[Four Years into the Russia-Ukraine War] ④ Reconstruction Fund-Raising Struggles amid AI Investment Dominance

Difficulties in Attracting Private Capital
Worsening Investment Concentration in the AI Sector
Concerns over Ukraine's Debt Repayment Capacity

Editor's NoteAs of the 24th, it has been exactly four years since the outbreak of the war in Ukraine, and the first three-way talks between the United States, Ukraine, and Russia in the postwar era are under way, rapidly accelerating peace negotiations. As cautious expectations emerge that a peace deal could be reached within this year, moves toward postwar reconstruction and recovery projects are also gaining momentum. At the same time, some observers predict that Ukraine's industrial structure, which has been reorganized around the defense industry in the wake of the world's first full-scale drone warfare fought on its soil, will bring about major changes in the global defense industry sector. This article takes a multifaceted look at Ukraine, which stands at a crossroads of massive change that will begin after the war ends.

Reuters, Yonhap News Agency

The biggest challenge for Ukraine's reconstruction program is known to be raising private investment capital. While public investment from Western countries such as the United States and the European Union (EU) is taking place, private investment funds themselves are barely being formed. Not only has it become difficult to secure funding due to the sharp global shift of investment toward the artificial intelligence (AI) sector, but there are also concerns about Ukraine's massive external debt and its repayment capacity, which are said to be dampening investor sentiment.

It is indeed a 'land of opportunity'... but Ukraine struggles to raise reconstruction capital

Efforts to raise funds for Ukraine's reconstruction have already been facing difficulties since last year. According to the New York Times (NYT), BlackRock, which was selected as the key adviser for the U.S. government's Ukraine reconstruction fund-raising, began soliciting funds in 2023 but announced in early July last year that it would halt the effort.

BlackRock initially sought to raise between 50 billion and 80 billion dollars as of April 2023, but after fund-raising faltered the following year, it drastically lowered the target to between 15 billion and 30 billion dollars. This falls far short not only of the 800 billion dollars in reconstruction costs targeted by the United States and the European Union (EU), but also of the 523.6 billion dollars in reconstruction funding needs estimated by the United Nations (UN). Even so, fund-raising proved so difficult that the campaign was halted altogether.

At the request of the U.S. government, BlackRock resumed efforts last month to raise reconstruction funds, but whether it will succeed remains uncertain. The NYT reported, "European and Ukrainian officials who discussed reconstruction fund-raising with BlackRock late last year are also skeptical that BlackRock will be able to attract investment capital," adding, "Even during the 2023 fund-raising effort, BlackRock sought to obtain money from the European Bank for Reconstruction and Development, and no documents indicated any plan to invest its own capital."

In the private sector, investors are reportedly reluctant to put money into Ukraine while peace negotiations have yet to conclude. According to the Kyiv Independent, a local Ukrainian outlet, foreign direct investment (FDI) in Ukraine in the first half of last year totaled 1.1 billion dollars, according to data from the National Bank of Ukraine (NBU), just one-third of the 3.3 billion dollars recorded in the same period a year earlier.

AI investment concentration intensifies... a black hole for large capital and talent

AP Yonhap News Agency

Since last year, most global investment capital has been flowing into the artificial intelligence (AI) sector. According to data compiled by the United Nations Conference on Trade and Development (UNCTAD), global foreign direct investment (FDI) in 2025 reached 1.6 trillion dollars, of which 1.09 trillion dollars was invested in high-income regions with per capita gross domestic product (GDP) of 14,000 dollars or more.

In particular, investment attracted by U.S. AI-related companies has surged. According to the "2025 AI Investment Report" jointly released by data analytics firm Crunchbase and HumanX, investment in AI-related companies last year reached 211 billion dollars, an 85% increase from the previous year. Of this, 126 billion dollars, or 60%, was concentrated in Silicon Valley in the United States.

From this year, the concentration is expected to intensify further as large-scale AI investments by global big tech companies are added on top. According to the Washington Post (WP), five major U.S. big tech firms - Amazon, Google, Microsoft (MS), Meta, and Oracle - plan to invest more than 700 billion dollars this year in building AI infrastructure. Massive investment is anticipated in AI data centers and related power generation facilities.

Alongside this investment concentration, the absorption of labor into the AI sector is also expected to become more pronounced. As electrical engineers and skilled construction workers are largely being drawn into AI data center projects, even in the United States other essential construction projects such as housing and hospitals are reportedly being pushed back. The WP noted, "Over the next few years, AI data centers to be built are expected to draw in about 20% of construction workers, including electricians and skilled tradespeople."

Ukraine's external debt exceeds 70% of GDP... default concerns emerge

EPA Yonhap News

Ukraine's rapidly expanding external debt due to the prolonged war is also cited as one of the reasons private investors are reluctant to finance Ukraine's reconstruction. If, after the war, Ukraine fails to service its massive external liabilities, it could fall into sovereign default.

According to the National Bank of Ukraine (NBU), Ukraine's public debt at the end of last year stood at 213.3 billion dollars, of which 160 billion dollars was external debt. Given that the International Monetary Fund (IMF) estimated Ukraine's GDP last year at 205.7 billion dollars, its external debt amounts to 77.78% of annual GDP. If the recently pledged 90 billion euros in loans from the European Union (EU) are fully extended, external debt is expected to increase significantly.

Concerns over a Ukrainian default have already been raised since 2024. In June 2024, Ukraine was unable to pay interest on its sovereign bonds and faced a default crisis, but narrowly averted default by reaching an agreement with private bondholders in August of that year to adjust bond maturities. Subsequently, there were also interest payment issues on 2.6 billion dollars of GDP-linked bonds, which were resolved only after a renewed agreement with creditors, underscoring the country's precarious financial condition.

International credit rating agency Standard & Poor's (S&P) stated in a report last month, "Ukraine's fiscal position remains fragile and depends on its fiscal and economic situation, including continued support from its allies," adding, "The potential terms and timing of any cease-fire are still uncertain. Ukraine's credit rating falls within the speculative-grade category on our rating scale."