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A Zara store window, on March 5, 2022, in Madrid, Spain.(A. Perez Meca/Europa Press via Getty Images)
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The following is the March 5, 2024 edition of our Ukraine Business Roundup weekly newsletter. To get the biggest news in business and tech from Ukraine directly in your inbox, subscribe here.

Spanish company Inditex, owner of fashion giant Zara, as well as Bershka, Pull & Bear, Stradivarius, Uterque, Oysho, and Massimo Dutti brands, will reopen some of its stores in Kyiv as soon as early April after shutting its doors at the start of Russia’s full-scale invasion just over two years ago.

Since then, the company has also halted its shipping to Ukraine but has continued to pay the salaries of its 1,000 Ukrainian employees and maintained contracts with its landlords, the Financial Times reported on March 1. The shuttered stores have been dark spots in otherwise busy malls, as well as eerie time capsules — in some cases, window displays are still showcasing the winter '22 collections.

Inditex said that it plans to reopen 50 of its 84 stores in Ukraine. The stores that will remain closed for now are in the country’s south and east close to the war’s front lines, the company told the FT.

Bringing back major brands to Ukraine that closed up shop following Russia’s all-out war has been “one of the goals of Ukrainian diplomacy” and “one of the most anticipated decisions for Ukrainians,” Foreign Minister Dmytro Kuleba said in October 2023 after announcing that Swedish fashion giant H&M would be returning to Ukraine.

“It is a signal of confidence in Ukraine's victory and the reliability of partnership with our country,” he said at the time, adding that Ikea's return was “actively underway, and I expect that there will be good news in this area soon as well." Ukrainians are still waiting for the Swedish furniture maker's return.

Other major retailers that have re-opened since the start of the full-scale invasion include McDonald’s, Danish jeweler Pandora, and French cosmetics firm Yves Rocher, among others. The hope is that each opening will have a “domino effect” and trigger other companies to return as well.

Ukraine's Finance Minister Serhii Marchenko at the Ukraine Recovery Conference in London, UK, on Wednesday, June 21, 2023. (Chris J. Ratcliffe/Bloomberg via Getty Images)

Uncertainty ahead

Ukraine needs $3 billion in external financing on a monthly basis this year, Finance Minister Serhii Marchenko said on Feb. 28 in a video address to a Group of Seven (G7) meeting.

Foreign aid is crucial for Ukraine as the economic pressure caused by the full-scale Russian invasion mounts. The besieged country received $42.5 billion in external financing last year, allowing it to support its budget and keep going amid the war. With U.S. assistance delayed by domestic political disputes, the uncertainty about Ukraine's economic stability grows.

"In 2023, Ukraine's financial system was stable, and the economy recovered faster than expected. The balanced policy of the government of Ukraine, together with the consistent support of international partners, played a decisive role in our achievements," Marchenko said.

"It is important to maintain this trend. In 2024, the monthly need for external financing will reach about $3 billion."

In January-February 2024, Ukraine’s State Budget received about $1.2 billion in external financing, mainly in the form of grants from Japan, Norway, and Spain, the Economy Ministry said.

Marchenko emphasized the G7's role in supporting Ukraine, reminding that G7 and EU countries have contributed $67 billion in financial aid since February 2022.

While assistance from the U.S. remains stalled, the EU gave final approval to its four-year 50-billion-euro ($54 billion) funding under the Ukraine Facility. The first payment of 4.5 billion euros ($4.9 billion) in EU funds is expected to be disbursed in March.

Ukraine's real GDP growth since 2013. (Lisa Kukharska/The Kyiv Independent)

10 years of Russia’s war in charts

Russia’s 10-year aggression against Ukraine has caused widespread and sure-to-be-long-lasting damage to the country’s economy and demographics.

Positive growth predictions were squashed following Russia’s annexation of Crimea and invasion of Ukraine’s eastern Donbas region in 2014. Then came Russia’s full-scale invasion in February 2022, wreaking havoc on an economy that had just started to recover following the Covid-19 pandemic.

In 2022 with the onset of Russia’s full-scale invasion, the GDP decreased by a whopping 29%, the country’s largest decline since gaining independence in 1991.

The economy surprised many by bouncing back in 2023, which the World Bank predicts will continue into this year and the next, although growth depends on continued aid from Ukraine’s allies.

