REbuilding Ukraine Agency – a Year in the Life!

Ability to see around the corners is not always a good thing. Although it gets one to places early, armed with advanced information and knowledge, it is a lonely place, as others at the time do not wish to hear, or process this information.

Today, it seems like everyone is talking about Rebuilding Ukraine, various government agencies, non-profits and private sector folks. The war still rages on, yet the “Prepare now for Rebuilding” theme is everywhere. Webinars, trade shows, talking heads, academic papers are written, new agencies and rebuilding initiatives are being established. Today’s message from the pundits is “let’s prepare, let’s start now, as it takes a long time to develop projects; it is complicated, and it is important”. For all of us at the Rebuilding Ukraine Agency, these constant posts, seminars and activities almost always put a smile on our faces, as March 24th marks a full year since the Rebuilding Ukraine Agency was officially founded with the sole mission of providing international solutions to help Ukraine recover and rebuild itself from the damages of the horrific russian aggression. A year ago, almost nobody was talking about Rebuilding Ukraine, yet a small, private sector, member-owned, international organization was created specifically to help address strategic needs of a war-ravaged country, both during and post conflict. It was created then, because all of us who founded the Agency knew that it takes a very long time, it is complicated and in order to succeed the right people would need to be selected and would have to do tremendous work. The organization, which itself has had to go from nascency to adulthood, while developing effective solutions among the chaos, political discord, bureaucracy and ongoing war, all while dealing with missile attacks on peaceful cities and Ukraine’s rapidly deteriorating economic conditions.

If one were to make a military analogy about the evolution of the Agency over the first 12 months of existence, it went from a shotgun to a high-powered sniper rifle. Its initial member and prospective member roster consisted of a buckshot of small and mid -sized firms interested in knowing more about the subject of rebuilding and charged with emotion of the early war days, when Ukraine was on CNN 24/7. Membership in 2022 was free, emotional response overwhelming and people (most of whom have never been to or worked in Ukraine) wanted to belong to the cause. As the year went on, and time came to start paying membership dues, the Agency’s membership roster shrank by about 30 percent and became laser focused. Effective management and governance were established, several projects in the areas of construction materials production, real estate and medical rehabilitation with combined value of over $100 million went into active development. Another $120+million in project financing and political risk insurance proposals are currently out for review and acceptance by the prospective investors. Active work is taking place in assisting our members to develop effective demining and unexploded ordnance removal operations for agricultural and urban environments, infrastructure and residential construction projects, new municipal heating solutions, effective PTSD rehabilitation centers and construction industry training programs. The membership bulked up, as large international companies started to join the Agency with more candidates emerging every week.

The Agency has created several strategic relationships, among which, the most notable were cooperation with the Rebuilding Ukraine Association (501C3 non-profit on industry education initiatives, signed MOUs with the Confederation of Ukrainian Builders and with the Mayors’ Club. The Agency provided humanitarian assistance to a birthing hospital in Nizhin (although much more needs to be done there and our efforts fell short of targets). We conducted free financing master classes to over 20 Ukrainian municipalities and announced another series of training sessions to help them improve their economic development activities and increase their attractiveness to international investors. Earlier this month, the Agency announced that its Board Member Dr. Anzola, who is renowned for training multiple Export Credit Agencies (ECAs) around the world, will offer a pro bono training course to Ukraine’s official Export Credit Agency. One of our members – a director of a large, global architectural firm has with the Agency’s support, led her firm to set up a pro bono effort to help modernize the city of Irpin in accordance with the latest energy efficiency and smart city standards. The Agency’s participation at the REbuild Ukraine event in Warsaw in February was a smashing success. The Warsaw event provided updated clarity of the current situation and allowed the Agency to plot new directions towards expansion of its membership roster, economic development assistance for Ukrainian cities and municipalities and development of new funding sources. Our community following the Agency on social media organically grew to over 1,500 followers.

I sincerely want to thank everyone who over the last year has contributed to the Agency’s success and development. Special thanks go to all the Board Members, our Corporate Officers, supporting professionals and Advisors. Thanks to the representatives of the US and Ukrainian Governments, as well as IFIs for all your help and support. Special thanks to our friends at the US-Ukraine Business Council and to all of you who followed our progress, read our materials and offered to help Ukraine in this difficult time. Thank You!

So where do we go from here? To find out you will need to read our upcoming posts and continue to follow us, as we remain steadfast in our commitment to help Ukraine Win this war and Rebuild! Slava Ukraini!

