the Ukrainian market during the war, and Ukrainian businesses are grabbing the opportunities. Our advice to foreign businesses is 'if you wait until the war is over, then maybe it will be too late for you already to enter the market'."
A foreigner's advantage
Tkachuk pointed out that many projects have been ongoing for two or more years now, supported by international finance institutions and development finance institutions. Foreigners, he said, have an advantage competing for those projects but still hesitate to enter.
Last year, "around €1 billion was reserved for projects in infrastructure and the same amount, roughly, is reserved for the social projects. But there is a lack of contractors. To get such projects, you need to meet high standards of compliance and requirements, which is not always available to purely local contractors. This is a good sign for international players, who are used to complying with such rules."
Private-sector infrastructure
In the private sector, he said, many large agricultural and metallurgical companies are looking for foreign businesses to develop infrastructure to reverse damage and skirt obstructions created by the war.
"This is something that's ongoing today - not something that's going to start. That's where, again, we face opportunity for international players who can come and provide their qualification and expertise. Everybody is looking for international investors who are ready to come."
0.3 x 12,000,000 = 'Great support'
And, as Ukraine struggles to attract investors during wartime, it's offering tax advantages and subsidies through the "investment nanny" program. The program may not be so generous when the war is over and investors are competing for business.
"The best part of this program is that it allows the foreign investor to get a refund from the state in the amount of up to 30% of the value of the project. 30% of a project of €12 million is great support," Tkachuk said.
For comments on this coverage, suggestions for future coverage, or general observations, criticism and tips, contact the editor, Adam Brown, at adam.brown@ukrainerebuildnews.com.
Now, on with the day's headlines.
After speaking to Putin, Trump says talks on ending Ukraine war to start 'immediately'
US President Donald Trump said on Wednesday he had a "lengthy and highly productive" phone call with Russian President Vladimir Putin and they agreed to "immediately" start talks about ending the war in Ukraine.
"We have also agreed to have our respective teams start negotiations immediately, and we will begin by calling President Zelensky, of Ukraine, to inform him of the conversation, something which I will be doing right now," Trump wrote in a post on Truth Social.
Trump also wrote that he has asked State Secretary Marco Rubio, Director of the CIA John Ratcliffe, National Security Advisor Michael Waltz, and the US special envoy to the Middle East, Steve Witkoff, to lead the negotiations, which he said he strongly felt will succeed.
"We agreed to work together, very closely, including visiting each other's Nations," Trump said of his call with Putin.
Apart from Ukraine, Trump wrote he and Putin discussed the Middle East, energy, artificial intelligence, and the US dollar, also reflecting on "the Great History of our Nations."
"We each talked about the strengths of our respective Nations, and the great benefit that we will someday have in working together," Trump wrote, eventually thanking Puting for "his time and effort with respect to this call."
About an hour later, Trump wrote in a separate post on Truth Social that he had also spoken to Ukrainian President Volodymyr Zelensky, saying that the conversation "went very well."
"He, like President Putin, wants to make PEACE. We discussed a variety of topics having to do with the War, but mostly, the meeting that is being set up on Friday in Munich, where Vice President JD Vance and Secretary of State Marco Rubio will lead the Delegation," Trump wrote.
JD Vance and Rubio are set to attend the Feb 14-16 Munich Security Conference in Germany where the US allies reportedly anticipate the US administration will present a plan for ending the Ukraine war.
Kremlin Spokesman Dmitry Peskov said the phone call between Trump and Putin lasted for an hour and a half, Russian news agency TASS reported. Putin last spoke with a sitting US President exactly two years ago when he had a call with Joe Biden just before the start of the full-scale invasion of Ukraine.
US Defense Secretary says Ukraine's return to pre-2014 borders 'unrealistic,' rules out NATO membership
US Defense Secretary Pete Hegseth said on Wednesday that returning to Ukraine's pre-2014 borders was an "unrealistic objective," as he was presenting US President Donald Trump's views on Ukraine and Russia during a meeting of Ukraine's military allies at NATO headquarters in Brussels.
"Chasing this illusionary goal will only prolong the war and cause more suffering. A durable peace for Ukraine must include robust security guarantees to ensure that the war will not begin again," Hegseth stated.
"This must not be Minsk 3.0," Hegseth said, referring to two failed agreements that were signed in the Belarusan capital of Minsk in 2014 and 2015, which aimed to end a separatist war by Russian speakers in eastern Ukraine.
