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Reconstructing Ukraine as Russian bombs fall

April 11, 2024

The German government wants to attract investment to Ukraine, despite Russia's ongoing invasion. Some 1,500 attendants are expected in Berlin this summer for the third international Ukraine Recovery Conference.

A damaged yellow bus in front of a damaged residential building
The reconstruction of Ukraine will cost $400 billion, according to the IMFImage: Anna Pshemyska/DW

Germany's Ministry for Economic Cooperation and Development has produced a 15-point paper aimed at what it calls "the mobilization of the private sector for the reconstruction of Ukraine."

Meetings have been held in the German and Ukrainian capitals for weeks in preparation for Berlin's Ukraine Recovery Conference on June 11 and 12. Similar events focusing on financial aid for Ukraine's economy have been held in Lugano, Switzerland, and most recently, London.

However, those close to the German government say the Berlin conference will highlight "four dimensions of reconstruction." In addition to training workers, the issue of EU accession will also be prominent, as will support for Ukrainian cities and communities.  

The price of reconstruction

Germany's Economic Cooperation and Development Ministry already provided some financial aid to Ukraine in 2014, following the Maidan revolution. "We want to build on what already exists," a ministry spokesperson told DW.  

The support is ongoing, even while Russia continues to attack Ukrainian infrastructure with missiles and drones, and is putting pressure on Ukraine's eastern front. The International Monetary Fund (IMF) estimates the cost of reconstruction at $400 billion (€370 billion).  

Private German companies wanting to invest in Ukraine — at least in areas less threatened by Russian attacks — can apply for German state securities. 

These are offered via investment guarantees provided by the economy ministry, and are similar to insurance policies. In the case of German investments in Ukraine, these are safeguarded in the case of war. For example, if a Russian bomb were to hit and destroy a newly built facility, Germany would be liable for the majority of the investments made.  

Germany's Cooperation and Development Minister Svenja Schulze (left) and Foreign Minister Annalena Baerbock (right)
The last Ukraine Recovery Conference took place in June 2023 in LondonImage: Thomas Koehler/imago images/photothek

Safeguarding investment projects in Ukraine  

Last year, German Economy and Climate Minister Robert Habeck approved 53 applications for investment protection abroad, as part of the investment guarantees program, totaling €1.5 billion worth of investments. Most of the applications for Ukraine were approved, amounting to €54.8 million for 22 investments, according to the 2023 annual report published by the ministry.

A ministry spokesperson was not able to say just how many applications have been submitted to the program since the start of this year. Russia has increased airstrikes on Ukraine the past few months. While Kyiv almost always successfully wards off attacks with its air defenses, other areas in Ukraine are less shielded. 

One of the German investment insurance policies approved for Ukraine since Russia's invasion was for a project by the German company Fixit. The firm is constructing a factory for building materials, near the western Ukrainian city of Lviv.

Fixit has been manufacturing building materials in Eastern Europe via its subsidiary Kreisel for years. The company began constructing a new factory near Lviv before Russia invaded Ukraine in 2022. After the attack, construction work was halted. Fixit was able to resume constructing its second Ukrainian factory with the backing of the investment guarantee policy. 

Containers line up to provide a temporary building marked with the company name Kreisel
Construction site of the new building materials factory of the Kreisel subsidiary of the German Fixit Group in Lviv OblastImage: Kreisel

Building materials for reconstruction  

"We are happy that we will be able to start trial operations this year," Michael Kraus, Fixit's managing director for the eastern region told DW. "We have to rebuild Ukraine. It is a very beautiful country with very friendly people."

But the war has also been challenging for him. The ongoing war has discouraged German engineering companies specialized in assembling machines that produce construction materials from sending experts to Ukraine.   

Kraus said he couldn't even send Fixit's Ukrainian employees to manufacturer training in Germany, because Ukrainian men of military age are not permitted to leave the country. In the end, he applied for a special permit from the Ukrainian government and was finally able to send three Ukrainian employees to Germany and Poland for training. Now they have the skills to install the machines in the new factory near Lviv, once construction is completed. 

Sixty people are due to start work in Fixit's new building materials factory soon, the second of the company's plants in Ukraine. And together with its Ukrainian subsidiary Kreisel, Fixit plans to set up a a training center to equip staff with the skills they need. It's another initiative that will likely benefit from German support, through a loan from the German KfW Development Bank.  

This article was orginally written in German.

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