Rebuilding Ukraine? All of us have it wrong!!! (some more than others)

Eleven months of constant work on the subject of Rebuilding Ukraine (both during and after the war); eleven months of preparation; of running two daily Telegram channels and reading countless articles on subject; watching videos and listening to podcasts by renowned, well-educated experts and politicians; daily conversations with friends and business associates who live in Ukraine and multiple in person and Zoom meetings with US and UA government officials, IFI representatives, mayors of over forty Ukrainian cities and dozens of corporate representatives.

Over these eleven months, a constant barrage of information and PR promotion from think tanks, government investment agencies, IFIs and reporters. Months of reading about emerging and repeating themes of using confiscated russian assets to rebuild Ukraine, countless high-level meetings with renowned global financial institutions, most of whom have never been in Ukraine before, on how to manage expected billions of dollars expected to flow to the country after the war. Endless talks about need for insurance, insurance and insurance, direct foreign investment and grants, grants and more grants. All these subjects and issues and information flows were part of our daily lives at the Rebuilding Ukraine Agency since the day of its official founding March 24th, 2022! Then, three days in Warsaw, being a key part of the REbuild Ukraine conference and exposition changed it all. Speaking and listening to hundreds of attendees (6,000 attended), tens of exhibitors (254 companies were present) and multiple representatives of the government agencies from at least dozen countries (there were over twenty in attendance) certain things became crystal clear.

Despite what the title of this article says, not all of the folks involved in the subject of Rebuilding Ukraine have it wrong, and many solutions, activities and plans offered are very good, needed and may one day have a shot at being implemented. The problem is not the plans and ideas and available insurance or financing programs. The problem is DISCORD of all the parties involved. There is a very famous 1814 fable by Krylov called Lebed’, Rak i Shuka (Swan, Crayfish and a Pike) (Yes, I know Krylov was russian and no, I will not accept criticism of activists for using this reference here, as it absolutely perfectly illustrates what is going on with respect to the subject of Rebuilding Ukraine). The gist of the fable is that when asked to pull a cart together, the swan, the crayfish and the pike would have easily succeeded had they worked together in unison, yet they failed miserably because the swan was pulling up wanting to fly, crayfish crawled backwards, and the pike was pulling the cart toward the river. With this type of effort, the cart of course remained in place.

The same situation is taking place now with respect to Ukraine. Multiple stakeholders, each with their own self-interest, are pulling the proverbial cart in different directions, while Ukraine remains in one place, all while being raped, tortured and pillaged by the aggressor. This is unacceptable and will not work effectively when the time comes to rebuild the country. Add to that graft and corruption, which exists both in Ukraine and in practically all Western countries, inexperience of many new entrants, protectionism and squatting within Ukraine and the recipe for a failure is almost complete. Below are but just a few factors, which have developed during the war, and which contribute to the discord. Rebuilding Ukraine’s process today is like a star-studded symphony orchestra without a conductor.

War effect – this terrible war has affected the lives of tens of millions of people, severely damaged Ukrainian economy and infrastructure, necessitated new skills and knowledge from multiple local participants, and completely upended the traditional means of municipal financing, affected urban development, reconfigured construction supply markets, impacted labor availability, economic development and this is just scratching the surface.

Federal vs municipal – Ukraine’s Federal Government has done a very credible job dealing with the war effort, repairing some infrastructure and planning for the post war recovery. The situation at the regional and local levels has not been quite as smooth and uniform. The fact that the local authorities were left largely to fend for themselves did not help. Most Regional and local entities do not have significant experience dealing with the western businesses and attracting international financing.

Famous vs forgotten – although there are over one thousand cities, towns, municipalities and villages, some like Bucha, Irpin, Bakhmut, Mariupol, Kharkiv, Zaporizh’e Kherson, Mykolaiv, Dnipro and Odesa became very well known as result of the devastating war and their suffering. This “fame” attracted disproportionate attention from the international community and a disproportionate desire to help rebuild these particular locales. Yet hundreds of other municipalities, some located practically next door to the aforementioned, have also suffered just as badly. What about them? How do they cope not only with the effects of war, but with being dealt a less fortunate hand in the rebuilding process?

PR effect – PR on all levels has been one of the most effective tools during this horrible war. From the national level PR of the President speaking to the parliaments, governments and international financial institutions, to more localized investment promotion agencies, municipalities, countless NGOs, YouTube bloggers and commercial entities constantly appearing in social media and at various international events, PR has made Ukraine the leading global brand and the most attractive destination for rebuilding. This phenomenon has attracted a great many players who have never before done business in Ukraine, or even visited the county.

