Statement by Prime Minister of Ukraine Denys Shmyhal at the Ukraine Recovery Conference in London
Dear friends, partners, colleagues and allies.
Dear President of the European Commission Ursula von der Leyen.
Today, Ukraine is going through the most difficult times in the history of our independence. It is a crucial time not only for our country, but also for Europe, for the civilised world, for democracy and freedom.
The outcome of the war in Ukraine will determine the geopolitical landscape of Europe for many decades to come.
16 months into the war, no one doubts that russia has not achieved its goals. Ukraine withstood. Thanks to the heroism of the Ukrainian army, thanks to the bravery of the Ukrainian people, thanks to the leadership, thanks to the unity, thanks to the pro-Ukrainian coalition and your help.
12 months ago, Ukraine was granted the EU candidate status. We have an ambitious goal to quickly become a member of the European Union. We are already well ahead of schedule on this path. We are transforming our country. We are rapidly adopting European policies and practices, integrating into European markets, and strengthening our institutions. European integration is the compass for all reforms and changes, including the implementation of Ukraine’s recovery projects. I would like to express my gratitude to the European Union for its consistent military, political, financial, and humanitarian support. In particular, I want to thank the European Commission for the initiative of the new Ukraine Facility, which support our program to modernize Ukraine and implement key reform on the path towards the European Union.
Over the past months, we have laid the basis for winning this war. We believe that we are going to win this war and we will win the peace that follows.
I say “we” many times because this is our common achievements, our common work, our common task.
We need to achieve long-term stability, security, and prosperity for Ukraine and for the region.
We have already begun our long and difficult journey of rebuilding Ukraine. A year ago, in Lugano, we held the first major conference on Ukraine’s recovery.
At that conference, our discussions primarily were around plans, roadmaps, challenges, and prospects. A year later, here in London, our discourse extends beyond plans, encompassing notable achievements as well. We are now addressing the 10 key aspects of Ukraine's recovery, which provide us with a comprehension of where we are, where we are going, and what else we need to do to win this peace.
Damage assessment. We have said that the first thing we need to start with, is an independent, professional and transparent assessment of the damage and reconstruction needs. Together with the World Bank, the European Commission and the UN, we have created such a tool. We have carried out Rapid Damage and Needs Assessment. This document provides a comprehensive overview of the impact of the war in twenty different sectors. As of 24th February, this year, reconstruction needs have already reached 411 billion dollars. This is an unprecedented figure. Unfortunately, it does not yet encompass many losses, including the damages inflicted by the horrific terrorist attack carried out by russian forces at the Kakhovka Hydroelectric Power Plant. We are grateful to the World Bank for actively assisting us and agreeing to promptly conduct an assessment of the damages resulting from this dreadful terrorist act. We appreciate World Bank support in evaluating all the losses and firmly believe in the necessity of continuing this work. Therefore, the programme of large-scale recovery and transformation of Ukraine will also be unprecedented – it will be the largest reconstruction project in Europe since the Second World War.
Stages of recovery. The second issue raised in Lugano was the need to divide the recovery process into stages. The first stage is rapid recovery, which we started last year and are now actively implementing. We are talking about projects that are really necessary for the survival of the country and the people in the face of war. The World Bank estimates that we need 14.1 billion dollars for such priority recovery projects this year. The second stage will be a long-term reconstruction, which will take many years. And we are now starting to lay down a plan for its implementation.
Priorities for rapid recovery. Last year, we also talked about the importance of setting the right priorities for recovery. For this year, our Government has identified 5 key priorities. These are energy, humanitarian demining, housing, critical and social infrastructure, and supporting the economy. As I have already said, we need 14.1 billion dollars for the priority tasks in these areas. We have projects in all of these areas. Ukrainian ministers will present them in detail, with calculations, responsible agencies and timelines. We expect that at this conference in London we will finally be able to mobilise the full amount needed for these projects. This is a priority and a very practical story that we have to make together.
Recovery architecture. The implementation of all these projects requires a special Recovery Architecture and regular platforms for cooperation. Last year, we created the position of Deputy Prime Minister for Restoration of Ukraine. We have also established the State Agency for Restoration, the dedicated Fund for Overcoming the Consequences of Aggression, and the positions of deputy ministers for recovery in the relevant departments. We are actively engaging regional authorities, which is an important element of the decentralisation reform. Alongside the internal recovery architecture, we have established a new mechanism for regular interaction with our international partners. This is the Multi-Agency Donor Coordination Platform for Ukraine (as we call it “Financial Ramstein”). From the Ukrainian side, the Deputy Prime Minister for Restoration will be the representative on this platform. We are planning to enlarge this platform and attract to its meeting the private sector to participate in the reconstruction.
Transparency. Speaking about the recovery architecture, I have mentioned many times the words “transparency” and “accountability”. We are making sure that these are not just words. Ukrainian reconstruction should become synonymous with transparency. Last month, we presented the Digital Restoration Ecosystem for Accountable Management, or DREAM as we call it. The ecosystem will allow to control every stage of any recovery project. In a very short period of time, more than 5,000 sites for restoration have already been entered into the system.