Hegseth added that the US "does not believe that NATO membership for Ukraine is a realistic outcome of a negotiated settlement."
"Instead, any security guarantee must be backed by capable European and non-European troops. If these troops are deployed as peacekeepers to Ukraine at any point, they should be deployed as part of a non-NATO mission and they should not be covered under Article 5," Hegseth said, stressing that there will not be any US troops deployed to Ukraine as part of the security guarantee.
Hegseth also said the US remains committed to the NATO alliance but will no longer tolerate an "unbalanced relationship" that encourages dependency and called on European partners to step up their defense capabilities and work on conventional security on the continent.
US Treasury Secretary visits Kyiv, presents economic partnership deal to Zelensky
US Treasury Secretary Scott Bessent arrived in Ukraine on Wednesday, marking the first visit by a senior official from President Donald Trump's administration to Kyiv, where he presented a draft document on the bilateral economic partnership to President Volodymyr Zelensky.
"President Trump has a plan to end this war and we would like an economic cooperation agreement. And in exchange for this agreement, the US will continue to provide material support for the Ukraine, for the people," Bessent said at a press conference with Zelensky following the meeting.
Ukraine will review the details of the proposed economic partnership deal ahead of the Feb 14-16 Munich Security Conference in Germany which is set to be attended by US Vice President JD Vance and State Secretary Marco Rubio, Zelensky told reporters.
"By increasing our economic commitment through a partnership with the government and people of Ukraine, that will provide - once this conflict is over – it will provide a long-term security shield for all Ukrainians," Bessent stated.
Trump, who on Wednesday said he had held talks with both Russia's President Vladimir Putin and Zelensky to start the negotiations about ending the war in Ukraine, earlier proposed that Ukraine provide the US with access to its rare earth minerals in exchange for military aid.
The proposal was welcomed by Zelensky, who has said he was open to investments from the allies who supported the country during wartime and called on for making a deal with the US to provide access to Ukraine's mineral resources to US investors.
Swiss government sets aside $550 million for Ukraine rebuild projects involving Swiss companies
The Swiss government has set aside CHF 500 million ($551 million) for Ukraine reconstruction-related projects involving Swiss companies as part of its three-year aid program.
In all, the government aims to focus on three basic goals over the next three years in Ukraine: accelerating the economic recovery, supporting quality public services and protecting the civilian population.
The aid, which will total CHF 1.5 billion in that time, is part of a 12-year plan to spend CHF 5 billion on Ukraine.
As for economic recovery, the Swiss government will work with Ukrainian small and medium-sized enterprises (SMES) "to help them gain a foothold on the global market," the government said in a press release.
"In addition to supporting and developing the private sector, including agriculture, the focus is on rebuilding urban infrastructure and repairing infrastructure damaged or destroyed by the war (particularly in frontline regions)."
For public services, the government aims to "support the Ukrainian authorities in providing good quality public services free from discrimination and corruption."
Aid regarding the protection of the civilian population "focuses on providing emergency aid and supports humanitarian mine clearance, the search for and identification of missing persons, and documenting and prosecuting violations of international humanitarian law and human rights."
EBRD to provide portfolio risk-sharing facility to Ukraine's Oschadbank to support energy investments
The European Bank for Reconstruction and Development (EBRD) said on Wednesday it is providing a portfolio risk-sharing facility to Ukraine's state-owned Oschadbank that partially covers credit risks in up to €100 million of newly originated sub-loans by the Ukrainian lender.
The development comes as Oschadbank became the third Ukrainian bank after Ukrgasbank and PrivatBank to join EBRD's Energy Security Support Facility (ESSF) which enables Ukraine's financial sector to boost access to financing for energy security investments.
The portfolio risk-sharing facility will support Oschadbank's lending to micro, small and medium-sized enterprises (MSMEs), medium-sized corporate clients, regional municipalities and private households for decentralized energy generation, storage and energy efficiency projects, the EBRD said in a press release.
Grant support is also available for eligible sub-borrowers which will cover 10-30% of their investment costs financed under the ESSF, the EBRD said, adding that higher incentives will be provided for those affected by the war in Ukraine.
The EBRD facility, which will enable €700 million worth of lending for energy security investments overall, will be supported by partial first-loss risk cover guarantees provided by France and the European Union;s Ukraine Investment Framework, as per the statement.
Oschadbank is the second largest bank in Ukraine in terms of assets and retail deposits. It has about 1,150 branches and 16,000 employees, providing services to over 3,600 corporate, 230,000 MSME, and about 6 million retail customers.
