Today's Contents
Reporter's Notepad:
- 5 banking tips for investors joining Ukraine's reconstruction, from Citi Ukraine head Alexander McWhorter
Just The Facts:
- UK, France and allies to draft plan to end fighting in Ukraine and present it to US
- France and UK to propose 1-month truce in air and sea attacks, but not ground fighting, Macron says
- US State Department cuts USAID staff in Ukraine to 8, scraps energy grid program, sources say
- Norway mulls changing spending rules for world's largest sovereign wealth fund to support Ukraine
- Ukraine to receive $400 million tranche from IMF after seventh loan program review
- Italy agrees to contribute €13 million to Ukraine Energy Support Fund
Here's What They Think:
- NYT: Europe needs to intensify efforts to become militarily independent as US pivots toward Russia
- SCMP: China's possible involvement in Ukraine's security framework gains attention as rift between Europe, US expands
Sober Second Thought:
- Ukraine may fail to repel Russia if US halts military aid, CSIS analysis says
Dear subscribers,
Today we present the second in our series of articles where we interview seasoned Ukraine hands to offer advice to companies just now joining, or considering joining, the reconstruction of Ukraine.
Today, we hear broad tips about banking in Ukraine, while we hard about project management in last week's article. Upcoming articles cover communications, physical security, construction and many more areas related to investing in the reconstruction.
5 banking tips for investors in Ukraine's reconstruction, from Citi Ukraine head Alexander McWhorter
Alexander McWhorter, the New Jersey native who has served as Citi country officer for Ukraine since 2018, has received an increasing number of calls from companies in recent months, asking about participating in the reconstruction of Ukraine.
"They're looking to understand the market," he said. "They want to understand how they can navigate the local complexities in banking and other areas. They're trying to understand the financing picture - where they can borrow money from. And they're trying to understand the risk and the opportunities."
Citi Ukraine has about 500 clients, including multinational companies, small and medium-sized businesses (SMEs), with a strong presence in the agriculture, metals and mining, tech, pharmaceutical and consumer goods sectors, among others.
Alexander said most US companies in Ukraine likely have an account with Citi but "I don't even think it's a majority of our client count. We have a lot of Ukrainian, European and Asian clients - they're from pretty much everywhere."
He also said interest in the reconstruction is coming from all over.
"We just held a related event in the Nordics where we had a very large attendance. We've organized one for Turkey. We've done one for Japanese clients. We're seeing interest from around the world."
Alexander's 5 Tips for Investing in the Reconstruction
#1 - Join the Reconstruction Early.
“People know there are significant opportunities. But what they may not know is that there are long lead times in all of this. If someone waits until the war is over, then they're going to have six months of strategic discussions and then start to move, they will miss the opportunities. It is much better for people to engage now.
“There will be massive needs, and those people that are able to move quickly will capture outsized returns on this.”
#2 - You Need a Local Presence.
"You need to be here, talking to people, understanding the way of the land. Things can work differently than what you're used to. It can take a while to understand how things work and how how to operate in the right way here.
"From a banking perspective, you're going to need some sort of local rep office or something like that set up. But having conversations with us now means that we're ready to go and we can work with you around that process. And, particularly if you're an existing global client, we can do a lot for you, even before you're on the ground."
#3 - Plan for Currency Controls and Regulatory Nuances.
“Just because you bring your money in doesn’t mean you can get it back out. The National Bank of Ukraine has put this in place to protect the currency… there are very nuanced rules that you need to understand around this, and you need to plan accordingly.”
"The rules will change in a post war environment. Hopefully the controls go away, but those are things you need to understand today if you're going to move."
"On the banking side, there is still a material amount of requirements for wet-ink signatures, for apostille documents and other things like that, that we've gotten away from in many other countries. There's been material progress, and it's a lot better than it was, but there are still things that will require that paper touch, that local presence – meetings for verification, and other things of that sort."
#4 - Come Prepared with Plenty of Documents.
“From a banking perspective, you need to expect that it can take a little bit longer and be a bit more complicated than you'd hope."
"We have all the fact sheets and we can explain exactly what's needed. It can be different from what's expected, and there are some nuanced rules. That does mean it may take longer and we may ask for a lot more documents that you'd be used to giving."
"We also may ask different questions than you're used to, because there are certain rules driven by the war – around relationships with Russia for example.
But it's doable."
#5 - Come With Respect for the Sacrifice and Suffering
“For three years, Ukraine and its society have been enduring war, facing serious hardships and challenges, yet the people remain resilient. This deserves the respect of the business that come to Ukraine to participate in the reconstruction."