Parametric approach and build back better principle. At the Lugano conference, we said that we wanted to carry out recovery using two approaches: the parametric approach and the regional approach. The parametric approach is the principle when the Government sets the general framework, the broad policies, and the general requirements. What does this mean in practice? For example, we have set new requirements at the legislative level for the construction of residential buildings, in particular that they must now have a bomb shelter. We have also developed requirements for schools and hospitals, and are setting up community safety centres. Security, barrier free environment, energy efficiency, green technologies – all these should be mandatory parameters of the new infrastructure in the reconstruction.
Regional approach. The regional approach is when our international partner countries take patronage of regions and communities in Ukraine. 30 countries have signed a Declaration supporting the initiative to provide coordinated assistance to rebuild Ukrainian communities and regions. During a year more than 300 territorial communities in Ukraine have signed 1,500 partnership agreements. Nearly 60 countries are helping our cities, towns and villages to recover. Currently, more than 214 projects are being implemented or have been implemented jointly with partner countries or international organisations.
Sources of financing the recovery. One of the key questions we are facing is: who will pay the hundreds of billions for the recovery? First and foremost – russia must pay for what it has destroyed. We are preparing a fair mechanism that will allow us to confiscate up to 500 billion dollars of russian assets frozen in the West. A historic decision was taken at a meeting of the Council of Europe to establish a Register of damage caused by russia’s aggression against Ukraine. This is the first component of the International Compensation Mechanism.
The second source of funding for reconstruction is the Ukrainian budget, including funds from confiscated russian assets in Ukraine. The Ukrainian budget for 2023 has already earmarked 3.3 billion dollars, and we have already started reconstruction with these funds. The third source is the assistance from our international partners, including international financial organisations. We are grateful to all of you! Our partners have already pledged 4.3 billion dollars out of the total 14.1 billion needed for the rapid recovery. But we still need another 6.5 billion dollars. We have set an ambitious goal of securing pledges for this amount as a result of this conference.
Involvement of the private sector. No large-scale, effective and rapid recovery is possible without the involvement of private capital and private investments. We believe that it is business and entrepreneurs who can make our recovery truly effective. We are already offering projects and investment opportunities to international capital. Together with the World Bank, the U.S. International Development Finance Corporation and other partners, we are working on an effective war risk insurance model for investment in Ukraine. We have identified 5 key segments that will form the basis for the recovery and transformation of our economy. The first sector is energy. There is a huge potential in the electricity sector, gas production and storage, and also hydrogen energy. The second sector is the military-industrial complex. Many Ukrainian weapons and developments are proving their effectiveness on the battlefield right now. European and global defence companies are increasingly considering options for building new production facilities in Ukraine. After the war, we expect a great boost in the development of this sector in Ukraine. The third sector is agriculture. Ukraine is already a world leader in the production of many crops. With government incentives and private foreign investment, we believe that post-war growth in this sector could be in double digits. The fourth sector is infrastructure. The recorded losses exceed 100 billion dollars. Colossal destruction. So, it will be the market that is worth tens of billions of euros. We will actively offer public-private partnership and concession projects. The fifth sector is IT. We have ambitions to become a digital hub in Europe. We offer IT companies some of the most favourable tax and regulatory conditions in the world. In general, we are telling the private sector that those who invest in Ukraine today will have extraordinary opportunities and prospects in the coming years.
Ukraine is changing. Recovery of Ukraine is not just about rebuilding a power plant, a road, a house or a hospital. Recovery of Ukraine is also about the transformation of our country, a new quality of institutions, a new living space, a new European Ukraine. We understand that Ukraine must change, and Ukraine is transforming right now. For this year, our Government has identified 10 priority reforms and transformation projects. European integration. Security and defence. New veterans’ policy. Human capital development in the face of extraordinary challenges. New economic model. Logistics development. And, of course, rapid recovery.
In addition, we have fully established the anti-corruption infrastructure: the National Anti-Corruption Bureau, the Specialised Anti-Corruption Prosecutor’s Office, the High Anti-Corruption Court, the National Agency on Corruption Prevention. These are important institutions that allow us to ensure the principle of inevitability of punishment and the rule of law. At the same time, our Government is carrying out a major digitalisation reform, a large-scale deregulation for doing business, the corporatisation and the privatisation of state-owned enterprises. These are the necessary changes that will allow us to prevent corruption.
Ukraine is changing and Ukraine is winning. Our victory will be the beginning of a renewed and stronger Europe.
We believe that we are united in defence and we will be united in recovery. We are grateful to everyone who is helping us fight for our freedom and independence today.
I would also like to express my gratitude to the Government of the United Kingdom for co-organizing this conference. Such events enable us to synchronize our efforts and work together towards the victory and recovery of Ukraine.
Thank you for your support. Thank you for attention.