Three months ago, Ukraine, the G7 countries and international organizations created a coordination platform, or "financial Ramstein". Does it work? A major rebuilding conference in London at the end of June will show.
On April 26, Ukrainian leaders led by Prime Minister Denys Shmyhal held the fourth conference on the reconstruction of Ukraine during the full-scale war in Rome. "There won't be big announcements there, but as part of the roadshow it's important for us," says an interlocutor related to the Ukrainian delegation, who asked not to mention his name and position in this article.
The Italian event is attended by Economy Minister Yuliya Svyridenko and Foreign Minister Dmytro Kuleba, but not by Finance Minister Serhii Marchenko. Two weeks ago, he was one of the key figures of the Ukrainian delegation at the spring meetings of the IMF and the World Bank in Washington. Another important role of the minister is that Marchenko is the co-chairman of the donor coordination platform of Ukraine (better known as "financial Ramstein"), created at the end of January.
This initiative has not yet yielded tangible results, but the Ukrainian side is counting on significant changes after the big conference in London, which will take place at the end of June, noted four Forbes interlocutors who are connected to government structures and international organizations.
At the event in the capital of Great Britain, Ukraine hopes to agree with its partners on the list of reconstruction projects and, accordingly, specific donors who will finance them. It is not only about the governments of countries or international organizations, but also about foreign business, says an interlocutor close to the Cabinet, participating in the preparations for the conference, on the condition of anonymity.
This time, Ukraine will not present big plans for restoration worth hundreds of billions of dollars, as was the case last year in Lugano, Switzerland. At the center of the discussions that will take place in London and continue as part of the "financial Rammstein" is not only the amount of money that the Ukrainian government can attract, but also its ability to effectively use it.
How are Ukraine's negotiations with donors going and what kind of support can it bring this year?
How the "financial Rammstein" is organized
The first meeting of the coordination platform, or "financial Ramstein", took place three months ago - on January 26. In addition to Minister Marchenko, the co-chairs of the structure became the Director General of the European Commission for Neighborhood and Enlargement, Gert Jan Koopman, and the US Deputy National Security Advisor, Mike Pyle.
The platform included representatives of the G7 countries (as members), as well as international financial organizations (as participants). The G7 is represented by diplomats and not by officials of the finance ministries, as Ukraine wanted, notes one of the officials from the international structure, a participant of the platform. "Without it, it would be much more difficult, but there is also a certain disadvantage, since the allocation of funds, as a rule, depends on the Ministry of Finance, and not on the Ministry of Foreign Affairs," he says.
Government and international donor representatives Forbes spoke to in January said they expected the platform to meet about once a month. One of the meetings, as the Deputy Director of the IMF for Ukraine Vladyslav Rashkovan noted at the time, was supposed to take place in Washington during the spring meetings in early April. To coordinate interaction between Ukraine and donors, it was planned to create a platform secretariat with two offices - in Brussels and Kyiv.
None of these expectations were fulfilled. After the January meeting, the platform met only once - online in April, says one of the interlocutors, who is connected to the government, on the condition of anonymity. "The Brussels and Kyiv offices of the platform's secretariat have not yet become operational (recruitment of people is ongoing), when this will happen is not yet known," he notes.
Currently, the main work continues in narrower groups, which include, for example, assistants or deputies of officials representing their countries in the platform, he clarifies. "We are talking about the G7 expert group, IFI operational group, G7 finance and energy track," explains the representative of the government structure. In particular, the latter group was actively involved in helping Ukraine during Russian attacks on energy infrastructure.
The next meeting within the framework of the platform (also in a remote format) is scheduled for mid-May, the first offline discussion is expected on the conference grounds in London.