Award of patronage – many countries, NGOS, individuals and businesses spent the last year helping Ukraine in its war efforts. Countless tons of military equipment, medical supplies, food, clothing and much more were delivered to Ukraine. As the result, the President of Ukraine awarded to some countries priority patronage over rebuilding certain cities. The basis for such awards were unclear, the countries selected were very few and this process did not appear to help the remaining municipalities in Ukraine.

Foreign entrants – It is estimated that businesses, NGOs and governments from about fifty countries are interested to participate in helping Ukraine win the war and to take place in the subsequent rebuilding process. Almost every country has one or more government agencies charged with supporting exports and investments for the businesses from that country. These agencies are very useful in helping their constituents enter multiple foreign markets but could become much more effective if they become a part of the Ukraine-focused international initiative, one that is capable of delivering to their clients the so called “last mile” connectivity with the Ukrainian federal, regional, local and commercial markets and can help them to better understand Ukrainian processes, needs and the local culture.

Foreign money and insurance – from the start of the war, many Ukrainian and international participants (including our own Agency) began to focus on bringing new investment projects and understanding the tools available for financing and insurance in Ukraine today and once the hot phase of the war ends. While FDI, debt financing and Political Risk Insurance (PRI), war insurance, export credit and breach of contract coverages, along with similar instruments are very important, it should be the proverbial number 175 on the list of priorities to rebuild Ukraine. The Rebuilding Ukraine Agency has an extremely deep and capable multi-country team to develop, finance and insure complex projects. We closely work with both government, private and capital market funding, and insurance sources in over 20 countries. Our members have successfully completed large and very complex financing in Ukraine over 27 years. What we see now is a very unorganized and poorly prepared market with a dearth of well-developed projects, deteriorating credit quality, unwillingness of many Western funders and local investors to participate and precious few selected projects ready for the financing/insurance applications submissions. The recipe for fixing this critically important issue will be a subject to a separate post.

Regional vs regional – Lviv region vs Zakorpatye vs Volyn, vs Chernihiv vs Odesa vs Kherson along with the other eighteen regions they all compete. They compete for economic development, for domestic and foreign investment, for more inhabitants, for more resources. During peaceful times, this type of competition is absolutely healthy and normal and should be left alone. Yet these are not peaceful times and the resources for which regions compete are foreign as well as domestic. The demographics are changing with manufacturing capacity and populations moving West or leaving the country completely. It is vital for the new market entrants to understand the effects of these changes in making their investment and financing decisions. It is also vital for the Regional and local authorities to understand the evolving situation and develop plans to make their regions more attractive for economic development, which are based on the new realities.

Local vs local – cities, towns, hromadas and villages – face much the same issues as the regions, but their woes are amplified. There are many of them, they greatly vary in size, economic advantages, location and population. Their credit quality is largely non-existent, or not sufficient to obtain any type of financing, other than from the Ukrainian Federal government, local taxes or utility fees. They education as to what is needed to attract Western counterparties is often below par and the local corruption is often high. All these sources are far from sufficient to help these cities and towns rebuild and jumpstart their economic activities post-war. For the last eleven months their issues have been largely ignored and this needs to change.

Shifting demographics, declining population, PTSD – by various estimates, about ten million people were displaced as the result of the war, about 4.7 million were forced to leave the country, and it is safe to predict that most of the 40 million Ukrainians will suffer the effects of PTSD. Thus, developing a coordinated plan to help welcome those refugees who will be coming back, replace those labor market participants who will not return and set up effective rehabilitation programs for those suffering from PTSD will be vital and will require strong coordination.

Reconciling Ukraine 5.0 with damaged pipes, schools and hospitals today – The mandate of the Ukraine’s government and its lawmakers, which is echoed by a number of private and NGO players, is to rebuild Ukraine better. Smart cities, energy efficient construction, new urban planning and other state-of-the-art features. But Ukraine is badly damaged, not destroyed. Thus, how to reconcile the planning of building an entirely new ultra-modern, energy efficient smart City, of which only maybe 20 percent has been damaged and for which the City administration desperately needs funds to repair broken pipes, streets, schools and kindergarten facilities today!!!! Do it piecemeal and you end up with a quilt patch of mediocre, and there is certainly no funding to do it all at once. Again, strong multiparty coordination is needed.

