Since 24 February, the day the Russian aggression began, nearly 50,000 people have died in Ukraine, with more than 15 million also having to flee their homes to save their lives. Current material losses are estimated at more than EUR 600 billion, and despite the war continuing, these estimates are already stimulating plans for the rebuilding the country.
Since Poland is not only a neighbour and friend of Ukraine, but also its major business partner, it is natural that one of the focal points of this long-term planning is located here. And this is also where the loudest debate about key needs, strategic directions, the most pressing problems and possible solutions is taking place. As a law firm, we have been committed from the very beginning to helping Ukraine, and therefore are an active initiator and facilitator of the debate.
Anna Yurchenko, Deputy Minister of Infrastructure of Ukraine, discusses the needs, risks and war reparations
It is difficult to imagine the enormity of the damage suffered by Ukraine as a result of the Russian onslaught. It is even more difficult to estimate its value, especially since almost all the figures we know today are rapidly becoming obsolete as the damage continues to be inflicted. Therefore, in order to understand the level of financial needs in the context of rebuilding Ukraine, we spoke to Anna Yurchenko, Deputy Minister of Infrastructure of Ukraine, who estimated that the value of destroyed property has already exceeded EUR 600 billion.
The dilapidated infrastructure needs more than just money
In terms of material damage, the greatest devastation can be seen in the infrastructure sector. Since the beginning of the Russian aggression, hundreds of bridges have been demolished, tens of thousands of roads have been ruined, and this is in addition to the lost railway networks and civilian airports. The municipal sector, i.e. city streets, public transport fleets, residential buildings, economic and social infrastructure facilities, has also suffered extensive destruction.
If we assume that the current calculations are accurate, the amount needed to rebuild Ukraine’s infrastructure alone reaches almost half a trillion PLN as of today. Of this, almost half should be spent on transport infrastructure alone. It should also be borne in mind that Ukraine’s infrastructural reconstruction is not only about obtaining the necessary funds.
“Speaking of infrastructure reconstruction, we are facing overwhelming logistical problems (broken chains of supply of construction materials, especially bitumen), material and technical problems (destroyed road construction equipment), personnel deficiencies (specialists have gone abroad or joined the Ukrainian Armed Forces) and other problems (the need for demining, fuel shortages, constant shelling, etc.). Restoring traffic on highways and railways will not be enough to solve the problem of agricultural and industrial exports. To ensure proper imports of critically important products to Ukraine, unblocking the Black Sea ports is also necessary,” stresses Anna Yurchenko, Deputy Minister of Infrastructure of Ukraine.
Effectively collecting and documenting Ukraine’s material damage
The systematic collection of the most accurate data possible on the damage and a thorough analysis and documentation of the losses are among the most important tasks facing the Ukrainian administration today. This gives the country a chance to successfully claim the return of lost state and social property in the context of reparation payments by the Russian Federation. Therefore, Ukraine is doing its utmost to monitor the material losses incurred.
“Back in March, the Government of Ukraine took a decision obliging all ministries and offices to put in place methods to determine the losses incurred in various sectors of the economy, including economic losses. At the end of May, the Government set up a special commission to investigate the damage caused to Ukraine as a result of the armed aggression of the Russian Federation. The Commission’s main tasks include preparing, reviewing and approving normative and legal acts concerning the audit of losses caused by military operations. Leading national and foreign expert institutions are involved in Commission works. In addition, the Ministry of the Economy of Ukraine has already developed a draft methodology for determining the scope and amount of losses and damage caused to enterprises, institutions and organisations of all forms of ownership in connection with the destruction of or damage to their property caused by the armed aggression of the Russian Federation, as well as lost benefits as a result of the impossibility or hindrance of doing business,” says Anna Yurchenko.
Up to EUR 1.3 trillion in losses due to the Russian aggression
According to analysts and economic experts, Ukraine could eventually suffer losses of up to EUR 1.3 trillion in 2014-2026. Assuming a favourable scenario under which the Russian Federation would pay war reparations, it will still not have sufficient financial capacity to cover even a greater part of this amount. Therefore, the priority for Ukraine should be strategic economic cooperation with European Union Member States.
To meet this goal, a number of operators are already announcing their economic support. As a law firm, we have been actively engaged in this process, by organising events, meetings and webinars during which lawyers and international experts discuss possible investment directions, sources of funding and potential war mitigation scenarios. We also provide substantive knowledge and support to Polish and Ukrainian enterprises eager to take an active part in the process.
This article has been prepared based on an interview conducted by Markiyan Malskyy with Anna Yurchenko, Deputy Minister of Infrastructure of Ukraine.
Source: Wirtualna Polska
Date: 13 July 2022
Reconstruction is a chance for Ukraine to move away from inefficient post-Soviet solutions and introduce modern, green technologies and know-how – read more in the article by Markiyan Malskyy, Partner and Head of our Ukrainian Desk.
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