Conference discussion "Beyond conflict, Ukraine's journey to recovery reform and post-war reconstruction"

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Razvan Serbu and Eduard Stoica

Conference discussion “Beyond conflict, Ukraine's journey to recovery reform and post-war reconstruction”

Silviu Nate, Andriy Stavytskyy

Abstract

Background: The paper investigates the results and conclusions of the conference held on 29 November 2023 within the framework of the research project. The conference extensively discussed the current problems facing Ukraine amidst an aggressive ongoing war. Considerable attention was paid to the country's post-war recovery, necessitating significant reforms in various sectors of the national economy. Participants underscored the need for these reforms to be integrated rather than isolated initiatives, serving as a comprehensive solution for Ukraine's achievement of the SDGs and fulfilling the criteria for joining the EU and NATO. The paper delves into the main challenges for implementing such reforms, their main elements, and their relationship, all of which were discussed during the conference. Particular attention was paid to achieving and maintaining the country's macroeconomic stability during military operations and identifying the main programs essential for revitalising Ukraine's economy. Furthermore, the paper presents successful cases of reform implementation at the micro level in state institutions.

Results and Conclusions: Following the conference, a program document on the directionsfor the restoration and development in Ukraine was drafted. It pointed out the critical need for unity between European countries and the USA in supporting Ukraine and providing timely aid. In Ukraine, achieving unity between the government and business regarding the de-shadowing of the economy, reform of the tax system, customs service, and administration of basic taxes and fees emerged as an issue. This should create prerequisites for the inflow of investments into the Ukrainian economy, ultimately reducing the gap with European countries.

Introduction and project background

The Romanian-Ukrainian research project “A modern science-based concept for Ukraine to ensure the sustainable development, recovery & reconstruction: cost assessment, model, and policy framework” was launched in 2023 to analyse new geopolitical challenges for achieving the goals of sustainable development of Ukraine in the post-war period. Conducting such an analysis should contribute to developing the concept of sustainable development and post-war renovation until 2030 under the global consequences of war.

The conference held in November 2023 was part of research aimed at providing a better understanding of how to develop a blueprint for security, resilience and development in Ukraine and the Black Sea region. A bilateral Romanian-Ukrainian team of six scholars from the Luciano Blaga University of Sibiu and the Taras Shevchenko National University of Kyiv focused on designing a roadmap for stabilising the region, fostering economic interconnection and facilitating Ukraine's integration into the democratic core of Europe. The research is directed to practical means and policy recommendations. Therefore, a combination of academic approaches and database research combined with policy design will generate academic papers, books, and policy papers.

The conference was addressed to investigate two main questions. How can we effectively address the new geopolitical challenges and achieve sustainable development goals in Ukraine and the region during the post-war period? How can regional actors enhance their joint profiles with the support of the EU, NATO and Western partners to strengthen regional security and stability? Ukraine's success and post-war reconstruction are a matter of interest for the broader region and its long-term stability.

Key speeches and insights from the speakers

V. Cojocaru, Director for Eastern Europe and Central Asia and representative of the Ministry of Foreign Affairs in Romania, underlined that the diplomatic dialogue between Romania and Ukraine is strong, dynamic and constant. Romania will continue to support the legitimate fight for Ukrainian independence, territory integrity and sovereignty. This commitment involves continuing to invest in Ukrainian infrastructure to increase transit capacity and provide a lift for Ukrainian exports. The reconstruction process will be directly interlinked with reform. These reforms will play an essential role in ensuring the long-term economic development of Ukraine and create a democratic, stable, safe and inclusive Ukraine. Moreover, the EU accession process will undoubtedly be transformative. reform reconstruction macroeconomic