For questions related to daily news, story suggestions, scoops and other newsy matters, please message URN newsroom chief Valentina Bajic at valentina@ukrainerebuildnews.com.
For sponsorships, the URN Guidebooks, the Tips for Investors column and other general matters, email founder Adam Brown at adam.brown@ukrainerebuildnews.com.
If in doubt, email us both and we'll sort it out.
Now, on with the headlines of the day ...
UK, France and allies to draft plan to end fighting in Ukraine and present it to US
UK Prime Minister Keir Starmer said on Sunday that the UK, France, and other allies have agreed to work with Ukraine on a "plan to stop the fighting," which will then be discussed with the US, and "take it forward together."
"We are at a crossroads in history today. This is not a moment for more talk – it is time to act, time to step up and lead, and to unite around a new plan for a just and enduring peace," Starmer said at a press conference following a summit with mostly European leaders in London.
Starmer said that the leaders agreed to keep military aid flowing into Ukraine, to have Kyiv at the table for any peace talks and for European leaders to aim to deter any future Russian invasion of Ukraine. He also said a "coalition of the willing" will be formed to defend Ukraine and guarantee peace there.
"Europe must do the heavy lifting… And to succeed, this effort must have strong US backing," Starmer noted.
Additionally, Starmer said the UK signed a £2.2 billion loan to provide Ukraine with military aid and added that the country will give Ukraine access to £1.6 billion to buy new missiles.
The summit, attended by Ukrainian President Volodymyr Zelensky, German Chancellor Olaf Scholz, Canadian Prime Minister Justin Trudeau, French President Emmanuel Macron, European Commission President Ursula von der Leyen, NATO Secretary General Mark Rutte, and Italian Prime Minister Giorgia Meloni, among others, came two days after Zelensky clashed with US President Donald Trump in the Oval Office.
During the meeting in the White House on Friday, Trump accused Zelensky of being ungrateful for US support and not willing to end the war with Russia, while Zelensky challenged Trump over his approach toward Russian President Vladimir Putin.
Zelensky, who was initially planned to sign the proposed minerals deal with the US on Friday, ended his visit to Washington early after the heated exchange in the Oval Office.
On Sunday, Zelensky told the BBC that Ukraine was still ready to sign a minerals agreement with the US.
France and UK to propose 1-month truce in air and sea attacks, but not ground fighting, Macron says
France and the UK plan to propose a one-month truce in Ukraine that would only cover air and sea attacks and assaults on energy infrastructure, French President Emmanuel Macron told the French newspaper Le Figaro.
The truce would not affect ground fighting, Macron told a reporter from Le Figaro on the airplane as he returned from a meeting with UK Prime Minister Keir Starmer and other Western leaders.
He said the advantage of such a truce is that "we know how to measure it" while a truce that covered fighting on the front lines would be hard to verify, he said in the exclusive interview with Le Figaro. The front line is equivalent to the distance between Paris and Budapest, he added.
The comments came as European leaders announced they plan to prepare a possible peace deal to end the fighting in Ukraine and present it to US President Donald Trump in an attempt to gain his backing.
US State Department cuts USAID staff in Ukraine to 8, scraps energy grid program, sources say
The US State Department ended a USAID initiative that allocated hundreds of millions of dollars to helping Ukraine restore its war-damaged energy grid, NBC News reported, citing two unnamed USAID officials who work on the agency's Ukraine mission.
The sources also said that USAID staffing levels in Ukraine will fall to 8 from the previous level of 64 under cuts by the administration of President Donald Trump, which has ordered all workers not deemed "critical" to return to the US.
In Washington, DC, the agency's Bureau for Europe and Eurasia, which oversees the Ukraine mission, would be cut to 29 employees from 115, the sources told NBC News.
“Russia is ... trying to crush the economy, but USAID has played a central role in helping it be resilient, [including] shoring up the energy grid…We’ve provided vast amount of support to the Ukrainian government to avoid a macro economic crisis," one of the sources said.
The two officials also said that USAID played the main role in ensuring that financial aid to Ukraine was spent on its intended purpose, but the State Department is scrapping the program focused on "financial sector reform activity."
Norway mulls changing spending rules for world's largest sovereign wealth fund to support Ukraine
The Norwegian government is examining a budgetary rule that caps the amount of money it can spend from its sovereign wealth fund, the world's largest, as it seeks to boost aid for Ukraine, Euractiv reported, citing multiple sources.
A budget rule introduced in 2001 prevents the government from spending more than 4% of its $1.7 trillion Government Pension Fund Global per year, but opposition politicians, the media and some government allies are calling for change.