What Ukraine brought from the spring meetings in Washington
Why didn't the "financial Rammstein" gather in Washington during the spring meeting? The Ukrainian delegation, in which Prime Minister Shmyhal, the head of the Ministry of Finance Marchenko and the head of the NBU Andriy Pishnyi played a key role, had an extremely busy schedule without it. "These are 10-12 meetings a day, and the prime minister has even more," says one of the members of the Ukrainian delegation in Washington, who asked not to be named in this article.
Another reason is that the trip to the USA had a tangential agenda to the tasks of the platform, but still a slightly different focus. On the eve of the meetings in the USA, Ukraine received the first tranche of $2,7 billion as part of the IMF program for four years and $15,6 billion. the foundation of the following decisions," one of the officials lists.
As for the "financial Reimstein", the task of the government in the US was only to work out the operational model of the platform, the interlocutor adds. This discussion could not but touch on the topic of the fight against corruption, which was almost the main topic at public meetings, says another delegate on the condition of anonymity. "Partners admit that we are moving, but their direct message is that any scandal involving their money can greatly harm Ukraine," he says.
After meetings in the US with the G7 finance ministers, Shmyhal said that Ukraine had reached an agreement on additional aid for $5 billion. Presumably, it refers to the need for the state budget of $115 billion over a four-year horizon, which was determined by the IMF program. Of them, $42 billion will be in 2023.
The sources of funding for this gap are one of Washington's key topics for Ukraine. The G7 countries have to cover the entire amount: the agreements on this became a certain guarantee for the Fund and allowed it to open a program with financing to Ukraine, notes an interlocutor in one of the financial state structures that participated in the negotiations. "We are now secured with financing for the next 12 months," he clarifies. - The rest are still soft commitments ("soft" commitments. - Forbes)".
What to expect from the conference in London
Other important figures that were announced on the sidelines of the spring meetings were announced by the World Bank: $411 billion of the total need for the reconstruction of Ukraine, of which $11 billion is this year. These funds are not included in the budget deficit and are supposed to finance the so-called fast recovery.
Ukrainian officials, led by President Volodymyr Zelenskyi, started talking about this track at the end of last year after the reconstruction conferences in Berlin and Paris. However, it was about a larger amount - $17 billion.
Attracting these funds is one of the main tasks of "financial Ramstein". In this sense, the Ukrainian side has high hopes for the conference in London, which will take place on June 21-22. Almost at this time a year ago, Prime Minister Shmyhal presented a $10 billion 750-year reconstruction plan for Ukraine in Lugano, Switzerland.
Statements about such large sums rather frightened potential donors, told Forbes interlocutors among representatives of partner organizations at the time. "Financial Ramstein" will be in June [in London], and it is necessary to prepare for it so that it does not become another Lugano," says one of the Ukrainian high-ranking officials in the financial state structures now on the condition of anonymity.
What will this training consist of? The key thing is that Ukraine plans to bring a clear pool of reconstruction projects to Great Britain, for which partners could already allocate funds, says an interlocutor close to the government, participating in the preparations for the conference. This is done primarily by the team of the Ministry of Community Development, Territories and Infrastructure.
The task is to obtain commitments from donors to participate in specific projects. "Ultimately, this "matrix" should become a key tool for working within the framework of "financial Rammstein," says an interlocutor related to the government.
Another important topic is to involve not only state structures, but also business. In particular, the organizers of the London conference are thinking of inviting representatives of the top 500 largest global companies to participate, who could testify that they consider Ukraine as a place for investment.
A separate track to be discussed in London is military risk insurance. While this is one of the most difficult questions, Ukraine's partners still do not have a clear answer to it.
In the meantime, the Ukrainian government has another difficult homework task - to assure potential donors that the country is capable not only of preparing a pipeline of projects, but also of implementing them. Why? "We are talking about $11 billion by the end of the year, although even in the best years of the "Big Construction" we were developing no more than $4-4,5 billion," says an interlocutor in the government structure.
What if the government misjudges its own capabilities now? This is a big risk, the official believes. "Then we can lose the trust of our partners for a long time," he warns.
Analysis from Forbes
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