Ex Polish central banker, an audit expert and a development finance specialist to form Ukraine Facility Audit Board
The European Commission has appointed a former Polish central bank chief, a former member of the European Court of Auditors and a development finance specialist to the audit board of the €50 billion Ukraine Facility.
The board is meant to "ensure the transparent and effective use of up to €50 billion in EU financial assistance to Ukraine between 2024-2027," the Commission said. "In the coming weeks, the Board will start evaluating Ukraine's management and control of funds, providing concrete recommendations how to strengthen financial oversight and governance structures."
The commission said the board will meet regularly in Brussels and travel frequently to Ukraine, supported by a secretariat in Kyiv.
"The Audit Board will begin its work immediately, with a focus on assessing Ukraine's financial control systems and identifying areas for improvement," the Commission said in a press release.
Marek Belka, who served as head of the National Bank of Poland from 2010 to 2016, plus stints as Poland's prime minister and finance minister, will serve as chairman of the Ukraine Facility Audit Board.
Gijs De Vries, who served on the European Court of Auditors from 2011 to 2014 and in various positions with the Dutch government and as a member of the European Parliament, has been named as deputy chair of the committee.
Gunnar Wälzholz, appointed as a member of the board, served as director of the Kyiv office of German development bank KfW from 2012 to 2015 and runs Reconstruct for Peace, which offers "advisory services for finance solutions in support of post-conflict stabilisation, recovery, reconstruction and development," according to his LinkedIn page.
"This assignment will allow me to return to Ukraine more often, a country I have cherished ever since I went there for research in 1999, and where I later lived and worked for several years," Wälzholz said in a social media post.
Longer Reads:
Ukraine's sole graphite miner illustrates potential for US investments and low likelihood of quick profit
Ukraine's only natural graphite miner, Zavalivsky Graphite, showcases the potential for US investments in Ukraine's mining industry but also the improbability of quick returns, Reuters reported in a feature on Wednesday.
Heads of Ukrainian mining operations, including Zavalivsky Graphite CEO Ostap Kostyuk, see an opportunity in US President Donald Trump's recent statement that the US wants to strike a deal to get access to Ukraine's rare earth minerals in exchange for military aid provided during the war with Russia, but also acknowledge that returns wouldn't come fast for potential investors from the US.
"No matter what, it's a long-term investment," Kostyuk told Reuters about minerals extraction in Ukraine.
Kostyuk hopes of making graphite pure enough to use for lithium batteries but the lack of investments represents a significant obstacle.
Equipment at the Zavalivsky mine, which has been operating since 1934 in Ukraine's Kirovohrad region, was last modernized in 1965, as per the report.
Although the mine is far from the front lines, it has struggled for resources since Russia's full-scale invasion in February 2022 led its Australian partner, Volt Resources, to withdraw funding.
Kostyuk, however, stated that his facility is already making a product good enough to be later purified into battery-ready spherical graphite (SPG). "We are ready for this technology," he said.
Kostyuk also said his company was prepared to supply US consumers with natural flake graphite, aiming to build a Ukrainian brand in US markets as American firms explore new deposits in Ukraine. However, he noted that new mining projects for graphite or other critical minerals could take at least five to seven years to start production.
Although Ukraine's President Volodymyr Zelensky said he was open to investments from allies who supported the country during the war into what he had earlier described as critical metals worth "trillions of US dollars," industry experts warn it may take years for investors to see substantial profits from a sector struggling with war and long-term underinvestment.
New York Post: Time to get realistic about Ukraine with Trump now in power
To achieve a lasting peace in Ukraine, all sides must be realistic, which means Ukraine will have to give up its stated goal to return to the 2014 borders, the New York Post's editorial board argues in an opinion piece.
Also, the newspaper added, Putin "must accept the voice of Volodymyr Zelensky in the peace talks, even if his real negotiations are with Trump. Trump, too, must recognize that Zelensky is key to a stable future: If Ukraine’s president is seen as being dictated to in some “peace in our time” farce, the whole country will look and feel weak — and Putin’s tanks are all too likely to get rolling again soon."
Eurasia Review: Ukraine war is transforming Russia just as profoundly as it is Ukraine
Since the full-scale Russian invasion of Ukraine, many commentators have opined on the sweeping changes the war is bringing to Ukraine, but few comment on the fact that Russia will undergo just as much change, according to an op-ed piece in the Eurasia Review.
