Corporate Meeting

Financing Ukraine's Economic Recovery

Monday, March 6, 2023

Senior Fellow, Future of Diplomacy Project, Belfer Center for Science and International Affairs, Harvard Kennedy School; Co-chair, Ukraine Economic Reconstruction Commission, Center for Strategic and International Studies; Former Undersecretary of State for Global Affairs (2001–09)

Managing Director and Head, Financial Markets Advisory, BlackRock

Alternate Executive Director, International Monetary Fund; Former Deputy Governor, National Bank of Ukraine (2014–16)


Chief Executive Officer, MCC Productions

Corporate Program Virtual Meeting

Panelists discuss how the Ukrainian government, multilateral lending institutions, and the private sector work can together to finance Ukraine’s recovery after the war.


CARUSO-CABRERA: Good afternoon, everyone. Hi. I’m Michelle Caruso-Cabrera. Welcome to CFR’s—the Council on Foreign Relations—discussion about financing the economic recovery of Ukraine. It’s a pleasure to have everyone here. We have a large crowd.

Let me quickly introduce who’s here. Ambassador Paula Dobriansky, talking about U.S. national interests is here, as well as Brandon Hall. He’s a managing director with BlackRock, to talk about the role of the private sector. And Vladyslav Rashkovan is the Ukrainian representative to the IMF, the alternative executive director. Great to have you all here.

Madam Ambassador, I’m going to start with you. There’s already debates about financing—the U.S.’s financing of the war in Ukraine. Is there a national interest for the U.S. in terms of financing the economic recovery of Ukraine?

DOBRIANSKY: Absolutely. And just good to see everyone. Absolutely. For the United States it’s in our national security interests. And let me explain the reasons why. One is that experience has shown us that if you let a conflict just go forward and you don’t address reconstruction, economic, financial issues, that—you know, it has shown us that that is to our own detriment and to the detriment of others. But here, I would say that the United States and the West has vested a great deal in the military, seeking a success here. Ukraine wants success. We want success for Ukraine. But what about winning the peace? And in order to win the peace, there has to be a strong economic basis and a plan—a game plan going forward.

Here, I think I’d also add, secondly, very importantly, Ukraine itself has already put forward a national recovery plan. And why I reference this is, and why it’s in our own interest, is that it addresses many of the issues that are of concern to investors. Issues of transparency, issues of corruption, steps that need to be taken, and also even a kind of a prioritization of the target areas. That brings me to the third, which matters. By having a kind of a strong economic base, and investing and ensuring that there is this economic recovery, that’s going to produce stability and security. There are many low-income countries that have been terribly affected by the war, this unprovoked war, in Ukraine.

Let me give one example: Egypt. Egypt depends 75 percent on its grain from Ukraine. And with that blockage at the port, it has been really seriously impacted. So here it’s not only about us, the United States, meaning our own stability and security. We’re part of NATO, the transatlantic alliance. Having a strong economic basis will ensure that it’s not only there’s a military success, but also, if you will, hopefully an economic success, an opportunity for Ukraine to modernize, to address transparency, corruption issues. It’s an opportunity. And I’ll end on this note: The other factor in this we also shouldn’t forget is the issue of humanitarian. There are close to fourteen million people who are either refugees or displaced—internally displaced. So also when you look at it, the financing on the economic side and the reconstruction, also will certainly have bearing on them.

I like to close—I like what the President of the European Commission Ursula von der Leyen had said. I’m just paraphrasing. She actually stated that Ukraine is well-poised for reconstruction because it has a strong civil society, it has friends internationally. It also, by the way, has a determination—very, very strong determination—to make change. And so from that standpoint, there’s a real strong basis and opportunity to go forward.

CARUSO-CABRERA: Vladyslav, let me turn to you. I’m sure the list is long, but what would an economic reconstruction plan look like ideally to Ukraine? How much money do you think it’s going to cost?

RASHKOVAN: Thanks, Michelle. It’s a complicated question, I would say, because how much money? There are many estimations and, unfortunately, the war is not finished. So while we speak, there are more destructions happening. And probably many people have seen, like, yesterday the cities like Marinka, which completely destroyed. There are hundreds of cities like that, which are completely destroyed.

We have, as of today, they will have to type of estimations. One is coming from World Bank. And the new estimation should come, like, in probably ten, twelve days. But we have so far the estimation that reconstruction will be something like $350 billion. My feeling is that the new estimation will be probably doubling this amount, because the 350 (billion dollars) was as of June last year. The Kyiv School of Economics is doing more regular assessment, but they are doing more damage assessment. And the damage already which occurred is more than 100 billion, was already on the start of the year.

But answering the question how much really you need, it’s a complicated question because this is what Paula just said. It’s a function. You know, it’s a function of what Ukraine wants, what Ukrainians want, because the vision should come from Ukrainians, from Ukrainian recovery plan. And I do hope this will be not recovery but really, as Paula just said, modernization. And modernization means more green economy, more, you know, inclusive economy, more digital economy. And this may require money, but I’m sure that those who will support that—both from the government side and private side—they will be proud to be a part of the—to be on the right side of the history, I would say, on this.

CARUSO-CABRERA: Thank you. Brandon, let me turn to you, the private sector. You and your team at BlackRock have been looking at this issue, coming up with a plan. First, what do you think of these numbers? The 350 billion to 700 billion (dollars). You could drive a truck through that. And the war is not over, to Vlad’s point. Who knows how much it’s going to cost. How do you think about this in terms of the private sector and how you can work with Ukrainians? And do you assume you’re going to work with multilateral institutions, like the IMF?