Critics of sticking to the rule say that the fund, managed by Norges Bank Investment Management, has gained an estimated €109 billion from oil price increases since the full-scale Russian invasion of Ukraine three years ago, according to the report.
"Norway is one of the few countries that has large amounts of money readily available, and we must therefore multiply our support for Ukraine immediately," Liberal Party leader Guri Melby said on Saturday, Euractiv reported.
Norwegian spending on support to Ukraine has totaled €3.35 billion at the same time, although the government said it has committed to spend €14.7 billion on support by 2030.
Euractiv reported that the government is now planning to introduce a proposal, prompting Liberal Party and the Socialist Left Party to delay plans to call an emergency session of parliament to discuss aid to Ukraine and the sovereign wealth fund.
The Green party has proposed Norway pleddge €85.5 billion in support to Ukraine.
Ukraine to receive $400 million tranche from IMF after seventh loan program review
Ukraine and the International Monetary Fund (IMF) have reached a staff-level agreement on the seventh review of Ukraine's $15.5 billion Extended Fund Facility (EFF) program, unlocking $400 million in funding.
The funding will be released to Ukraine once the IMF board approves the agreement, which would bring the total disbursements to Ukraine under the program to $10.1 billion, the IMF said in a press release on Friday.
"Program performance remains strong with all quantitative performance criteria for end-December met, and important progress on the structural agenda due for this review," the IMF stated.
The disbursement of the funds to Ukraine under the EFF program is tied to the country's implementation of the Memorandum of Economic and Financial Policies, which sets out monetary and fiscal reforms that have to be executed.
The IMF noted that Ukraine's GDP growth is estimated at 3.5% for 2024, but is expected to slow down to 2-3% in 2025, "reflecting headwinds from labor constraints, damage to energy infrastructure, and the persistence of Russia's war."
Italy agrees to contribute €13 million to Ukraine Energy Support Fund
Italy has agreed to contribute €13 million to the Ukraine Energy Support Fund to help rebuild the energy sector after a year of withering Russian attacks, the Ukrainian government said.
The agreement was signed late Friday between Italian Ambassador to Ukraine Carlo Formosa and Deputy Energy Minister of Ukraine Roman Andarak, the Ukrainian government said in a press release.
Contributions to the Ukraine Energy Support Fund, which was established in April 0f 2022, now exceed €1 billion, the government said. Donations have come from more than 30 countries, including the UK, the US and European Union member countries.
"During its operation, the Fund has become an effective instrument for providing international assistance in the energy sector, enabling Ukrainian energy companies to restore power facilities after russian attacks, carry out repairs, and install new capacities," the government said in the release.
NYT: Europe needs to intensify efforts to become militarily independent as US pivots toward Russia
European leaders need to step up their efforts for the continent to achieve greater military self-reliance as it became evident during the Friday meeting between US President Donald Trump and his Ukrainian counterpart Volodymyr Zelensky that the US is shifting its foreign policy toward Russia, Jeanna Smialek, the Brussels bureau chief for The New Times, wrote in an op-ed.
Now, when it became obvious that Europe can't simply hope for continuity in its relations with the US as it had before, some argue that the time for sluggish deliberations is over and that Europe needs to quickly find a way to implement security guarantees for Ukraine, not just discuss them, Smialek wrote.
SCMP: China's possible involvement in Ukraine's security framework gains attention as rift between Europe, US expands
Considerations of China's potential involvement in Ukraine's security architecture are gaining traction as the diplomatic crack between Europe and the US broadens despite of Europe's mistrust toward China and the fact that having Chinese troops as peacekeepers in Ukraine is not likely, Alina Hrytsenko, a senior consultant at the National Institute for Strategic Studies in Kyiv, wrote in an op-ed for the South China Morning Post.
A key development now is the potential rapprochement between China and Europe amid the growing transatlantic rift. While formal participation in the peace settlement is important for China, its primary focus is on Ukraine's post-war reconstruction. This could serve as a gateway for economic and infrastructure collaborations with the European Union, particularly as Ukraine's potential EU membership remains a tangible prospect, Hrytsenko noted.
Ukraine may fail to repel Russia if US halts military aid, CSIS analysis says
The US is reportedly considering halting military shipments to Ukraine following the heated exchange between President Donald Trump and President Volodymyr Zelensky of Ukraine on Friday, which may lead to Ukraine failing to repel Russia and win the war, according to an analysis from the Center for Strategic and International Studies (CSIS).
Unless disrupted by a Trump administration decision, US military aid to Ukraine is set to increase significantly in 2025, with monthly deliveries rising from $500 million to $920 million, according to the analysis on the status of US military aid funds and deliveries for Ukraine, written by researchers Mark F. Cancian and Chris H. Park.
