When War Ends, a Race to Rebuild Ukraine
LVIV, Ukraine — Latvian roofing companies and South Korean trade specialists. Fuel cell manufacturers from Denmark and timber producers from Austria. Private equity titans from New York and concrete plant operators from Germany. Thousands of businesses around the globe are positioning themselves for a possible multibillion-dollar gold rush: the reconstruction of Ukraine once the war is over.
The war is far from over as it enters its second year, but the staggering rebuilding task is evident. Hundreds of thousands of homes, schools, hospitals and factories have been obliterated along with critical energy facilities and kilometers of roads, rail tracks and seaports.
The profound human tragedy is unavoidably also a huge economic opportunity that Ukraine’s president, Volodymyr Zelensky, has likened to the Marshall Plan, the U.S. program that provided aid to Western Europe after World War II. Early cost estimates of rebuilding the physical infrastructure range from $138 billion to $750 billion.
That prospect is inspiring altruistic impulses and entrepreneurial vision, smart business strategizing and rank opportunism for what the Ukrainian chamber of commerce is trumpeting as “the world’s largest construction site!” Mr. Zelensky and his allies want to use the rebuilding to stitch Ukraine’s infrastructure seamlessly into the rest of Europe.
Yet whether all the gold in the much-anticipated gold rush will materialize is far from certain. Ukraine, whose economy shrank 30 percent last year, desperately needs money just to keep going and to make emergency repairs. Long-term reconstruction aid will depend on the outcome of the war and on how much money the European Union, the United States and other allies will provide.
And though private investors are being courted, few are willing to risk committing money now, as the conflict is entrenched.
More than 300 companies from 22 countries signed up for a Rebuild Ukraine trade exhibition and conference in Warsaw last month. At the World Economic Forum in Davos, Switzerland, in January, a standing-room-only crowd packed Ukraine House to discuss investment opportunities.
More than 700 French companies swarmed to a conference in December organized by President Emmanuel Macron.
For businesses, a crucial question is, Who will control the money? Europe, America and global institutions like the World Bank — the biggest donors and lenders — are debating the answer.
Ukraine has made clear that there will be rewards for early investors. But that opportunity carries risk.
Danfoss, a Danish industrial company that sells heat-efficiency devices and hydraulic power units for buildings, has been doing business in Ukraine since 1997. When the war started last February, Russian shelling destroyed its Kyiv warehouse.
Danfoss has since focused on helping with immediate needs in war-torn regions and in western Ukraine, where millions of displaced people live in temporary shelters.
“For now, all efforts are going toward maintaining a survival mode,” said Andriy Berestyan, a Danfoss official.
Germany announced the creation of a fund to guarantee investments. The plan will be overseen by the global auditing giant PwC and would compensate investors for losses if businesses were expropriated or projects were disrupted.
France will also offer state guarantees to companies doing future work in Ukraine. Bruno Le Maire, the finance minister, said contracts worth a total of 100 million euros, or $107 million, had been awarded to three French companies: Matière will build 30 floating bridges, and Mas Seeds and Lidea are providing seeds for farmers.
“A lot of companies are starting to position themselves to be ready,” said Tymofiy Mylovanov, a former economy minister who is president of the Kyiv School of Economics.