HALL: Thanks, Michelle. And hello to everyone. Appreciate the question. And, yes, to your point, we’ve been working with the Ukrainian government for the better part of the last six months on a pro bono basis to think about how can you attract private capital into the reconstruction and recovery of the Ukrainian economy. I think the array of private sector, public sector, multilateral, stakeholder conversations that we’ve engaged in have crystalized a very core takeaway. Which is, the appetite is incredibly limited for the private sector, despite a lot of the initiatives and programs that the Ukrainian government, the international community have been undertaking.

And that is because there is a belief that there are simply some uninvestable risks that exist in the situation. Obviously the first one we reference, and needs to be resolved quite frankly for any private sector investment, is the notion of the war still ongoing. But there’s a big question of if and when there is some resolution to the conflict, if and when there is some reasonable cessation of hostilities, what does the peace look like? And for investors to have some surety that Russia won’t want to come back, that there will not be some further sort of uptick in hostilities, there are all sort of, you know, I would say, table stakes just to start the conversation.

But then when you think of the other risks that come after it, some of these risks actually existed before the war as areas of focus for investors. Rule of law is certainly one big area. And I think this can—this can pair with a little bit of a conversation here around whether or not Ukraine has the opportunity to become an EU member state. That is the type of thing that a private sector investor might be looking for in terms of providing some surety around what the rule of law will be, how you think about an independent judiciary, independent of other organizations, et cetera.

I think, secondly, and I know we’ll come onto this a bit, this question of transparency and the presence of corruption, whether or not there will be some continued prevalence of oligarchic activity, who will be the future owners of capital as, you know, the peace comes online. And then I think, very importantly, the notion that the capital markets and the financial regulatory environment in Ukraine was already fairly immature and nascent before the war.

This is something that investors from the private sector are going to be looking for in terms of the ability for the Ukrainian government to facilitate sort of maturing these capital markets, ensuring that there’s a regulatory regime in place that has international credibility and repute, and that there will be the opportunity for, you know, sort of different types of investments to come into play—whether it’s equity, whether it’s debt, whether it’s through other transmission channels.

The final point that I’d not, at least when I think about things from the private sector standpoint, is that organizations—be they asset managers, be they asset owners, et cetera—they’re going to be looking for credible first movers. And oftentimes in these types of situations, the credible first movers come from the multilateral community, whether it’s the IFC, or the UBRD, or other stakeholders that have that experience to come in and show proofs of concept from a transactional perspective that gives a private sector investor the view that they can come in.

But really what I would say is today there is really no more than just very opportunistic pools of capital that are looking. And when we talk about, Michelle, to your question, the 350 to 700 billion (dollars) of need—and I would posit that it may go higher than that—for the private sector to support a significant chunk of that, these risks are going to have to be mitigated in some way.

CARUSO-CABRERA: Vlad, do you want to answer some of those? Obviously, you can’t tell us when the war will end, and that’s one of the prerequisites, as Brandon highlighted. But there are other issues there, such as transparency, rule of law, corruption. How is Ukraine handling them, while at the same time trying to prosecute a war?

RASHKOVAN: Look, I would start maybe from two other factors which Brandon just now said. He said about who are the future owners of the capital? And I say—I would answer to Brandon, it’s up to us with you, you know, now. You know, you, me, and others. You know, we can provide—we can work on that, you know, on providing this capital—who could be the future owners of the capital. And about the credible first movers, I fully agree with that. And these, however, make a bridge to your question, Michelle. Because, you know, the IMF is not a development bank, as you know. And we are not involved in reconstruction directly. But we do—we have two important roles in this process.

First, IMF puts some kind of stamp on the forecast of the market framework. And, second, it also works with the government on policies, to ensure both macrofinancial stability, but also the issues which Brandon raised now about the governance issues. And working on macro framework, you know, the fund builds the fundaments or grounds both for these credible first movers, for other development banks, and private capital, you know, and it somehow opens the doors for others. And this is the catalyst role of the fund is very high. And at the same time, donors and investors, they somehow outsource the fund, this working with government on policies.

I cannot disclose it now, because we are in the process of negotiations now with Ukraine, but I can assure you that the governance element of the IMF program will be substantial, in order to reduce substantially the risk for the clients of BlackRock, and those who will be brought to Ukraine by development banks, and by private investors.

DOBRIANSKY: Michelle, may I weigh in? Yes, thank you, if I could jump in on this. Several points. First, Brandon, I wanted to just say it’s terrific that BlackRock has jumped in, because I think by your engagement you’re also—you’re setting also a certain framework of governance, and in which the Ukrainian side must be sensitive to in order to attract investment. But also let me cite also JPMorgan Chase also has jumped in. They just signed an MOU. And, again, I think that kind of a trend from the private sector is an important signal for Ukraine, because they know that they cannot move forward and they’re not going to be able to attract this private investment unless there is good governance, and rule of law, and all of the elements that we’ve spoken to.

Let me go to your point about—and, by the way, one more point in there. Insurance. I’d love to hear you comment on that piece, Brandon, because actually I know that—well, the former short-term prime minister of the U.K., Liz Truss, actually when she was foreign minister, she was actually talking about this issue about insurance for companies. And that’s also an important element here as part of reconstruction, and also part of monies and where monies go to.

The other point that I was going to mention, because you asked, what about the multilateral institutions? So here, there has been a movement. I believe the other day the World Bank actually announced the establishment of a fund actually for reconstruction. The EU has certainly been focused. The G-7 also, and the EU as part of the G-7, has also—you know, has had a laser-focus. But going back to Ukraine itself, because Ukraine does have to be an important leader in this—(laughs)—in terms of the areas and what can and should be done.

