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Ukraine pursues $400bn investment drive despite conflict raging on

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Ukraine has begun attracting foreign investment of up to $400 billion in projects across the economy, even as it faces a protracted war with Russia and a slump in production.

The Kiev government has identified hundreds of technology, agribusiness, clean energy, defense, metallurgy and natural resources initiatives that it hopes will attract international investors, backed by loan guarantees and insurance from Western donors.

President Volodymyr Zelenskyy described the investment potential in his country as “the greatest opportunity in Europe since World War II”.

Economic Development Minister Yulia Svyrydenko said Kiev was also preparing to allow larger investors to operate in Ukraine under English trade law to reassure Western companies concerned about widespread corruption in the country’s legal system.

“We are grateful to our Western partners for international financial aid,” Svyrydenko said in an interview with the Financial Times. “But today we are not asking for humanitarian aid. We are asking for investments that can offer Ukraine a growth opportunity. We see it as blood for the Ukrainian economy.”

When asked why international investors would enter the Ukrainian market without the end of the war in sight, Svyrydenko said: “You could say that it is too early to ask for foreign direct investment, but for businessmen, for those who take risks, they understand that whoever is first will achieve the most and reap the benefits.”

Yulia Svyrydenko: ‘Today we are not asking for humanitarian aid. We ask for investments that can provide Ukraine with a growth opportunity’ © REUTERS

Foreign investors could use the period of uncertainty as the war continues to explore opportunities, prepare projects and conduct due diligence before committing once the situation stabilises, she said.

Kiev is also looking for investors to help rebuild bridges, roads and homes in a short-term “rapid recovery phase”.

Ukraine’s economy is expected to contract 35-45 percent this year, far more than Russia’s, due to the destruction of infrastructure and industrial facilities, the blockade of export routes, an exodus of workers and disruption of activity by the Moscow offensive. Kiev also needs $5 billion a month from international partners to finance its deficit.

Despite the economy being on its knees, the government hopes to turn the outpouring of Western solidarity to Ukraine into foreign direct investment.

In the energy sector, it has identified 50 investment opportunities worth $177 billion in solar, hydrogen, nuclear, oil and gas, storage and grid modernization.

The government says it is simplifying and speeding up regulatory procedures and has canceled 500 different permit requirements to open up projects to new investors. It will also offer generous tax credits.

But Ukrainian officials recognize that Western investors need protection. They want access to World Bank war risk insurance products and Western export credit institutions to provide guarantees.

“If we kick the Russians out of our area, they still have the chance to shoot us,” said Deputy Economy Minister Oleksandr Gryban. “Unfortunately, we will always have a certain level of risk. It is more about how we mitigate these risks.”