Zelensky and BlackRock Announce New Investment Initiative to Rebuild Ukraine

Global asset manager BlackRock coordinates investments to rebuild Ukraine’s economy, Kyiv announced on Wednesday.

After a meeting with President Volodymyr Zelensky and BlackRock CEO Larry Fink, the government said the Wall Street giant would “remember the efforts of all potential investors and participants in rebuilding our country.” You have confirmed that you have agreed to adjust the As a result of the agreement, BlackRock will invest in multiple sectors of the Eastern European country’s economy.

Since Zelensky and Fink’s first meeting in September, when they discussed moving public and private investments to Kyiv, the two sides have been working on a comprehensive project to advise the government “how to build a national recovery fund.” rice field.

In November, Ukraine’s Ministry of Economy (MoE) and BlackRock Financial Markets Advisory (FMA) signed a memorandum of understanding confirming the plan.

“BlackRock FMA will advise MoEs on establishing a roadmap for the implementation of the investment framework, including identifying possible set-ups, structures, powers and governance design choices. ‘ said the $8 trillion asset manager. statement last month.

This comes a week after Zelensky visited Washington to meet with President Joe Biden and address Congress. The House has approved her $45 billion aid package for Ukraine.

Larry Fink
BlackRock CEO Larry Fink attends a session at the World Economic Forum Annual Meeting in Davos on January 23, 2020. (Fabrice Coffrini/AFP via Getty Images)

In his speech, the Ukrainian leader called it an investment, not a charity, and thanked the American people for their money.

“Your money is not charity,” he told Congress. “What we deal with in the most responsible way is investing in global security and democracy.”

Will Ukraine become an investment hotspot?

Speaking at the Ukraine Infrastructure Forum in London this month, Deputy Economy Minister Oleksandr Gurban predicted After the war, Ukraine will eventually “become one of the best countries in the world in terms of investment opportunities.”

“We have to act quickly. In this case, the experience and expertise of the private sector in project management should help,” he said.

So far, 10 months after Russia launched its aggression, more and more international organizations and global companies are announcing new investments in Ukraine.

For example, earlier this month, Nestlé announced: $43 million investment Launch of production facility in western Ukraine.

“This is an important move for Nestlé at a very difficult time for the country,” said Alessandro Zanelli, CEO of Nestlé South East Europe Market, in a statement.

In November, the International Finance Corporation, the private investment arm of the World Bank, launch A $2 billion package to support the Ukrainian private sector.

“This investment is a testament to the new generation of Ukrainian visionary entrepreneurs leading businesses that have high potential to help boost the resilience of the Ukrainian economy.” It aims to inject much-needed capital into the Ukrainian IT sector, boost innovation, create jobs and encourage investors to return to the market despite the ongoing war. increase.”

Andrew and Nicola Forrest last month offered $500 million for Ukraine Green Growth Initiative through Tataran Group. Expected to reach $100 billion, the fund was set up to partner with global investors to accelerate Ukraine’s reconstruction efforts and rebuild its key infrastructure.

The initiative is backed by President Biden, UN Special Envoy Michael Bloomberg, former British Prime Minister Boris Johnson, and Organization for Economic Co-operation and Development (OECD) Executive Director Matthias Koemann.

“Ukraine can enter a golden age,” Forrest said. “By supporting Ukraine with business, we are sending a message to the world: to all governments that as soon as hostilities cease, global business is ready to help rebuild. I would like you to know.”

Foreign direct investment (FDI) into Ukraine surged by $439 million in the second quarter, according to the data From the National Bank of Ukraine.

At the same time, the World Economic Forum (WEF) Recommended Kyiv’s post-war reconstruction must be green and inclusive.

“While Ukrainians are brave defenders of their freedom and values, it is important to create a vision of a new successful nation with a growing economy, sustainable energy and inclusive infrastructure,” the group said. writing.

Last summer, Kyiv estimated the cost of post-war reconstruction. $750 billionBut the numbers continue to rise amid heavy artillery bombardment, constant missile attacks, import-export disruptions, and population displacement.

Ukraine Established A program to attract up to $400 billion in foreign investment to target different sectors of the economy, from clean energy to defense to natural resources. Zelensky believes this is “the greatest opportunity in Europe since World War II.”

But Nick Fenton and Andrew Rosen of the Center for Strategic and International Studies (CSIS) warn that “corruption concerns threaten much-needed financial flows.”

“Ukraine has embarked on significant anti-corruption reforms in recent years, but will need to show further progress to maximize its potential for foreign investment,” they wrote in November. report“Investors must contend with unscrupulous bureaucrats for rent, compete on an uneven playing field with actors who use bribes and kickbacks, and rely on flawed justice systems to protect their rights. If you think you can’t, you may be deterred.”

In recent years, the Ukrainian government has established several organizations to address this issue, including the National Anti-Corruption Service (NABU), the National Anti-Corruption Service (NACP) and the Asset Recovery Administration (ARMA). However, oligarchic influence, judicial capture and strategic corruption could undermine these efforts and further threaten reconstruction efforts.

Andrew Moran

Andrew Moran has been writing about business, economics and finance for over a decade. He is the author of “The War on Cash”.