HE Ihor Prokopchuk, Ambassador Extraordinary and Plenipotentiary of Ukraine in Romania, admitted that the key objective for Ukraine is to win the war unleashed by Russia. This war of aggression is not only an existential threat to Ukraine; Europe is at a critical point. The result of this war will define the security order that will govern this continent through the century. It is, therefore, crucial for all to stand firmly with Ukraine and provide the necessary assistance until the full victory over the aggressor. The victory would be a restoration of the sovereign and territorial integrity of Ukraine within its internationally recognised borders of 1991, which includes the autonomous republic of Crimea and the city of Sevastopol, compensation of the losses, and bringing the perpetrators to justice. It is essential to maintain international solidarity regarding all forms of assistance to Ukraine, including military, economic, financial, and humanitarian. One of the important tracks for cooperation is Romania's participation in the rebuilding and recovery of Ukraine. A bilateral partnership will facilitate Ukrainian and Romanian partnership on rebuilding Ukraine to increase the transit of products of Ukraine in origin. There is mutual interest in doing more in energy security and cooperation in digitalisation and cyber security. Postwar reconstruction and resilience building will become the key driving forces for strong partnerships between Romania and Ukraine.

Dmytro Natalukha, Member of Parliament of Ukraine and Chairman of the Economic Affairs Committee of the Verkhovna Rada, Ukraine, outlined that Ukraine has all the opportunities to implement and support logistics routes between the EU, Turkey, the Caucasus and Central Asia. It has a huge potential for freight transportation by rail, sea, and roads, which makes these routes extremely competitive. Ukraine has significant natural resources, such as agriculture and energy, which can stimulate economic growth, and it is ready to attract investment and operate in competitive markets. Without Ukrainian grain and other components, ensuring food safety worldwide is impossible. Significant volumes of energy resources, in particular, uranium and shale gas, and large and reliable gas storage make Ukraine attractive for the energy hub of Europe. Ukraine has significant natural resources for green energy production, including solar, wind and biomass. This provides opportunities for developing sustainable energy and reducing dependence on hydrocarbons.

Dr. Sergiy Nikolaychuk, Deputy Head of the National Bank of Ukraine, stressed the significance of Ukraine's victory and the subsequent strengthening of its economy and resilience as a very important challenge. This resilience is of joint interest to Ukraine and the EU, including, of course, Romania, and will considerably mitigate security risks for Europe. The fundamental prerequisites for sustainable economic growth are economic and financial stability. The NBU's commitment to maintaining price and financial stability under any conditions was a clear statement from the recently updated NBU strategy.

Under the full-scale war, the policy toolkit has had to adapt substantially and implement stabilisation policy measures. Despite the progress since the beginning of the war, today, Ukraine has embarked on a full-fledged program with the IMF, which is unprecedented and helps to navigate the economy and financial sector amidst extreme uncertainty. Notably, this program stipulates the absence of direct financing of the budget. All these efforts have led to a notable reduction in inflation to 5.3%, very close to the medium-term target of 5%, instilling optimism about achieving a control level of inflation close to the target in the medium term despite various adversities.

The domestic financial sector has to play a pivotal role in Ukraine's reconstruction and economic recovery, facilitating Ukraine's access to the EU common market in its interventions with other key sectors. To ensure successful reconstruction, Ukrainian authorities must prioritise different aspects in different stages. During the current stage, the critical role belongs to the state and official financing partners to make this stage work effectively. The key element nowadays belongs to the National Reconstruction Agency. According to the transfer and EU standards, this is relevant for all reparation, implementation, control, and reporting for projects with budgetary and donor funds.

There is a strong potential to boost the effectiveness of many state-owned enterprises and banks alongside expediting infrastructure and formulating comprehensive strategies for their subsequent privatisation. Transitioning to the next phase, the focus should move to public-private partnership instruments to overcome the initial resistance; the target programs from foreign governments, government agencies, and IFIs via subsidising the board risk insurance, co-investment, and guarantees are crucial. Ukraine must also improve infrastructure for public-private partnerships, concessions, and state-enabled investments.

Kateryna Ivanchenko, Head of CID, Ukraine, focused on the key goal of supporting and strengthening the capacity of local authorities, businesses and civil society to adapt to new challenges and make effective data-driven decision-making. She presented a Special bank of 80 proposed solutions for local self-government bodies for joint evaluation and selection of the best in providing services. Such solutions include data-driven decision tools, more than 100 in democracy and government services to make evidence-based decisions.

