Ukraine pursues $400bn investment drive despite conflict raging on

Ukraine has launched a drive to attract foreign investment of up to $400bn in projects across the economy even though it is facing a protracted war with Russia and a slump in output.

The government in Kyiv has identified hundreds of initiatives in technology, the agro-industry, clean energy, defence, metallurgy and natural resources where it hopes to entice international investors backed up by loan guarantees and insurance from western donors.

President Volodymyr Zelenskyy described the investment potential in his country as “the greatest opportunity in Europe since world war two”.

Economic development minister Yulia Svyrydenko said Kyiv was also preparing to allow larger investors to operate in Ukraine under English commercial law to reassure western businesses concerned about widespread corruption in the country’s judicial system.

“We are grateful to our western partners for international financial aid,” Svyrydenko said in an interview with the Financial Times. “But today we are not asking for humanitarian aid. We are asking for investment that can provide a growth opportunity for Ukraine. We understand it as blood for the Ukrainian economy.”

Asked why international investors would enter the Ukrainian market with no end to war in sight, Svyrydenko said: “You might say it is too early to ask for foreign direct investment, but for businessmen, for those who are ready to take risks, they understand that who are first, they will achieve the most and gain the benefits.”

Foreign investors could use the period of uncertainly as the war drags on to explore opportunities, prepare projects and conduct due diligence before committing themselves once the situation stabilised, she said.

Kyiv is also looking for investors to help rebuild bridges, roads and housing in a short-term “rapid recovery stage”.

Ukraine’s economy is expected to shrink by 35-45 per cent this year, far more than Russia’s, because of the destruction of infrastructure and industrial facilities, the blockade of export routes, an exodus of workers and disruption to activity from Moscow’s offensive. Kyiv also needs $5bn a month from international partners to fund its deficit.

Despite facing an economy on its knees, the government is hoping to translate an outpouring of western solidarity for Ukraine into foreign direct investment.

In the energy sector it has identified 50 investment opportunities worth $177bn in solar, hydrogen, nuclear, oil and gas, storage and power grid modernisation.

The government says it is simplifying and speeding up regulatory procedures and has cancelled 500 different permit requirements to open projects to new investors. It will also offer generous tax credits.

But Ukrainian officials acknowledge western investors will need protection. They are looking to access insurance products covering war risk from the World Bank and want western export credit agencies to provide guarantees.

“When we kick the Russians out of our territory, they will still have the chance to shoot at us,” said deputy economy minister Oleksandr Gryban. “Unfortunately, we will always be at a certain level of risk. It is more a matter of how we mitigate these risks.”