Also, I mentioned that national recovery plan. So of that plan, it’s interesting to note, there are some 850 projects. And you could say, well, that sounds like overwhelming, well, what’s the prioritization? They have indicated very clearly that local municipal governance and, in particular, infrastructure projects, agricultural projects, are some of the ones that are at the top of the—of the list. But I think we’ve seen movement from the multilateral institutions already. It’s not there yet, but it’s moving in the right direction.

And, last point, I think it’s also been an important signal that the international community itself has had these Ukraine recovery discussions. The Lugano meeting last year, as well as the meeting in Berlin, the upcoming in Prague, the upcoming one in July—or, excuse me—June in the U.K. All of those will matter in terms of trying to coalesce actually not just the private sector but Ukraine, as well as with the multilateral institutions.

CARUSO-CABRERA: So, Brandon, I think there was one question in there about insurance. Do you want to address that?

HALL: Yes, I’m happy to. And maybe I can touch that in sort of a broader response as well. So, Paula, I’m glad. Which is, certainly I wanted to lay out the risks that the private sector perceives. But I would come back around and say to you both—and I agree with you—that the private sector is—actually has a strong spirit of wanting to be involved here and wanting to invest. And if you look at Davos, for example, there was significant momentum at Davos around this particular topic and issue with—you know, beyond JPMorgan and ourselves, a whole range of others that are looking to come in.

I think what I wanted to note about these risks that I mentioned is that were the private sector to really come in at size and scale, they would want to see these risks mitigated, to some degree. And so there are a number of ways that, from an investment standpoint, you can mitigate some of these risks. Insurance is certainly one form. So if you look at, for example, MIGA, which obviously is part of the World Bank Group, provides political and other type of risk insurance. There are ways to support and risk share with specific transactions or particular funds. But I would say, even more broadly, our takeaway from the work to date is that you really have to stand up some sort of vehicle or some sort of fund that has a commensurate degree of what we call concessional capital as part of it, to provide a risk-sharing mechanism and a risk mitigating mechanism for the private sector to come in.

And when we talk about concessional capital, what we mean is capital that is open to, call it, a less-than-market type of return. This has been some of the provenance of the development finance institutions over time, the IFC, the World Bank, they are expert in this place, the EBRD, of course. But our belief is that there are other potential pools of concessional capital, particularly philanthropic capital, donor capital, that may be interested to come in and create the opportunity to scale that through private sector investment and private sector participation alongside that concessional capital, and then to start to mitigate—from a private sector investor’s mind—those risks that I mentioned.

Now, also, you know, my last point would be, Vlad, completely taken. I think that there are efforts, and no question, you know, particularly from the Ukrainian government side, on trying to demonstrate serious progress against some of those concerns, whether it’s around the transparency and the corruption piece, whether it’s around sort of the capital markets piece, et cetera. And, you know, as a representative of the private sector, we welcome that because, you know, for all of us to come in there will have to be some degree of progress there. But I think the private sector is a big part of the answer here, working alongside and complementary to multilateral and public sector efforts.

CARUSO-CABRERA: Go ahead quickly, Vlad, because I want to move onto the next—

RASHKOVAN: Yeah, my own very quick answer, because I fully understand what Brandon just said. And to Paula, clearly the London conference will be dedicated to the war insurance as well. This is the core topic now, which is clearly a prerequisite for the private capital. Coming back to your credible first movers, for me European Investment Bank, which was not mentioned here, you know, should be central, considering the anchoring of EU membership aspiration. I would personally love more to see World Bank to be more involved, more providing loans from their own balance sheet rather than, you know, moving or transferring other money. EBRD and IFC, which Brandon just mentioned, clearly are more for private sector in supporting.

And clearly, they need more capital for that as well. And, you know, I fully agree that we need to have more vehicles, you know, to route the private capital. And I’m sure we need to look also to ESG funds, because if Ukraine goes not only for recovery but really modernization, this could be a very interesting experiment for many investors to look at how the green economy can work, in these cities which could be functionally rebuilt from scratch.

CARUSO-CABRERA: Vlad, do you think frozen Russian assets should be used to pay for Ukraine’s reconstruction?

RASHKOVAN: I do hope. And I’m sure—I know that there are many, many efforts now in the world to route this money, you know, to the—for the reconstruction. There are different ways how to do it. You know, there are models in that the money itself could be directed. The money could be somehow used as a collateral for the fund, which could send money to Ukraine and reconstruction. There is a work in progress. I’m not sure it will be very fast. Therefore, I would still go with some sequencing, more money coming from—as we saw last year—more emergency financing, which were coming from IMF, World Bank, EU, you know, different organizations. Later we had some concessional funding, you know, more for recovery. We had the bilateral money, you know, coming.

CARUSO-CABRERA: But it can’t be first, in other words? Right.

RASHKOVAN: Yeah. And hopefully it be. But it will be not the first in line.

CARUSO-CABRERA: Right. And, Madam Ambassador, what do you think? Should we—those assets right now are frozen. They’ve been seized. They’ve been frozen. But to actually use them is a questionable thing. Should we be doing that? Should it be used? Should frozen Russian assets be used to refinance Ukraine’s economic reconstruction?

DOBRIANSKY: I’m on the side of yes, that we should. Bob Zoellick, who is the former head of USTR, and also Phil Zelikow, who was the councilor at the State Department in George W. Bush, both of them have spoken to this issue and have written about it. And let me mention just three quick points.

One is, first, that, yes, that we should do it. And there is a legal foundation from which to do this. The U.N. General Assembly in fact recognized in 2002 the International Law Commission’s Articles on the Responsibility of States for Internationally Wrongful Act. (Laughs.) I had to look down to remember that whole phraseology there. But the bottom line on it is that does provide the legal basis. There is—or a precedent for this. If you look at that U.N. resolutions combined with using the International Court of Justice, in this case, that basically Russia has waged a war of aggression and that these articles do establish a legal basis for transferring such reserves.