Dr. Habil, Prof. Andriy Dligach, Taras Shevchenko National University of Kyiv, Ukrainian entrepreneur, scientist, and civic activist. Founder of the Advanter Group of companies and the international business community Board and co-founder of the Center for Economic Recovery Ukraine, discussed efforts to strengthen Europe, enhance Ukraine's resilience, and foster its integration into the European Union.

Emphasising the multifaceted nature of the conflict with Russia, he highlighted Ukraine's role as a frontier between the Western world and regions marked by conflict and resource competition. He stressed the need for total modernisation in Ukraine's economy, state, and society beyond mere recovery. Economic freedom was identified as crucial for future growth, with a vision to double Ukraine's economy and achieve a scale similar to Turkey or Poland within 8 to 10 years.

The proposed formula for modernisation involved inclusive collaboration between the government, business, and civil society, focusing on anti-corruption initiatives. He estimated that Ukraine would need approximately $700 billion over the next decades, based on an analysis of over 40 countries worldwide that underwent similar challenges like war. He asserted that a significant portion of this $700 billion would come from FDI foreign direct investments. In this case, accordingly, he stressed the need to develop Ukraine's financial infrastructure both domestically and internationally, with the European investment bank identified as the biggest investor in Ukraine.

Addressing concerns about Ukrainian corruption, Dr Dligach attributed it to systemic economic issues rather than merely institutional shortcomings. He concluded by asserting that a strong Ukraine contributes to a strong European Union, positioning the country as a potential significant partner for the EU's future.

Mr. Stefan Schleuning, Head of Cooperation of the EU Delegation to Ukraine, delivered a speech on the challenges and progress in Ukraine's recovery, reform, and reconstruction efforts. Notable points include the recent recommendation for accession negotiations with Ukraine in the EU enlargement report, highlighting impressive reform progress despite ongoing war and the pandemic. The speaker emphasised the need for visible results and quick impact in various sectors, citing an example of school repairs in Chernigiv. Cooperation with international partners, capacity building, and the proposed four-year Ukraine facility were discussed as key elements of EU support, focusing on financial assistance, technical support, and coordination efforts. The speaker concluded by addressing the importance of donor collaboration and expressing readiness for questions or comments.

Dr. Pinter addressed challenges faced by Ukrainian publishers by fostering global collaborations, particularly in the realm of textbooks, scientific, and general publishing sectors, offering various support mechanisms.

Dr. Humenna discussed the importance of SDGs in Ukraine's recovery agenda. Survey findings highlight the war's significant impact on Ukraine's future development, with key sectors such as agriculture, IT, and construction expected to drive the economy. Challenges like corruption and human capital retention need to be addressed for successful SDG implementation.

Dr. Colibi^anu examined the complex challenges of rebuilding Ukraine post-war, emphasising geopolitical and geoeconomic perspectives. Key priorities include infrastructure reconstruction, energy security, and societal reconstruction to enhance competitiveness and resilience against external influences.

Prof. Stavytskyy proposed a comprehensive modernisation plan for Ukraine post-war, emphasising EU alignment, green economy transition, and societal reforms. Key steps include stimulating SMEs, reforming education, and enhancing infrastructure to position Ukraine as a major player in Eastern Europe.

Mrs. Leca outlined Ukraine's potential contribution to Europe's green transition, emphasising its natural resources and expertise in energy sectors. For successful green recovery, policies promoting good governance, transparency, and local empowerment are recommended.

Dr. Nazarov presented survey findings indicating low trust in institutions and challenges in synchronising perceptions of conflict readiness. Efforts to rebuild trust, enhance communication, and promote collaboration between sectors are crucial for strengthening national resilience amidst external pressures and destabilising trends.

Prof. Izarova highlighted Russia's illegal invasion of Ukraine and emphasised the need for fair compensation procedures. Mr. Chernohorenko discussed implementing European Court of Human Rights (ECHR) judgments, crucial for Ukraine's recovery and EU accession. Prof. Maydannyk explored legal challenges in compensating damages caused by Russian aggression and advocated a shift to a reparation tort model.

Michael Khoo shared insights from the KleptoCapture Task Force, detailing efforts to enforce economic countermeasures against Russia and seize assets. Jared Kimball discussed trust in Ukraine's judiciary and efforts to seize Russian assets for reconstruction.