Russia’s decade-long aggression against Ukraine has also devastated the country’s population. Millions have fled abroad since the start of the full-scale invasion, many of whom, unfortunately, may never return as they adapt to their new lives. The country’s population decline is likely to be one of the major impediments to recovery and economic growth post-war.

The Kyiv Independent visualized the various impacts of 10 years of Russia's war against Ukraine in charts. See more here.

A view of cars destroyed and burned during the war between Ukraine and Russia, piled up on the roadside in the city center of Irpin, Ukraine on April 21, 2022. (Metin Aktas/Anadolu Agency via Getty Images)

Voyeurism or enlightenment?

Ukraine’s tourism industry predictably plummeted after Russia’s invasion. As the war enters its third year, the large numbers of foreign journalists and political delegations who came to the country to document and visit the sites of Russian war crimes have also partly migrated elsewhere.

But tourists have gradually begun to return and the battered sector has adapted by offering war tourism opportunities, Kyiv Independent reporter Dominic Culverwell writes in his latest.

Tour guide Svet Moiseev, who gives tours of Kyiv suburbs that were occupied and ravaged by Russia, said he’s noted an uptick in tourists. The first wave arrived in the summer of 2022 and peaked in the summer of 2023 with one or two tours a day. His clientele is a mix of business professionals, political figures, people visiting friends, and curious tourists or thrill seekers, he told the Kyiv Independent.

Not everyone is excited about showing foreigners the scars of war — some locals balk at the idea of displaying their most vulnerable moments to tourists. Taking a tour of Bucha — a suburb of Kyiv occupied in the first months of the war — Culverwell said signs can be seen on damaged houses warning visitors not to enter or take photographs.

For Moiseev, it's important to show the reality of war to those who have never experienced it in the hopes it will educate people about Ukraine’s plight and increase support for the country abroad.

"People want to understand how (this war) could happen in the 21st century,” he said. “And, of course, they want to pay tribute to those who were killed and those who defended."

Read the full story here.

European Bank for Reconstruction and Development (EBRD) President Odile Renaud-Basso poses for a photograph following an interview with AFP at the Bank's headquarters in London on Oct. 2, 2023. (Henry Nicholls / AFP via Getty Images)

The European Bank for Reconstruction and Development has been Ukraine’s largest institutional investor since the collapse of the Soviet Union. Following the start of the full-scale invasion, the bank invested 3.8 billion euros in 2022-2023. By February 2024, that number had reached 4 billion euros.

In a recent interview, I spoke with the bank’s president Odile Renaud-Basso on investing in Ukraine during a full-scale war, the bank’s decision to approve a capital increase to sustain support for the country, and the challenges ahead as both Ukraine and the world enter an uncertain year.

The Kyiv Independent: What are the challenges for an institution like the EBRD to allocate financing to a country that’s actively at war?

Odile Renaud-Basso: This is the first time that we are in such a situation. Although we continued to intervene in Ukraine post-2014, there wasn't a full-scale war. It took a few months (after the start of the full-scale invasion) for us to define what our risk appetite was.

With the war and all its challenges and all the country’s efforts I thought it would be very hard to have structural reforms in parallel, to continue to pass laws in the Verkhovna Rada (Ukraine’s parliament), to apply for EU candidacy, and to make changes in governance, but this is what (the Ukrainian government) has been able to do.

The Kyiv Independent: What are the one or few things that an institution like the EBRD wishes was different in Ukraine or that would change faster to make both the bank’s job easier and the country more economically stable or sound?

Odile Renaud-Basso: It’s a bit of a paradox — Ukraine has been more able to deliver in a way because of the unity and efficiency of decision-making (during the war) than sometimes before. It’s very important to keep that going. The fight against corruption will be key to keeping the support needed for the war and reconstruction. This is a key element for donors. It’s very well understood that (corruption issues) can create a backlash.

The Kyiv Independent: How does the EBRD assess what’s happening in the U.S. Congress and what are its contingency plans to make sure the bank can continue to support Ukraine regardless of what happens in the U.S.?

Odile Renaud-Basso: Our support for Ukraine is not directly dependent on the package, but one caveat is the fact that we were able to provide so much financing because there was demand, Ukraine’s economy was in a relatively good position, and there was a rebound in 2023 that was conducive to private-sector investment. iIf there’s no support and the economy collapses, the dynamics and investment opportunities will be different.

Read the full interview here.