Secondly, it is important to state—and Brandon mentioned, you know, the oligarchs. And there, we’re talking about here the assets not from oligarchs, but actually from the Russian Central Bank, and those assets that are also located elsewhere.

Here, I, thirdly, would want to mention that there’s already legislation that’s afoot in the Senate. Senator Jim Risch has put forward legislation specifically as the ranking member of the Senate Foreign Relations Committee, to basically authorize such a transfer. Finally, it’s worth noting Canada has already done that. They already have put forward legislation authorizing such a transfer. This would have to be done collaboratively, Michelle, with our G-7 colleagues.

CARUSO-CABRERA: I just want to make sure I understand position. So Russian Central Bank assets, those are obviously the assets of the Russian state. But also, yachts have been seized, oligarch property has been seized. The oligarchs themselves have not invaded Russia, but the premise is that they are close to Putin and that, in some ways, they have aided and abetted through financial means, et cetera. And you’re comfortable with what you’ve seen—I mean, we’re talking about the rule of law in Ukraine and it being a concern. At the same time, we have a strong ethos here in the United States and in the West of private property. Are you also comfortable with the notion that oligarch assets would be used—would fit within the rule of law?

DOBRIANSKY: I personally, I would say yes. (Laughs.) The only reason I made the distinction is just because of the, A, parameters, the kind of framework that has been used and can be used in this case. But, quite frankly, there have been those oligarchs who have been 100 percent behind Putin in this—in this case. But here, the intent and the way this has been expressed and put forward is you go after officially the Russian government here, in this case.

CARUSO-CABRERA: Brandon, what do you think of that, in terms of seizing—or, nominally, you know, presumably, private-sector assets, right?

HALL: I mean, I don’t think I have a particular policy or legal view here. What I’d be more focused on more is what’s the mechanism? How do these assets which are frozen become monetized in a way that they can then be put to use in the context of reinvesting in the reconstruction, reinvesting in, in particular, different sectors of the economy, where Ukraine is very focused? I think that the process and the mechanism by which that is done is going to ultimately be precedent setting, and so there need to be a lot of international sort of focus on how that precedent is established, and what process is gone through, and then to ensure that that’s a consistent process, given the size and scale of the Russian assets that are there.

You know, I think, stepping back, the more—the more funding that is available to the reconstruction, the better. And this feels like one of those situations, you know, we’re in kind of a Marshall Plan territory here, where creative means are definitely important to consider. But this is one that’s going to take some real doing, from a mechanistic standpoint.

DOBRIANSKY: Can I just make a comment, a fast one, on that? There is thought, Brandon, already being given to that, to a mechanism, for having a claimant’s fund. But secondly, on the issue of precedent, there is a kind of precedent that actually Zoellick and Zelikow have pointed out and have written about. Basically at the time of the Iraq invasion of Kuwait 1990, actually there was a U.N. commission that was established and that did award more than $50 billion to more than a million claimants. And they actually set up a fund, a process, for actually—you know, they have to apply, and going through it. So there is actually a kind of a precedent in general broad terms, I’m not going to say in precise terms, where—which can be drawn upon.

HALL: No, that’s great. And I would say this is a unique situation where there, I think, are going to be very few, if any, analogs from history that will be exactly replicated. So if there are situations that can be referred to, in all aspects of this not just the sort of reclaiming of frozen Russian assets, you know, it feels like all that has to be deployed.

CARUSO-CABRERA: Vlad, you get the last word, and then we’re going to go to Q&A.

RASHKOVAN: Yeah, if I may, the portion of answer to the first question of Ambassador Dobriansky, which you were asking about, the U.S. role. I think if you look at it broadly, you know, this unique case, as Brandon said, should be used as an example for other countries what may happen if they want to invade another country. And this could become exemplary, you know, and maybe unique. And we need to make everything possible that these kind of invasions would be unique. But definitely, Russia should pay for it.

CARUSO-CABRERA: Can we now, to the team behind the scenes that you can’t see but is really good, can we go to questions here? And let me remind everybody, at this time I’d like to invite participants to join our conversation with their questions. A reminder, this roundtable is on the record. That means your voice and your name will be heard if people watch it later. I’m going to post it on Twitter and Instagram, so people are going to see it. And can we have the first question, please?

OPERATOR: (Gives queuing instructions.)

We will take our first question from Andy Olson.

Q: Hi. Andy Olson. I’m the deputy staff director with Senate Foreign Relations on the Republican side of the house, working for Jim Risch. So thank you for plugging our bill. Appreciate that.

My question—and I appreciate this conversation turning around insurance, because I think that is going to be critical in attracting private capital into Ukraine. And I’m really glad that there was a lot of focus on that. But I guess my question is this: We don’t know when the war is going to end. And, you know, the Ukrainian economy needs investment now. And so do we need essentially to implement a recovery plan, a reconstruction plan, on an ongoing basis? And just welcome your thoughts on that. Thank you.

CARUSO-CABRERA: You mean, like starting right now?

Q: Starting right now. Now, some sectors you will probably want to avoid. Obviously, the Russians are targeting the energy infrastructure, so that would be a problem. But I’m thinking of manufacturing and other types of jobs, creating an insurance program to essentially keep the economy going. Thanks.



CARUSO-CABRERA: Sure, Vlad, go ahead.

RASHKOVAN: Yeah, it’s a very good question. And moreover, I should tell that reconstruction is already ongoing. It’s not only should we start now or should we start later. But the biggest—unfortunately, the biggest part of the overall investments in the reconstruction will be directed to demining. And demining can be started now, especially in those territories which are liberated. Because without, you know, demining, further investment, further building there, the housing or private businesses, will be very, very hard, first.

