As we approach the much heralded and expectant Ukraine Recovery Conference due to be held in London later this month, I cannot help but feeling a little perplexed, or even disturbed by a number of developments – is it just me? But...
First, I am just amazed how quickly an industry in conferences and seminars has grown up around the whole topic of Ukrainian reconstruction. It's great that there is interest in getting involved and thinking through the issues, but the sheer number of think tanks, consultants, etc. who are now selling themselves as Ukraine or reconstruction (or both) experts but who seem to have little historical experience is a worry.
We can debate the effectiveness of these programs, but my take, as someone who was there and involved first hand, was that a lot of Western consulting companies and consultants got the lion's share of monies which should have gone to actually help the transition and development in these countries. And lots of waste on bureaucracy. I hope that this does not happen in the Ukrainian case.
Lots of talk – action?
We had the Lugano recovery conference, now the London recovery conference. Let's hope that decisions are made here, and that this is not just another talking shop for lots of warm words by politicians and bureaucrats but not much substantive action.
Second, there seems to be lots of duplication of effort and little coordination, at least from the G7 side. On the military side we have the Ramstein process, and I think there is the need of something similar now from the Western side when it comes to helping better coordinate and focus efforts on the economic side of support for Ukraine. I know we have a new $15.6 billion IMF Extended Fund Facility (EFF) for Ukraine, but this is about macro stability not really about post-war reconstruction.
Third, and linked a bit to the second point, I still don't think we have a decision around the institutional setting for reconstruction. I have long argued the need for a single entity to manage the reconstruction effort, jointly managed/owned by the Western and Ukrainian sides. I have argued the need for a sovereign wealth-style structure, an Agency for Ukrainian Reconstruction and Accession (ultimately to the EU).
There has been talk of a multilateral development bank (MDB), like the European Bank for Reconstruction and Development (EBRD) or World Bank acting in this role as a coordinator, but I don't think that is appropriate and have argued that elsewhere. Maybe the EU is the right entity, but then it needs a special office or commissioner I think to manage that effort. I think we need to quickly move in this, as any such entity will be a key partner for private businesses thinking of investing in Ukraine.
And I do think that we need a heavyweight business or political leader to lead this effort – someone who has international gravitas, credibility, and standing that can lead this process. I remember the stellar job done by Paddy Ashdown in Bosnia and Herzegovina as the special representative soon after the war.
Perhaps it could be an internationally recognized business leader – what's Richard Branson doing these days? Maybe Jamie Dimon needs a break. Or maybe a Carl Bildt, or I hate to say it Mark Carney (I was never a fan of his stint as Bank of England governor, but he has the stardust factor for sure, and understanding of the international financial institution landscape that can perhaps help to continue to focus light on Ukraine's reconstruction needs.
I might have said Tony Blair but I can never personally forgive him for the Iraq war debacle. And please, please, not Boris Johnson. I know the Ukrainians love him, but I fear that his solution to all problems seems to involve a microwave and I think this mission needs a little more substance in terms of leadership and credibility. Ukraine does not need a circus. Lipton?
Fourth, I still don't think Western governments have clearly thought through the huge financing needs of Ukrainian reconstruction – and who's going to pay for them.
It's clear that there is no appetite for Western tax payers to pay, and then government types tend to focus on the private sector, I fear without really understanding the private sector. The reality is that, given the security risks, Ukraine's track record in terms of corruption and rule of law, a likely lack of early international market access (high debt burden), and lower credit ratings, the private sector will be slow to rise to the challenge here.
I think that alternative sources of financing need to be found – frozen Russian assets or innovative financing schemes to bring in the private sector. Recapitalizing MDBs by $5 billion extra a year for Ukraine's reconstruction does not really touch the sides.
I would say that if the plan is to just rely on the private sector for Ukraine's reconstruction, then it just won't happen quickly enough – and actually, it won't happen. Maybe the EU accession anchor will be different this time around – it did ultimately work for the first round of EU entrants in 2004, after a date was given for accession in the Copenhagen agreement (ironically, the same year as the Budapest Memorandum).
I thought someone needed to say the above, so I did.
Editor’s Note: The following is taken from Timothy Ash's Substack blog, @tashecon blog, and republished with his permission. The opinions expressed in the op-ed section are those of the authors and do not purport to reflect the views of the Kyiv Independent.