What else is happening

France invests 5 million euros in reconstruction of Chernihiv Oblast. Ukrainian officials signed a memorandum of understanding with France to invest over 5 million euros toward the reconstruction of Chernihiv Oblast, Ukrainian Infrastructure Minister Oleksandr Kubrakov announced on March 4. Work is reportedly already underway on several restoration projects, including on the roof of the Chernihiv regional academic theater, the development of anti-radiation centers in local hospitals, as well as local government trainings on recovery, decentralization, innovation, mobility, and more. "A successful partnership between French and Ukrainian communities is essential for the sustainable development of Chernihiv Oblast, especially given Ukraine's gradual integration into the European Union economic space," Kubrakov said. Chernihiv Oblast is located on Ukraine's northern border with Russia. The region was invaded and partially occupied during Russia's initial onslaught in February 2022, but Russian forces withdrew in April 2022 after the Kremlin failed to take Kyiv.

Ukraine, Palantir sign agreement to accelerate demining through AI. Ukraine’s Economy Ministry and the U.S. tech company signed an agreement to use artificial intelligence in Ukraine’s humanitarian demining efforts, the ministry announced on March 3. Since the start of the full-scale invasion, deminers have neutralized over 470,000 explosive objects and cleared more than 1,170 square kilometers of land, according to Serhii Reva, the head of the State Emergency Service’s humanitarian demining department. At least 270 Ukrainians, including 14 children, have been killed by mines and other explosives since the start of the full-scale invasion. Under the agreement, the government will use AI-enabled software in its efforts to further digitize the demining process, as well as analyze and prioritize which areas to focus on. The main goal, overall, according to the Economy Ministry, is to "demine territories faster and at lower costs."

Ukrenergo: Ukraine plans record electricity exports to 5 countries. Ukraine plans to export a record 13 gigawatt hours of electricity to other countries on March 4, namely to Slovakia, Hungary, Poland, Romania, and Moldova, said Ukrenergo, Ukraine's state-owned energy operator, in a statement. Since electricity exports are permitted only in the absence of energy deficits, the announcement indicates a stable situation in that sector despite Russian attacks and winter consumption. "Today, it is planned to export a record amount of electricity – 13,264 megawatt hours, with the maximum capacity in individual hours up to 716 megawatts," Ukrenergo said on Telegram. The state company said that flooded rivers and sunny weather contributed to greater output of hydroelectric and other power plants. "Thanks to this, electricity producers have the opportunity not only to fully meet the needs of Ukrainian consumers but also to sell electricity to neighboring countries, receiving funds for further recovery after Russian attacks," the statement read.

Naftogaz says Ukraine passes winter with only domestic gas production for first time. Ukraine got through the winter using only domestic gas production for the first time in history, Naftogaz’s CEO Oleksiy Chernyshov said on March 1. Prime Minister Denys Shmyhal said on Jan. 31 that despite Russian attacks, Ukraine's energy sector remains stable as the country relies on its own gas this winter season. "Ten years ago, nobody would believe in it. Two years ago, when the full-scale war began, it was also difficult to believe in it. But we did it, and now we plan to maintain the trend of Ukraine’s energy independence in the future," Chernyshov said. Meanwhile, Ukraine's state-owned oil and gas giant Naftogaz aims to produce 15 billion cubic meters of natural gas in 2024, Shmyhal said at the meeting of the Cabinet of Ministers on March 1. Shmyhal said that the increase in domestic natural gas production is one of the key objectives of Ukraine’s energy strategy in 2024.

Official: Poland holds informal talks with EU on exemptions for farmers. Warsaw is conducting informal negotiations with European Commission President Ursula von der Leyen on granting Polish farmers possible exemptions to the EU's Green Deal, Poland's Deputy Foreign Minister Andrzej Szejna said on March 3. Polish farmers in February launched a new wave of protests against Ukrainian agricultural imports and environmental policy reforms in the European Green Deal. Ukraine's State Border Guard reported on March 3 that all six border crossings with Poland are now blocked by protesters. Szejna confirmed to Polish media that informal talks with the EU are in process. He said Poland is looking for exemptions to EU regulations on "everything that is possible, both from the Green Deal and the influx of products that would cause a permanent disruption to the market of one or most countries." Warsaw argues that the flow of cheaper Ukrainian products threatens the livelihoods of Polish farmers, a claim Kyiv denies. Poland has already instituted a ban on several Ukrainian products, including grain.

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