Combined with growing European production and expanding domestic manufacturing, these deliveries will enhance Ukraine's overall firepower, according to the authors.
However, if the US halts equipment shipments, Ukraine will have to rely on European aid, other global sources, and its own industry to sustain its forces, which may keep it in the fight but will eventually force it to accept an unfavorable peace settlement, Cancia and Park wrote.
Discussing the status of US military aid to Ukraine, the two wrote that all allocated military aid funds have been committed, though the equipment remains at various stages in the delivery process.
Congress has authorized $86 billion for Ukraine's military aid through five supplemental appropriations and the Department of Defense (DOD) base budget. The most recent aid package was approved in April 2024, but following last week's events, the Trump administration is unlikely to request additional funding.
However, the fact that all the military funds have been committed does not mean that the US military aid to Ukraine has ended as the deliveries take a long time.
The chart below shows estimated deliveries of US military equipment to Ukraine in the following years:
The US is not Ukraine's sole military equipment supplier, the authors pointed out. According to Germany's Kiel Institute, European military aid has been on par with US contributions, averaging around $1.8 billion per month.
However, European contributions are already stretched to their limits due to the weakened state of their defense industry, according to the analysis. Moreover, if the US halts its aid, many European countries may also reduce their support.
Cumulative military aid to Ukraine from the US and other donors:
The US supplies Ukraine with items that are in short supply domestically, including artillery shells, air defense systems, and Javelin anti-tank weapons. The emphasis on equipment should not overshadow the "soft" support the US provides, such as training and intelligence. Losing these elements would have unpredictable consequences for Ukraine's military effort, the authors wrote. While European allies are offering some of this support and could partially compensate for any reductions, the US possesses unique capabilities and a scale of resources that are difficult to replace, they noted.
The outlook for Ukraine is grim, Cancia and Park concluded. In the best-case scenario, continued US and European aid would enable Ukraine to stabilize the front lines, repel Russian attacks, and buy time for a negotiated settlement—potentially with Russia becoming more open to a deal as its casualties surpass the 1 million mark.
How to Join UNDP's Reconstruction
The Confederation of Builders of Ukraine (CBU) recapped a presentation by Nadiya Bondarchuk, a technical expert at UNDP Ukraine, outlining how companies can participate in UNDP reconstruction projects, which total €790 million.
Bondarchuk offered an overview of the Emergency Credit Program for Ukraine's Recovery (ECPU), which includes a €200 million framework loan for the restoration of critical and social infrastructure, the Ukraine Recovery Program (URP), which includes a €340 million loan for infrastructure restoration, and the URP III, which includes loans of €250 million.
3 Finnish Firms Seek Ukrainian Partners
Olli-Pekka Hatinen, owner of the Finnish company Kajamo which helps companies enter the Ukrainian market, posted that he brought representatives of three Finnish companies to Ukraine for the first time last week in a search for local partners.
The companies include Elementti Oy, which manufactures concrete elements for construction, Entos Oy, which manufacture air quality products, and Pronor Control Oy, a company specialized in industrial automation, Hatinen said.
Will Canada Thaw its Frozen Russian Assets?
Balkan Devlen, a senior fellow at the Canadian think tank Macdonald-Laurier Institute, promoted an article in which he suggests "practical measures" for Canada to confiscate frozen Russian central bank assets and transfer them to Ukraine.
The article says that CAD 20 billion (US $ 13.8 billion) worth of frozen Russian assets are held in Canadian dollars and suggests the Canadian government start by extending a loan to Ukraine backed by those assets, before taking further measures for a complete transfer.
Architecture after War
The Kharkiv School of Architecture promoted the book "Architecture after War," which is says is a "is one of the few in our collection that addresses the topic of reconstruction through the Ukrainian context and is published in Ukrainian."
"The book, published in cooperation with the Ukrainian publishing house CANactions and the English publishing house MACK, combines historical examples and theorizes modern approaches to rebuilding cities after the war," according to the post.
Trends in the Development of Ukraine's Industrial Parks
UkraineInvest, the government investment promotion agency, promoted an update of its guidebook "Investment Incentives for Industrial Parks," along with a link to an article on "the development trends of industrial parks in Ukraine."
The guide includes detailed information on advantages for resident companies, forms of state support, eligibility requirements for participants and the step-by-step process of state registration, according to the agency.
URN Daily: Sense Bank and Ukrgasbank for sale? And US seeks to cancel $4.7 billion of Ukraine's debt