The war marks “the end of the history of post-communism with its ‘new Russians’ and the beginning of a fundamentally different era … the main character of which will be ‘the other Russian,’” a completely different person, the article argues. "'The other Russian’ is an emasculated and distilled product of the new era in which everything Soviet has been washed away.'"
Ukraine war-related airspace restrictions raise flight CO2 emissions by 1%, study finds
Airspace restrictions introduced as the result of the war in Ukraine and the consequential rerouting of long-haul flights to avoid Ukrainian and Russian territories have increased global aviation CO2 emissions by 1% in 2023, a study published in the Communications Earth & Environment journal revealed.
Following Russia's invasion of Ukraine in February 2022 and the ongoing war between Ukraine and Russia, Western countries have banned Russian airlines from their airspace.
Russia has reciprocated by banning Western airlines from its airspace, which led to longer flights between Europe and Asia and between North America and Asia, the authors wrote.
Among all the current airspace restrictions due to conflict zones globally, Russia's closure of its airspace to Western airlines has the largest impact on global aviation CO2 emissions, according to the study.
Although the number of flights to and from East Asia that would have crossed Russian territory was initially reduced following the introduction of airspace restrictions due to the war in Ukraine, routes gradually reopened by making a detour, the study found.
The study revealed this has resulted in an average rise in fuel consumption of 13% on the affected routes, with a higher impact for flights to and from Europe (14.8%) compared to flights to and from North America (9.8%), and led to an increase in CO2 emissions equivalent to 8.2 million metric tons of carbon.
The 1% increase in flight CO2 emissions in 2023 is "remarkable," given that only 1,100 flights were impacted by the restrictions daily on average.
"This is because these flights are among the longest flights worldwide, and even though they account for a small percentage of the flights, they account for a disproportionally large fraction of the emissions," the authors wrote.
Social media posts
Turkish Investors Visit Ukraine
UkraineInvest, the state investment promotion agency, recapped a meeting with Turkish investors exploring opportunities in the reconstruction of Ukraine, including construction firm 77 INSAAT and energy conglomerate Aydem Enerji.
"Turkish companies expressed interest in investing in the reconstruction of critical infrastructure, the development of renewable energy and the establishment of new production facilities," UkraineInvest wrote. "Cooperation with international companies such as 77 INSAAT and Aydem Enerji is a crucial step in Ukraine's economic recovery and growth."
AmCham Insights into $1 Trillion Rebuild
The American Chamber of Commerce in Ukraine took to LinkedIn to promote its latest "Ukraine Fact Sheet," a 12-page pdf compilation of information of potential relevance to investors.
The latest fact sheet includes "key insights into Ukraine’s resilience, global partnerships, and investment opportunities in its $1 trillion post-war rebuild," the chamber said.
Anti-Corruption Reform
Transparency International Ukraine raised some concerns with a draft law, passed in first reading in parliament yesterday, which will reform Ukraine's Asset Recovery and Management Agency (ARMA), the state body that tracks assets derived from corruption.
The concerns include "certain corruption risks related to compensation for ‘necessary expenses’" as well as "the potential low motivation of asset managers under the new model" and "unjustified narrowing of qualification requirements for the Head of ARMA."
SOE Governance Reform
Supervisory board members of Ukrhydroenergo, the state hydropower producer, said it met with the Organization for Economic Co-operation and Development (OECD) to discuss the company's governance reform, including "implementation of new legislation aimed at improving corporate governance in state-owned joint-stock companies."
Ukrhydroenergo, which said it is the first state-owned company to approve a financial plan for 2025 in accordance with OECD standards, said the reforms "strengthen the role of supervisory boards, enhance management transparency, and integrate global best practices."
New Bankruptcy Law
CMS, the global law firm, promoted an article on how Ukraine is aligning bankruptcy law with European Union standards, including introducing "Preventive Restructuring—a new mechanism to help businesses avoid bankruptcy and recover financially."
Highlights of the law include that it can be initiated by debtors, creditors, or employee representatives, applies to companies in financial distress, and enables restructuring even without full creditor approval, CMS wrote.
'New Realities' in Transport
Arzinger, the Ukrainian law firm, promoted an article written by two of the firm's employees on new challenges that "have compelled the Government to significantly revise its approach to the development of the transport sector."
The article looks at "how Ukraine is adapting to the new realities: from developing alternative routes and modernising border crossing points to restoring air traffic, implementing of concession projects in seaports and reforming the railway sector."
URN Daily: Sense Bank and Ukrgasbank for sale? And US seeks to cancel $4.7 billion of Ukraine's debt