The Warsaw conference clearly showed the proper unique positioning and the leadership role of the Rebuilding Ukraine Agency. During the conference we have been approached by multiple European Governments and Government agencies, seeking to cooperate with the Agency and for us to assist their constituent businesses. The Agency has also conducted significant discussions with the private sector companies and with multiple Ukrainian municipalities. Current situation calls for completely different tactics. Investment projects and market entrance by the players new to Ukraine have to be curated and carefully developed. The Investment Promotion agencies, while useful, have no depth and expertise needed to see the projects through to their financing and completion. Over the next several months the Agency will significantly broaden its scope and membership roster. Stay tuned!

After two action-packed days, the basic thesis of the Rebuild Ukraine event may be summed up as follows: Private business looking to get into Ukraine and Ukrainian business looking for the western business expertise and financing, should be supported by their respective governments, IFIS and NGOs, but led into action by an international, experienced privately managed economic development organization, which has experience, cross-cultural awareness, stature and independence to act. This organization needs to be comfortable in talking to all Ukrainian and external stakeholders, as it will be a key interface between helping Ukraine get ready for Western investment, lending, insurance, supply and training. Support from international government investment promotion agencies is absolutely vital as is the support from the Ukrainian side on all levels. The analogy I often like to use is that of a major port where large passenger, cargo and at times military ships, come in and each one of them is big and mighty. Yet, in order for the port to operate successfully, small, agile tugboats are needed to coordinate all these large ships. Thus, either as the conductor of a large multinational Rebuilding symphony orchestra, or as the tugboat of the port of call named UKRAINE it is indisputable that Ukraine needs an experienced independent, multinational economic development organization to coordinate the massive rebuilding effort for the western players seeking to help the country. For the last eleven months, the members of the Rebuilding Ukraine Agency have been working on developing innovative training programs, financing solutions and economic development techniques applicable to the new realities of Ukraine. If your organization is interested in helping Ukraine rebuild efficiently and with the maximum benefit, please consider joining our Agency. Our team, and our esteemed members have the technical, legal, cross-cultural and financial tools required to deliver an orderly process where the resources are used strategically and the rebuilding process involving western companies, governments and financial institutions will have the maximum effect for every Hryvna, Dollar, Euro, Pound or Zloty spent.

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REbuild Ukraine – Warsaw diary. Day t-2.

First from our group to arrive to Warsaw for the big event was Thomas Lang, head of the Rebuilding Ukraine Association (the 501c3 non-profit spearheading the REUNITE education initiative to help train Ukrainian construction industry professionals and seeking to sign a multiparty memorandum at the event) He is also working to assist a Ukrainian project sponsor on developing a construction block production facility in Ukraine.

The incomparable Thomas Lang

After Thomas, our own Edward Vays made his way to Warsaw. Edward is the Principal Owner and Developer of a unique Berehove Springs Thermal Rehabilitation Project. Due to its unique location and access to healing mineral water, which comes from1.3 km deep well drilled by Edward’s company, the Berehove Springs project aims to become the leading PTSD veteran and family rehabilitation center in Ukraine. Soon after his arrival, Edward found himself engaged into intense discussions with the Rebuilding Ukraine Agency’s Board Member Aleksandr Stefansky, who arrived in the afternoon loaded with a 70lb bag of Agency’s presentation materials.

Aleksandr Stefansky, Rebuilding Ukraine Agency Board Member
and Construction Committee Co-Head

Edward Vays, Principal Owner, Berehove Springs Thermal Rehabilitation Center and Wellness Community project

Others, including yours truly, continued to arrive and their stories and the story of the Rebuild Ukraine event will unfold over the next few days. Symbolically, Warsaw met the visitors with grey and dingy weather, which reflected the somber mood over the current situation in Ukraine. Yet, after walking around in the Old Town, one could see splashes of color and lights, which to me symbolized the hope and the bright future events like Rebuild Ukraine will bring after the war to this long-suffering country.

On a housekeeping note. All my photographs from the Rebuild Ukraine event will be put into a separate album, the link to which will be available in the last post covering this trip.

Regards from Warsaw, A. Gordin

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Rebuilding Ukraine – seven months of swimming upstream

It has been eight long and painful months watching Ukraine and its brave people fight and suffer during the brutal war brought on by its neighboring “broZer”. During seven of those months, Rebuilding Ukraine Agency had its own complex journey riddled with victories, potholes and disappointments.

Formed a month after the war, our member-owned international rapid deployment Agency has one clear mission – help Ukraine rebuild by bringing together likeminded US, UK, European and Ukrainian companies, along with international capital and risk management solutions.