Second is, why we should start now. And any planning and any big reconstruction of a city requires planning. And, you know, the planning may take a year, you know, maybe even more, because we need to look at the—you know, you need to collect different opinions of people, you need to build the process of reconciliation between people, you need to understand that—do we need this city or not? Do we need—to understand what the city should have. So this money, the first, you know, seed money for that could be not billions but millions, you know? And these millions still need to go, and they need to be financed in parallel with thinking about the larger projects.

CARUSO-CABRERA: But, Vlad, let me ask you. You just mentioned that you could start—restart mining projects in liberated territories. What if the worst happens and they’re retaken, and investment money have been poured in there, and then lost? I see Brandon, you’re nodding your head. I’m going to assume that’s one of the large concerns from private investors right now.

RASHKOVAN: Yeah, but what if you don’t, you know? This is—if the war is not coming there, and you will stay there—

CARUSO-CABRERA: But if somebody poured billions in to revive a mine that’s now taken by the Russians, that’s billions that you could have had for something else.

RASHKOVAN: No, but you still need to demine the territory of Ukraine. You know, so it’s—there are many areas which we do hope, and we do everything possible, that Russian would not come, you know? And—


CARUSO-CABRERA: Go ahead, ambassador, yes.

DOBRIANSKY: I can, and then, Brandon, I didn’t mean to—

HALL: Not at all, please go ahead.

DOBRIANSKY: First, Andy’s question is an excellent one. I do agree with Vladyslav that we have to be doing this now. In fact, that’s what is aid in my opening remarks when you asked, that you can’t just invest and put monies into the military. By the way, we are already putting money—the U.S. government—into projects assisting with infrastructure and with rebuilding. We’re not talking about the banks and the private sector, but monies are already going. Why does it matter, Michelle? Let me tell you why. Because also in terms of the priorities, there is the issue, you may have seen it, of fast rebuilding of infrastructure.

We’re not talking about modernization, but enable to move products, to move military assets from one location to the other. They sometimes do it in twenty-four hours. And so the assistance that comes through the Agency for International Development, Congress—thank you, Andy, and your colleagues for putting money forward. Because those monies are helping right now, not in what I call long-term reconstruction, but in making sure that Ukraine’s economy still functions, as best it can in a wartime environment. Two, that the infrastructure is built up so at least, from the humanitarian side, food security side, and military side, that they’re able to move assets.

So it’s a good question. And it’s one that is already happening because of the resources that have been allocated by the U.S. Congress. So thank you for that.

CARUSO-CABRERA: Brandon, anything you want to add.

HALL: Sure. I would just add a couple of points. One is, I think there are other sectors of the economy which are shown as interesting examples of things that you can do now. So the IFC has actually initiated a program with respect to investing in agriculture and agricultural loans. So there are things that can be done. But—and it’s important to have these types of small-scale transactions done, supported by public sector of multilateral sector capital, because they do serve as proofs of concept. They serve as proofs of concept for a private sector investor to later come in, knowing some of the lesson learned from that experience.

I will say, however, that the private sector is not going to come in precisely, Michelle, in scale, to your point, because there is this concern of the war ongoing. That being said, one of our big takeaways around this kind of point around concessional capital is that Ukraine would actually benefit from standing up its own local-level DFI, its own development finance institution, where public sector or multilateral concessional capital could serve at the top of that and create the scale for private sector capital to come in. What can you do now to stand that up? You can set in place the architecture of that vehicle. You can set in place the governance structure. You can build the investment policies, the risk policies, et cetera.

And that doesn’t need to be done on the ground, per say, in Ukraine. It can be done outside of Ukraine, such that when there is a reasonable and sustained cessation of hostilities, you can press the button and go, and actually have private sector capital be a part of that solution.

RASHKOVAN: I fully agree, but, Michelle, just one last comment here. That the—what Brandon just now said, absolutely correct, because it takes time to build these institutions, to build the frames, to build the vehicles, you know, to—you know, to prepare the projects, to develop the capacity of locals on the ground in terms of the project managers, surveillance, et cetera. It will require time. Therefore, investing in that now, already, is investing in reconstruction.

But I was Kyiv, like, ten days ago. And we were going to Irpin. And I was nearby this famous bridge, which was shown on all TV in the first days of the war. And the bridge itself, for me, is an example of Ukraine today and the reconstruction itself. So the bridge itself is destroyed, like Ukraine in many cases is destroyed. But nearby, Ukrainian government built an interim bridge which helps to connect Irpin with other city of Ukraine. And this is an interim, now is going on in many parts of the country. This is what Paula said, because we need to move the humanitarian goods, we need to move the military goods. Without this interim, no single leader would be able to come to Ukraine in the last months and to see what is going on in Ukraine.

But what is interesting, nearby that bridge, there is already in the process of building a regular, sustainable bridge. You know, it’s not finished yet, but it’s already started. So this picture, of the three bridges together—you know, one destroyed, one interim, and one is building the new one—I think is the picture of today Ukraine.

CARUSO-CABRERA: A true physical metaphor. OK. Let’s move onto the next question.

DOBRIANSKY: Oh, I was just going to say a fast one, before the question, just to Andy, please complete that legislation. Hope you guys get the support for that legislation for the Russian assets. Just glad that Senator Risch has moved that forward.

CARUSO-CABRERA: Next question.

OPERATOR: We will take our next question as a written question from Stephen Lewarne.

Who asks: The government of Ukraine has an excellent recovery plan in place discussing the three stages of development—war-torn, immediate post recovery, and long-term recovery. It is as good or better than other postwar plans I have seen. Are there other assurances we will start with this recovery plan and not try and recreate a new plan that could slow things down?

