Page 44 - bne_May magazine 2023_20230503 BRICS

44 I Central Europe bne May 2023
“We will provide further humanitarian aid and contribute to post-war reconstruction,” Golob said.
In addition to discussing political matters, Golob and his delegation also met with Ukraine’s Prime Minister Denys Shmyhal to discuss economic co-operation.
Golob underlined the interest of the Slovenian side to start actively thinking about how to build on the cooperation that was established during the Russian aggression in the post-war period.
"The Ukrainian market is not unfamiliar to Slovenian companies, and it would be good to lay solid foundations for future economic relations now," according to the statement.
Croatia also said several times that it
is ready to help with Ukraine’s post- war recovery. Balkan countries such
as Bosnia and Croatia have their own experience of post-war reconstruction after the wars in former Yugoslavia in the 1990s. This was noted by Shmyhal during his Croatian counterpart Andrej Plenkovic’s visit to Kyiv in March.
Other small countries in the region such as Albania, Montenegro and North Macedonia have also pledged to do what they can to rebuild Ukraine.
Russia’s friends in CEE
Even those countries that have maintained a relationship with Russia – to the dismay of both Kyiv and most EU members – such as Hungary and Serbia, are seeking to play a role in the reconstruction of Ukraine. However, Hungary's continued energy sector cooperation with Russia and Serbia's refusal to join sanctions may well result in their companies being side-lined.
“Hungary will provide all possible assistance for the reconstruction of Ukraine", the foreign ministry said in a short statement in early April, which came right after one of Hungary’s top security policy experts said Hungarian companies will most likely miss out on post-war construction projects. It is rather unusual for any ministry to
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react to reports, which may show the desperation of the government, Forbes.hu wrote.
Ferenc Kaiser, a professor at the University of Public Services, said
the future reconstruction of Ukraine will cost around $400bn-$500bn and Hungarian companies will thus be
left out of what could be almost half a trillion dollars-worth of business. He is one of the first persons to say out loud what is becoming the reality that the prospects of Hungarian companies winning tenders in Ukraine are slim, given Budapest’s position on the war, which many allies see as representing Russian interests.
Hungary has refused to send arms
to Ukraine, blamed EU sanctions on Russia for high-energy prices and the highest inflation in Europe, as well as threatening to veto assistance to Kyiv on numerous occasions. Last week, Nato chief Jens Stoltenberg convened the first ministerial-level meeting of the Nato-Ukraine Commission since 2017 despite Budapest’s objection, a sign that Hungary’s allies have grown weary of Viktor Orban's veto threats, breaking the unity of the alliance.
Hungary’s construction sector is also dominated by companies run by powerful oligarchs close to the prime minister, a fact well known in the EU, which is calling for Hungary to reform its public procurement system to access frozen EU funds.
Avoiding the pitfalls
Kyiv has talked of the need to learn from early post-war reconstruction efforts such as in Iraq and the countries of former Yugoslavia. There has also been an emphasis on the need to build back better, by investing, for example, into new renewable energy capacity and other modern high-tech sectors.
On the downside, bne IntelliNews sources have mentioned the inflated prices already charged by some companies employed to carry out early reconstruction projects. And that is not to mention the corruption in Ukraine’s own government that has already seen
senior defence officials dismissed for inflating the cost of soldiers’ rations in January to make a quick buck for themselves.
The gorilla in the room is the endemic governmental corruption that will become an issue when the billions of dollars of reconstruction money start to flow. In anticipation of these problems, that is likely to slow the amount of aid sent to Ukraine by western partners, Zelenskiy’s government continues to roll out its anti corruption programme in the background. One of Ukraine's most famous oligarchs is under investigation in an anti-corruption crackdown in February, when law enforcement agents raided the home
of oligarch, and Zelenskiy’s friend, Ihor Kolomoisky.
Before the war, suggestions that the West fund a Ukrainian Marshall Plan to rapidly build up the economy as the most effective counter to Putin’s pressure were instantly dismissed on the widespread belief that most of the money would simply be stolen.
Meanwhile, rather than allowing
a free-for-all by forcing companies, Olena Shulyak, the head of Ukraine’s parliamentary committee on regional development and urban planning, said on April 6 that Kyiv aims to have 60% of all reconstruction work carried out by domestic companies, reported Ukraine Business News.
She recommended that the government protect domestic producers and launch a programme to revive business activity, including preferential lending, after the damage caused to Ukraine’s economy by the war.
Shulyak also pointed to the need to analyse the materials required for reconstruction and to identify areas where the share of imports can be reduced. Ukrainian businesses can,
for example, provide construction materials such as bricks, concrete, paint and ceramic tiles, while it would need to rely on imports of glass, electrical equipment and lifts.