A Luxembourg roundtable initiative that brought together public and private sector stakeholders with an interest in the economic recovery of Ukraine has evolved into becoming UkrainePlatform, a think tank focused on encouraging investments and developing the country’s economy.
UkrainePlatform seeks to cultivate discussions and share insights about Ukraine’s economy and necessary investments in a “friendly and professional atmosphere,” said one of the initiators, Valeriia Kotsur, a Luxembourg fund compliance professional from Ukraine who moved to the grand duchy six years ago.
“We are a group of professionals looking to share experience with each other for the benefit of Ukraine,” she said, adding that a decision to formally incorporate UkrainePlatform will be taken at a later stage. For the moment the group runs a LinkedIn page as “recovery and governance network”.
As a think tank, UkrainePlatform aims to provide EU investors with “adequate and professional guidelines/memos” on dealing with the “Ukraine realities and risks which are persisting now” in a manner that is aligned with the EU framework for doing business with Ukraine. The platform also foresees a project pipeline with milestones and projects which can already be implemented.
Four working groups
The 22 February roundtable discussion titled “Derisking of Ukraine Recovery Landscape” saw an elaborate exchange of views on Ukraine’s investments needs. The discussion involved investment professionals from Luxembourg as well as Ukrainian government representatives, which participated online.
Participants included, among others, Vira Savchenko, board member of Ukraine recovery committee of the European Business Association and CEO of BDO Ukraine; Viktor Nestulia, chairman of Rise Ukraine, head of Eastern Europe and Central Asia for Open Contracting Partnership; Sergii But, CEO of online government procurement auction Prozorro; Ihor Markevych, head of strategy and development Ukraine Startup Fund and advisor on innovation for the Ministry of Education and Science of Ukraine; Yevhenii Shakotko, deputy CEO of UkraineInvest; insurance broker Zilkens; and Mostobud, Ukraine’s biggest bridge construction company.
Following these discussions, four working groups are now being established in Luxembourg: one for governance, investment structuring including Insurance; one for innovations, IT, tech and startups, one for infrastructure and machinery and one for ESG, green energy and debt structuring plus projects pipeline.
On the sidelines of the roundtable participants also discussed the potential of restructuring Ukraine’s debt with frozen Russian assets. Luxembourg has frozen some 5.5 billion euro in Russian assets, which is about a quarter of the 21.5 billion euro in Russian assets frozen in the EU. Worldwide, it’s estimated that governments have frozen some 300 billion euro in Russian assets.
Frozen Russian assets
Economists at PGIM Fixed Income have recently suggested that frozen Russian assets could be used to back converted Ukraine debt obligations into so-called “freedom bonds”. The bond house has proposed a modified version of the Brady Plan to restructure Ukraine’s private debt obligations.
However, it is increasingly becoming clear that using frozen Russian assets for Ukraine’s recovery is something that would be legally complex, would require significant international cooperation, and that would take many years, if not decades.
While it’s relatively easy to freeze assets, detaching them from the legal owner is something that involves significantly more complexity.
Luxembourg’s finance minister Yuriko Backes, answering questions about Russian assets in a Bloomberg television interview while in Singapore last month, said any further steps on the use of frozen assets would require close international cooperation.
‘Can be a precedent’
“I think a lot of questions can be asked around this,” Backes said. “We have to make sure that this respects the rule of law. This can be a precedent, because something like that was never done before. So I think this will entail some more discussions.”
In the interview, Backes also made clear that Luxembourg is well aware of its position as an international financial centre that for many years also has been actively used by Russian clients.
“Luxembourg has a responsibility also as an international financial centre. Luxembourg has frozen 5.5 billion euros in assets of Russia. This is very important. What we have to make sure is that there is no circumvention of sanctions. Now we need to see what else can be done. And we’re doing this together with our allies. These discussions are very important,” Backes said.