[One Year Since Ukraine Invasion] ③ Still at War... "Competition for Ukraine Reconstruction Projects Already Underway"

[Asia Economy Reporter Jeong Hyunjin] As Russia's invasion of Ukraine enters its second year, companies around the world have already begun jockeying to participate in Ukraine's post-war reconstruction projects. Even though the war is not over yet, expectations are growing that it will become a kind of 'gold rush' generating enormous profits, prompting European countries to propose measures to support their domestic companies.

[Image source=Reuters Yonhap News]

According to the New York Times (NYT) on the 16th, the initial costs for rebuilding Ukraine's infrastructure and other sectors are estimated to range from at least $138 billion (approximately 177.4 trillion KRW) to as much as $750 billion (approximately 964.1 trillion KRW). Since the war with Russia began on February 24 last year, hundreds of thousands of homes, schools, hospitals, factories, as well as key power facilities, roads, railways, and ports have been destroyed in Ukraine. Former Ukrainian Minister of Economy Tymofiy Mylovanov said, "Many companies have started preparatory work," adding, "There is enormous capital worldwide, and everyone wants to participate in a part of it."

At a trade fair and conference for Ukraine's reconstruction held yesterday in Warsaw, Poland, more than 300 companies from 22 countries participated. The event organizers described the conference program by introducing Ukraine as the "world's largest construction site." The event was attended by Ukrainian government officials as well as representatives from Poland, the Czech Republic, Germany, and other governments.

Earlier, at the World Economic Forum (WEF, Davos Forum) held last month in Davos, Switzerland, the NYT reported that the Ukraine House was crowded with audiences solely for investment-related discussions. The Finnish Industrial Association also invited Ukrainian government officials to hold a webinar where companies could discuss matters throughout the day.

As interest in Ukraine's reconstruction grows, European countries such as Germany and France have pledged to support their domestic companies to gain a competitive edge. In December last year, French President Emmanuel Macron gathered more than 700 French companies to hold a conference related to Ukraine's post-war reconstruction. France promised to guarantee companies participating in Ukraine's post-war recovery efforts at the government level. Germany decided to establish a separate fund to protect investors. The global consulting group PwC will oversee the projects, and if any project fails or encounters problems, this fund will provide compensation.

Private equity funds are also closely watching business opportunities. In December last year, Larry Fink, chairman of BlackRock, the world's largest asset management firm, agreed with Ukrainian President Volodymyr Zelenskyy to cooperate on investment in Ukraine's reconstruction. BlackRock plans to provide free advice on how to structure the reconstruction funds.

The NYT stated, "Long-term reconstruction support depends not only on the outcome of the war but also on how much funding the European Union (EU), the United States, and other allies provide," adding, "However, while individual investors want to win favor to participate in reconstruction projects, there are not many companies willing to take the risk of committing investment funds immediately." The NYT also noted that from a corporate perspective, who manages the funds is crucial, and there is still intense debate over whether it will be Europe or the U.S., or international organizations such as the World Bank (WB)."