Investing

Germany pitches international private investment fund to boost Ukraine recovery – Euractiv


Germany is lobbying EU partners to set up a new investment fund to support private business investment in Ukraine to help address the enormous cost of post-war reconstruction, according to a government framework passed on Wednesday (10 April). 

The fund is one of 15 priorities passed by the government to encourage private investment into Ukraine’s post-war recovery, in preparation for an international donor conference to be hosted in Berlin.

“Public money won’t be enough, we will also need private investors,” German Development Minister Svenja Schulze told reporters.

Ukraine would currently need around $486 billion to account for the damage done by Russia’s war, as per the latest projections of the World Bank.

Encouraging more investment from businesses in Ukraine is thus a major priority for the 2024 edition of the Ukraine Recovery Conference hosted by Germany on 11 June, Schulze said.

The previous edition in London raised over $60 billion towards Ukraine’s reconstruction.

The development ministry underlined that few of the roughly 2,000 part German-owned businesses that were active in Ukraine before the war have withdrawn entirely.

However, with the war still going on, businesses have repeatedly stressed that government support is vital to safeguard investments against the risk of destruction.

Foreign companies remain more reserved about investing in Ukraine, Reiner Perau, director of German foreign commerce association AHK in Ukraine, told Euractiv. “It would probably take even more risk reduction on the part of the state to make Ukraine more competitive as an investment location.”

The fund that Germany has proposed would provide capital from public donors to reduce risks and support “large-scale private investment projects in key sectors such as energy, infrastructure, industry and the agricultural sector”, the document reads.

Details are currently being discussed with international partners, including the European Union, but the exact financial volume remains up in the air, a spokesperson of the German development ministry said. 

Aside from support for investment, including existing guarantees, Germany will also offer its own historical expertise in rebuilding an economy after a disastrous war. 

The German KfW Development Bank, created in 1948 to support the reconstruction of Germany’s private business landscape wrecked by WWII, is supposed to provide the model to develop a similar Ukrainian fund with German support. 

For that, Germany proposes to develop the long-standing Ukrainian Business Development Fund (BDF), which is partly funded by the KfW.

Germany will also lobby for using proceeds from immobilised Russian assets for the purpose of reconstruction, alongside weapon purchases, as well as integrating Ukraine in EU trade chains.



[Edited by Alexandra Brzozowski/Alice Taylor]

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