CARUSO-CABRERA: Vlad, Brad, anybody? Are you familiar with this?

DOBRIANSKY: I’ll jump in.


DOBRIANSKY: It’s an excellent point here. As far as I can see, and I’ve mentioned it several times in my own comments, I have been very impressed. The Ukrainian government had moved quickly forward in outlining what it needs. And here, so much so that not only this, you know, national recovery plan, it has two phases. The first phase is 2023 to 2025. The second phase, by the way, is 2026 to 2032. There are some 850 projects, at an estimated 750 billion (dollars). I think they’re very much vested in it. A lot of time was taken to develop that. They have also brought that around to different groups. I happen to co-chair, at the Center for Strategic and International Studies, a commission on Ukraine’s economic reconstruction. And the Ukrainians have come in very, very specifically with us. I think they’re vested in it.

That’s why I don’t think that there’s going to be some diversion or, you know, change. That’s not to say that as thing go on that—with advice of the private sector, BlackRock, others that are also advising them. I would also imagine that there might be some modifications, in appropriate ways, that will serve not only the interests and the immediate needs of Ukraine, but also for the investors.

CARUSO-CABRERA: OK. Let’s move onto the next question.

OPERATOR: We will take our next question from Avinash Kaza.

Q: Hey. My name is Avi Kaza. I work at USAID. So I’ll reiterate the thanks to Andy for funding so much of the potentially good work in Ukraine.

And I like how this conversation kind of started high level, black and white, and has gotten into more the kind of gray area and nuances. And so, you know, yeah. I actually come from a former Wall Street background, Goldman Sachs, blah, blah, blah. And so when you talk about concessional capital, Brandon, and then Michelle, your point on kind of, you know, why should firms invest in a mining project that could get blown up by the, you know, Russian regime—

CARUSO-CABRERA: To clarify, he was talking about demining and I thought he was talking about extraction. (Laughs.) OK. I was like, I thought they more into agriculture than mining. But, go ahead, finish your question.

Q: I mean, I guess the point is, like, when price is clear, right, when assets are cheap enough, Wall Street steps up or investor step up. And when it’s cheap enough, they’ll do it themselves. Otherwise, they need the concessional capital, as Brandon said. And so when I sit at USAID, I see a lot of sectors—a lot of companies actually investing already, right, like, particularly in agriculture. And so I do like to kind of maybe delve a little bit into the nuances a bit on kind of, Brandon, like, what sectors do you kind of see the concessional capital being needed, what sectors you don’t.

Like, and I have my own thoughts, but obviously you’re the expert here. You know, we can catch up more in person later. But I’d like to—you know, and then I actually see the Ukrainian government doing a lot already on the regulatory stuff, on the—on some of the constraints you pointed out. So some of the higher-level stuff you pointed at the beginning, like, I feel like some of them are being addressed, but—yeah. So let’s go into the gray area and nuances.

HALL: That’s great. Michelle, I’m happy to take it, and then I know that Vlad and Paul probably have perspectives as well. So in the work that we have done with the Ukrainian government, they’ve really called out five key sectors that they think may make more sense for the support that they need as early as possible, in the context of their reconstruction. And this is not to say that there aren’t other sectors that matter, so please don’t read this response in that way.

But the ones that kind of rise to the top of the list are energy, agriculture, IT, manufacturing, and then what I would describe as sort of other forms of infrastructure that, you know, can contribute to all of that and be a part of sort of—a function of investment. I think the places where, Avinash, to answer your question, concessional capital can play a role, let’s start with the energy sector. There is what seems to be—obviously, the energy sector is a significant component of the GPD of the country, and will be ripe for reconstruction opportunities and reconstruction plays.

But I think what’s really interesting here is that there is a—there is an array of infrastructure that historically went to sort of dirtier forms of energy that can actually be converted into cleaner forms of energy. So think about oil and gas pipelines and turning that into hydrogen pipelines, for example. This is a place where you’ve got what I would describe as a wall of energy transition and climate finance capital that is looking to be put to work. That capital will be much more likely to come in if there’s—if there’s some concessional capital coming in alongside that to de-risk, whether that’s from the multilateral or public sector, or whether that’s from a donor or a philanthropist.

I mentioned agriculture. This is one that, because of the array of financing types that can exist, all the way down to very small-scale sort of, you know, individual farmer-level investment, through to much broader-scale types of investments, we see this is another one where if you have sort of a chunk of concessional capital that might be put to use, it could actually be deployed in a variety of ways, depending on how flexible the structure is, to have it sort of cascade down into the local level.

And then finally, I would say IT is probably the area where we’ve seen a lot of interest. Part of the reason why the interest is high here is that there doesn’t seem to be as significant a degree of, call it, kind of oligarchic influence on that sector of the economy. And it is certainly one where both the human capital and the technology capital underpinnings in the country are perceived to be incredibly strong and incredibly vibrant, you know, should there be an opportunity for reinvestment.

CARUSO-CABRERA: Play that out for me just a little bit more, Brandon, when you say there’s less oligarchic influence in this area versus some other areas. The implications for a private investor are what, then?

HALL: Well, I think the view is that their capital would be less at risk of being—either from a policy standpoint or from an ownership standpoint—you know, sort of kind of taken out from under them, if you will. And that’s, in part, because there just seems to be less involvement of that set of stakeholders, historically. That kind of comes from a legacy of sort of the post-Soviet redistribution of resources.


RASHKOVAN: Yeah. Since I’m on that side of the team which was formulating these industries, you know, I believe you missed one of these, which is housing. You know, and the housing—without housing you cannot rebuild the country, because people should have a roof above them. They should live somewhere. People should come back from their being refugees in Europe, and they need to come back home. And here, you know, the issue is exactly coming back to the concessional funding.

