Leadership for the Recovery of Ukraine

Russell Reynolds Associates and Crown Agents hosted a breakfast discussion with His Excellency Vadym Prystaiko, Ukraine’s Ambassador to the UK. The Ambassador spoke about the upcoming Ukraine Recovery Conference in London on 21-22 June that the UK will be co-hosting, and the financing required for a successful recovery.

His comments sparked a lively conversation among the group of senior executives from military, US and UK civil service and governments, banks, insurance, advisory firms and international financial institutions.

While the nature of the capital instruments needed is important, the focus of the discussion was on how Ukraine should capitalise on this moment of moral superiority. Robust civil institutions will be needed and there is a chance to begin building them now before the peace. Crown Agents’ work with the Ministry of Health offers both encouragement and a practical approach.

Financing the recovery

• There will not be a linear “war-to-peace” process, with the war still ongoing. However, planning for the recovery ahead, which the June conference in London will support, will be hugely beneficial to the process.
• There will need to be a move from liquidity support to sector-specific interventions. While some emergency repair capital support is necessary, interventions in specific areas (such as agriculture, digital and technology, energy and more), will be more impactful and beneficial to a successful recovery, rather than general, economy-wide policies.
• International finance institutions (IFIs), such as the EBRD which is one of the largest institutional players in the country, will need to coordinate their development financing approach.
• The (re)insurance industry will need to strengthen existing products likely to be in high demand after the conflict, as well as rapidly innovate to provide cover for new risks.

Leadership and human capital

• The recovery will need to be led by Ukraine and Ukrainians. Throughout the war, the country has demonstrated a strong sense of national pride and a deep moral foundation.
• However, even prior to the war, Ukraine was not considered investable by many Western private companies after due diligence processes were carried out. In order to create an investment climate to allow the country to crowd private sector capital, there needs to be predictability and institutional reform; sanctity of contract; and transparency of economic interest.
• Given Ukraine is a sovereign state, reconstruction will not happen in a vacuum (as was the case in Iraq in the post-2003 reconstruction), but a reform of governance structures will allow Ukrainians to retain leadership and provide the trust and accountability required for the flows of capital and subsequent service delivery and sectoral reform.

Public sector and judicial reform agenda

Public sector and judicial reform will be essential precursors to the inward investment that will be needed post war:

• There will need to be an enhancement of the capability of the civil service. Pivotal elements for success include ministerial courage; competent civil servants and support from the President. These were all present when Crown Agents was supporting the Ukrainian Ministry of Health from 2015 to the current day. Crown Agents worked with the Ministry of Health to create transparency in the supply chain for the provision and distribution of oncology drugs. The result was what was described by Guardian columnist Oliver Bullough as ‘one of the most successful hands-on anti-corruption interventions in history’.
• 8 million people have left Ukraine since the start of the war. The country should consider the capacity of the civil service and consider how to recruit for success of the recovery, taking into account the Ukrainian diaspora looking to come back.

Final considerations

• While there needs to be a Ukraine-led recovery, alongside this there should be a realisation that the war is a shared European issue and that all countries of the continent need to address this when thinking about the economic implications for years to come.
• The country will also need to consider how to maintain the moral superiority (especially of high-ranking officials) in the transition to peace that should be in line with the above-mentioned reforms.

With thanks to the attendance and insightful contributions of:

• His Excellency Vadym Prystaiko, Ukraine’s Ambassador to the UK
• Sir Clive Bannister, Chair, Rathbones Group
• Simon Bond, Non-Executive Director, Impact Investing Institute
• Mark Bowman, Vice President of Policy & Partnerships, European Bank of Reconstruction and Development
• Sarah Ciaccia, US Embassy Foreign Service
• Fergus Drake, CEO, Crown Agents
• Major General Tim Cross, MOD
• Sir Alan Duncan, Director, Vitol
• Patrick Handley, Partner, Energy, Brunswick Group
• Dr Sarah Hepworth, Chief Programmes Officer, Crown Agents
• Simon Meldrum, Executive Director, Humanitarian Finance Forum
• Richard Meredith, Senior Advisor, Milken Center for Advancing the American Dream
• Mark Stadler, CEO Africa, HSBC
• Bill Stanton, Managing Director, Commercial Banking UK, Citi
• Tim White, Ukraine Response, ARUP