War risks insurance is a key condition for attracting investments to Ukraine
This opinion was shared by Kurt Volker, former US ambassador to NATO and special representative of the US State Department for Ukraine in 2017-2019, with the participants of the European Business Association during the Warconomic Talks meeting. In his opinion, covering military risks for investors should become a key issue in the coming months and years to attract investments to the Ukrainian economy. For this, according to Mr. Volker, governments of partner countries should direct a certain amount of resources to subsidize such insurance.
About combat actions and the situation in Ukraine
Full-scale Russian aggression created a strong opposition and united Western countries in solidarity with Ukraine. Mr. Volker is sure that it is impossible for Ukraine to lose, but the path to victory will not be quick either. The guarantor of the survival of Ukraine as a sovereign, independent Eurpoean democracy is, above all, the Ukrainian people and their strong sense of national identity and their resistance to Russian aggression. Together with the support of Western partners, Ukraine will be able to gradually push the invaders out of its territory, Mr. Volker is confident.
According to Mr. Volker’s expectation, by the end of the year, Russian troops will try to dig in and maintain their gains in the occupied territories. The liberation of Zaporizhia and Donbas may take a long time, while Ukraine will be able to counterattack and gain an advantage in the Kherson and Kharkiv directions more quickly. The pace of hostilities may slow down in the winter and spring, after which both sides will restore resources, but Ukraine will be better equipped and prepared than before February 24.
About economic challenges
The war waged by Russia challenged the Ukrainian economy and became another factor that shook the global economic environment. Stoppage of business operations, interruption of logistics routes and supply chains, closed exports – all these factors put pressure on the economy and increase inflation. In this context, financial support from the international community is very valuable, but Ukraine will need a lot of resources for recovery. War is an extraordinary situation, and therefore requires extraordinary efforts.
Answering the question of whether US investors are ready to come to Ukraine, Mr. Volker noted that he saw substantial support and interest in Ukraine, in particular from the private sector, but it was currently not fully understood what can be guarantees of safety and return of investments, protection of investors’ interests. Currently, a practical guide is needed – how foreign investors can bring money into Ukraine even in war conditions.
It may seem that the world is now entering a new phase that does not seem very peaceful. We asked Mr. Volker how he assesses the risks of expanding the war beyond the borders of Ukraine. In his opinion, Russia cannot withstand another front now since its troops are tied up in Ukraine. However, if Putin remains in power and Russia is allowed to gain territory in Ukraine, then after some time they can accumulate strength, regroup and strike again either at Ukraine or at other European countries. And therefore, Ukraine will have reliable support from Western partners, in particular from the USA in the next few years, Mr. Volker is confident.
China, which has a territorial claim to Taiwan and considers it its territory, is also actively watching this war. And China will draw conclusions about its further actions based on Russia’s success or failure in Ukraine. In general, China has its own interests, which may or may not intersect with Russian ones. It does not want to be associated with Russia’s brutal military aggression, so it is restrained in its support. The USA continues to monitor China’s actions and policies in East Asia.
About the role of business and victory
Mr. Volker’s advice to Ukraine and Ukrainians is to try to resume operations and work actively. Everyone will remember the companies that continued to operate and help the country and the army in difficult times even despite the risks and danger.
Ukraine is already a part of the European family and is on the right track. And for further victory, coordinated internal and external efforts are required.
We thank Mr. Volker for great expert discussion of the topic!