I’m sure there should be a big portion of the private money there, you know, for not only the government or the public money, but also the private sector. Because this is a private business. But at the same time there is, you know, affordable housing for people who cannot pay for that, who cannot even rent it, who cannot afford the mortgages. (It’s one-fourth ?). And you need to put the concessional funding at least, you know, to compensate the interest, maybe not necessary for the principal. That is one thing.

But the second thing is what Brandon just now said at the end, what Paula was saying in the beginning. It’s not recovery. It’s not reconstruction. It’s modernization. We need to build the houses according to the—you know, the new green standards. But not only housing. As soon as you start building housing, you start speaking about recycling, you know, in the city which is destroyed which, by the way, the culture was not so good in Ukraine and the current cities don’t have good systems of recycling. Then you go to energy efficiency, and you go to the water supply.

You know, this is World Bank money. You know, there is USAID money. There is IFC money. So all these together, you know, will be, as Brandon said in the beginning, the credible first-comers. They need to leverage. So the private sector will come after them if they will see that this money are coming to the—to these cities. And cities, for me, are atomic reconstruction, and the organization of cities is atomic, not in this case itself. But housing—

CARUSO-CABRERA: Brandon, are there any sectors that are so—that are so investable that you—that investor—you know, hot, or that will, obviously, provide returns, that there is less of a desire for concessional capital? Or every sector requires concessional capital?

RASHKOVAN: If you ask from my—

CARUSO-CABRERA: No, I’m talking to Brandon, sorry.

HALL: From our standpoint, almost at this point—and, quite frankly, again, I think this has to be—this is really a question of after the—after the conflict, so some sort of—(inaudible).

CARUSO-CABRERA: Right. Right. Got it.

HALL: The private sector is still going to want—except in very, very idiosyncratic and opportunistic pockets, they’re going to want concessional capital. And, Vlad, I should clarify, you’re totally right. What I mean was social infrastructure, when I said infrastructure is the fifth. So I’m agreeing with you on housing.

CARUSO-CABRERA: Right. Let’s move onto the next question.

OPERATOR: We will take our next question as a written question from Paul Podolsky.

Who asks: Is there a working calculation of how much damage has been done? Before the war, GDP was around 200 billion (dollars). If so, how was the calculation done?

RASHKOVAN: I think we answered this question at the beginning, you know? The damage assessment will be in the—as I said, in ten days, the new report. Until that time, the figures are really not known very much. You can also rely only on the Kyiv School of Economics estimations. The last one was around $120 billion. But you should understand also the weaknesses of this methodology. They only analyze something which they can have access. You know, they don’t analyze Mariupol or other cities which are not under control of Ukraine. So they only can estimate the cities which are liberated. And they can use the methods studying from drones, but also the satellites, to understand—to build the heat maps of the city, to see where the life is still there, or the cities, like Marinka, are completely destroyed.

CARUSO-CABRERA: And does the team in the back see this new question that just came in, about China? Do you want to do that one?

OPERATOR: We will take our next question from Peter Swiers.

Who asks: Before the Russian invasion, China was a major Ukraine trading partner. Worthwhile to try to encourage China to resume a more constructive role in its economic interest?

DOBRIANSKY: I’d be glad to take that question.

CARUSO-CABRERA: I thought you would, Madam Ambassador. Yes, the role of China in a postwar Ukraine reconstruction. How do we feel about that?

DOBRIANSKY: Thank you. Well, two points, if I can. If I may step back and then answer the question about going forward, reconstruction. In fact, all countries should be—G-7 and also China, by the way—should be engaged in the reconstruction process. But it seems like it’s gone in another direction. And that’s what I, especially with these reports about providing military assistance to Russia.

But, Peter, you are absolutely correct here. It’s worth noting two things. First of all, I mentioned before about how Egypt was very much affected by the cut off of grain. Well, so was China. China has—actually, it does get a significant amount of grain from Ukraine. Also, China has had a relationship with Ukraine. And I think it’s noteworthy, Foreign Minister Kuleba has reached out to his counterpart and has tried, right from the very beginning of the invasion, to engage China in trying to basically deter and get Russia to pull back, to reason, and even—I mean, starting with the humanitarian corridors which they tried to set up—he has tried at every step of the way to engage China. And there just hasn’t been any traction.

So my answer to you is: It’s not for a lack of trying. I would commend Ukrainian Foreign Minister Kuleba for making these efforts. He’s building upon a relationship, a trade relationship, a relationship that has existed. But there has been no traction, no movement. But on the second part of the question, Michelle, I think that you asked, well, should they be engaged in reconstruction and Ukraine’s recovery, yes. (Laughs.

CARUSO-CABRERA: But let me ask you this. All over the world the administration is trying to convince countries not to use Huawei, for example. I mean, do we want China to be installing the telecom system in Ukraine? I don’t know that Ukraine would make that choice, but if it came to that, would that be in the U.S. national interest?

DOBRIANSKY: I don’t think Ukraine would make that choice. You know, every country has the right to make its choices, but from what I’ve heard and can hear, no. I think Ukraine—I’m sure—is very, if I could use the word, disappointed that China, on the contrary, has taken a position, with these recent reports about giving military assistance, you know, against Ukraine. So I don’t think that they would turn towards China for that kind of digitalization, if you will.

CARUSO-CABRERA: Well, let’s go to the source. Vlad.

RASHKOVAN: Michelle, yeah. May I try to expand this question slightly, you know, in a broad sense? I would not take China, but what is the Asian role in the reconstruction of Ukraine? You know, we have now Japan as a G-7 president. I would love to see—I mean, Japan, what they experienced also after the, you know, earthquakes, after tsunami, after also reconstruction—postwar reconstruction, with their development banks, with JICA involvement, there is—you know, I think it’s this year that JICA was—I think a few times was already in Kyiv, you know?