James Carafano emphasised the need to integrate Ukraine into the broader Eurasian community, viewing reconstruction as pivotal for Europe's future. He outlined strategies to leverage regional infrastructure, particularly focusing on the Black Sea's significance for maritime safety and trade. Carafano advocated for Ukraine's role in connecting Europe with the Middle Corridor, fostering economic integration despite ongoing conflicts.

Gabriela Ciot and Liviu Serban discussed the European Union's (EU) enlargement methodology and expectations for candidate countries like Ukraine. Highlighting The discussions emphasised the need for unified international legal acts to navigate challenges effectively and achieve justice.

The need for fundamental reforms in areas such as the rule of law and economic development stressed the importance of credible progress and political leadership in the accession process.

Silviu Paicu addressed the reform of Ukraine's intelligence system, advocating for democratic oversight to build public trust. He proposed models from countries like Norway and Belgium to enhance parliamentary oversight and ensure independent scrutiny of security agencies, fostering transparency and accountability.

Vira Konstantinova discussed Ukraine's aspiration to join NATO, noting increased public support for membership as a long-term security guarantee. Despite challenges such as Russian propaganda and political changes within NATO, she emphasised Ukraine's strategic importance in deterring Russian aggression and protecting European security.

Vasyl Yurchshyn highlighted the importance of international assistance for Ukraine's security and reconstruction efforts. He emphasised the role of military-industrial cooperation in strengthening Ukraine's defence capabilities and contributing to regional security, urging global partners to support Ukraine's defence industry.

Alla Kozhyna discussed the significance of digital transformation in shaping urban resilience, sustainability, and recovery. Emphasising global urbanisation and digitalisation trends, she underscored the importance of digital solutions in addressing contemporary challenges and fostering economic and social development in urban areas. The presentation highlighted the potential of digital technologies to enhance urban strategies and improve residents' quality of life.

Victoria Vdovychenko focused on the resilience of Ukrainian cities and communities in achieving sustainable development goals. She highlighted the positive outcomes of decentralisation initiatives and Ukrainian cities' environmental priorities. Vdovychenko emphasised the importance of collaboration with European partners and advocated for a comprehensive strategy that includes community resilience and sustainable development goals.

Alina O'Connor discussed the transformative role of education in Ukraine's reconstruction efforts. She emphasised the importance of investing in education and skill development, particularly targeting adult learners and public service leadership skills. O'Connor proposed collaborative initiatives with Ukrainian universities to expand educational access and address local needs effectively.

Professor Silviu Nate elaborated on the efforts to convey the Ukrainian perspective on victory to European partners. He emphasised the importance of countering potential Russian propaganda and aligning terminology and ideas with Ukrainian experts and society representatives. Nate underscored the importance of incorporating sustainability into Ukraine's reconstruction efforts for a resilient future.

Conclusions and policy paper

In conclusion, participants highlighted the main challenges that need to be solved in the near future:

Further unified support of Ukraine by EU countries, the USA and other allies demands an uninterrupted supply of both weapons and financial resources. The countries of Eastern Europe and the Black Sea region should play a key role in providing transit corridors, promoting the recovery of the Ukrainian economy, and investing in infrastructure recovery, which will ensure the stability of the entire region.

The strategic importance of incorporating sustainability and resilience-building strategies into Ukraine's post-war reconstruction efforts requires uniform EU approaches to reforming the Ukrainian economy.

The development of joint strategies to counter potential Russian propaganda and align European perceptions. It is imperative for both EU countries and the USA to maintain a unified position regarding the terms, sources of funding, and reform tasks. Otherwise, all such reforms will be nullified by counter-propaganda of the Russian Federation. Also, the unification of cyber security with the EU and the US is becoming an important challenge, especially in the world of smart things.

The development of unified international legal acts to navigate challenges effectively and achieve justice, especially in the matter of paying reparations to Ukraine and punishing war criminals.

Ukraine will require huge investments to restore war-affected regions, which should be rebuilt according to SDG principles. This approach will not only expedite Ukraine's progress but also bring it closer to EU standards.

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