But (lately ?) I will ask you the second question: What about the Gulf region, you know, involvement in Ukrainian reconstruction? As the ambassador said, they are also dependent on the Ukrainian grain. They should be interested in securing, you know, the agriculture supply and grain supply in the future. So they might be interesting in demining of some part of Ukrainian territory. Coming back, it’s not extraction. It’s demining. You know, and therefore, to the issues of investing in agricultural business and increasing productivity there, and also to have these parts, you know, of the export to their country to secure for the future, you know, in terms of the food security.

Latin America, you know, you can also raise that question.

CARUSO-CABRERA: Yeah, but let’s go back to—the question was about China. And let me ask you, what is Ukraine’s experience with Chinese investment in the past? Is that something that you think the country would like to repeat? And I ask that because in other parts of the world there are—there’s a mixed response to Chinese investment, to put it blandly.

RASHKOVAN: Thinking about the experience, there has never been an experience of the large investments of China to Ukraine. So it’s not like Sri Lanka or you look at the—or Zambia, or Ghana, or other experiences. You know, we never had it. So China was a trade partner for us. I’m sure Ukraine will be happy to trade if China is not taking the part of the enemy, you know, in this situation. If they stay mutually positive to Ukraine, I’m sure Ukraine will be ready to trade.

But as Ambassador Dobriansky just now said, I’m sure after the war Ukraine security risks will be still on top of everything, unfortunately, for a long period, Brandon. You know, and this is a question of what Brandon was asking, what the peace will look like—looks like in the future. But I’m sure that from a security perspective, there will be a lot of the concerns there as well.

CARUSO-CABRERA: OK. I think we have time for another question. Maybe the last question.

OPERATOR: We will take our next question from James Gilmore.

Q: Great. I’m Jim Gilmore. I’m the immediate past ambassador to the OSCE in Europe, and a friend of Paula Dobriansky, I think.

I come to this thing with a sense that the discussion is not grounded in reality there. This is—look, I’ve been a strong spokesman on behalf of this Ukraine war. I just published an article in the National Review that made it clear that I think that we have to stand fast in Ukraine. But the panelists, you’ve got to focus on the fact that this is a war that the Russians intend to win this. They’re sacrificing many hundreds of thousands of people to try to win this thing, and to annihilate as much of Ukraine as they can, in order to break the will of the Ukrainian people.

I’ve already—I think I want to focus on this: The war really has a second front. And that front is the United States. And what I’m hearing right now from—I’m fighting the good fight on behalf of what I believe is the majority in America and in the Republican Party on behalf of Ukraine. But there are significant voices that don’t think we should be involved with this at all. And that we should not be giving any money, and we should not be pursuing this in any way.

And I’m fighting back on that every day, but I think the panelists—my question is this: If there’s any hint on these reconstructions from any of you all that the American taxpayer is going to stand behind any of this rather than the criminals that are doing the destruction, the Russians—

CARUSO-CABRERA: Yeah. So I appreciate the question. That’s why we started out the conversation the way we did, to—

Q: My question is—

CARUSO-CABRERA: Yeah, are we going to—yeah.

Q: But—

CARUSO-CABRERA: I totally get it.

Q: You get it? I mean, you’re going to lose the political battle in the United States unless this panel recognizes, is there going to be money from the American taxpayer backing this reconstruction?

DOBRIANSKY: Governor Gilmore, yes, you’re my friend. You’re my governor, state of Virginia. (Laughs.)

So let me—let me just go right to it. The first question that Michelle posed was: Why does this matter to the United States? And I don’t know if you were on when I answered that question, but let me try to give the condensed thirty-second version. Which is, our national security interests are vested in it. It’s not only about getting the military assistance there far and fast, so that Ukraine is successful in winning the war. It’s also, as I said, winning the peace. Ukraine will not be stable, it will not be secure, unless it not only wins militarily and there are terms and a framework, but also a process begins to modernize it, to stabilize it, which will—

CARUSO-CABRERA: Ambassador, I’m going to interrupt you, because we’ve got little time left. But I think the spirit of Governor Gilmore’s question is that maybe it’s not being made clear enough to the American people, because we’re already—I mean, his point is, here we are talking about reconstruction. And it’s not clear that the U.S. is going to be willing to still fund the actual underlying war, right? And I know we’ve talked mostly about multilateral institutions and other private sector investment, and not necessarily as much taxpayer dollar. But are you confident that the case has been made enough, in the last minute here, to the American people to convince them that not only do we keep the war going, but the reconstruction efforts?

DOBRIANSKY: This answer is that this has to be repeated, and repeated, and repeated so that the American people do understand what is at stake here in terms of not only Ukraine, but European security, but us, the United States, and the global security. If Putin—my last line—if Putin is not—is not, you know, pulled back and defeated in this regard, then, by the way, it’s a signal for a continuation of aggression in the continent of Europe and also globally. It affects us. The case needs to be made more.

RASHKOVAN: Ukraine is going to win this war. And it’s better to be on the right side of the history.

CARUSO-CABRERA: Well, we are all hoping for that and praying for that. Ladies and gentlemen, ladies and gentlemen, thank you so much for joining this discussion. We had a huge turnout for it. And I’m sure it’s engendered a lot of discussion behind the scenes. A real pleasure. Thanks for everyone for tuning in here to the Council on Foreign Relations on the discussion about the reconstruction of Ukraine, for a hoped postwar. And, remember, this is on the record, so you’ll be able to see it on the website when they post it. Thanks so much.


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