The Agency is organized along several key industry segments – construction/real estate, energy, agriculture, and healthcare. Approximately fifty members strong today, the Agency’s members represent a broad array of companies. From single-person professional practices, to very large architectural, engineering, agricultural and energy firms. As the world’s governments and major financial institutions have been working with Ukraine to develop recovery and rebuilding mechanisms, the Agency quietly took a lead in creating a “closed cycle approach” of developing, financing and insuring projects using its broad toolbox of financing and insurance mechanisms, coupled with building of multidisciplinary teams capable to address the project needs at each stage. Current projects in the Agency pipeline range from development and financing of the state-of-the-art insulation production facility, development of a precast concrete production facility, development of a wellness/rehabilitation center and housing subdivision, to co-financing of a nuclear reactor and of alternative energy powered powerplant facilities.

Despite of the uneven support from the various government agencies and from the international financial institutions on both sides of the pond, the Agency’s Board and staff have persevered and have been moving forward with the laser focus. Rebuilding Ukraine is a rapid deployment agency and that ability to quickly decide, mobilize and act has thus far served as an unbeatable advantage. The Agency entered into several key alliance with established organizations, both in Ukraine and in the US, and through regular roundtables and social media channels has been in the forefront of curating the “Rebuilding Ukraine” topic to a broad audience in several countries. The Agency’s invitation-only Telegram Channel 1 has been critically acclaimed and has become the go to place on the subject.

However, Rebuilding Ukraine journey has not been without its challenges. At the time the Agency was formed, the pro-Ukrainian sentiment was very high worldwide, the war was in the headlines and the world’s outpouring of humanitarian and emotional support has been tremendous. A number of members who joined the Agency at that time have joined guided largely by emotion and having no clear understanding of how they may benefit Ukraine’s rebuilding. When it became apparent that the war will not end quickly and the Agency’s strategy would need to be revised for the long-term, the Agency experienced an attrition of about ten percent of its members.

Another significant obstacle has been investor/donor fatigue, which has developed across the entire “Ukraine” space and the Agency’s capital raising efforts have been impacted by this. As the economic situation in Ukraine deteriorated and bombings escalated, it has become increasingly difficult to develop bankable projects and to even keep up certain meeting schedules due to electricity blackouts, facilities of Agency’s clients being attacked and forced air raid evacuations.

Since the entire Agency staff, Board members and supporting professionals have been volunteering their time, sometimes their “day jobs” took priority and certain Agency initiatives did not unfold as quickly as desired.

When, in March, the Rebuild Ukraine Agency started delivering the message of Private Sector being the key driver in the Rebuilding of Ukraine process, the media and various forum spaces were dominated by theorists and pundits who would put out opinions on how to Rebuild Ukraine without any practical basis. As the time passed, multiple relevant parties understood the importance of the Rebuilding Ukraine with the private sector and started to piggyback on the Agency’s message. I guess imitation is the sincerest from of flattery.

Based on the analysis of the problems, obstacles and successes, the Agency’s Board and Officers have working on putting together a strategic plan, which would allow the Agency to maintain its leading position in the Rebuilding Ukraine space, expand its financing toolbox with equity and possibly NFT offerings, transition its key staff away from the volunteering role, develop cost-effective due diligence and compliance procedures and grow its membership roster to 100 members in 2023.

The Agency is planning a major in-person event in the middle of February in Poland to participate in the Rebuild Ukraine conference and exhibit being organized to accelerate the rebuilding process and we expect 2023 to be the year this horrific war finally ends and the recovery and rebuilding of Ukraine will start in earnest with the Rebuilding Ukraine Agency leading the way for its members.

Rebuilding Ukraine Agency is 120 today

120 days that is. And yet, with the horrific war raging in Ukraine for the past five months, these 120 days seem like eternity. The Agency’s journey, thus far, has been an exhausting marathon filled with ups, downs and periods of frustration. Although, all our activities pale in comparison with the heroic efforts of the Ukrainian armed forces, civil defense and tireless volunteers, who provided incalculable help in delivering humanitarian aid and clean up of destroyed cities, we know that our work is important and is vital to the development of Ukraine’s economic future.

Just 90 days after its formation, the Agency announced its first economic development project – creation of a $25mil. production and distribution facility in the center of Ukraine to produce badly needed construction insulation materials. The project’s principal is a US-based company. Think about the courage required to make such an investment decision into a country embroiled in the brutal war. The agency’s role has been to assist with the project’s development on the ground and to arrange financing and insurance coverage for the facility. Not an easy task, but one for which the Agency has been specifically developed. We are a private, member-owned and rapid reaction organization with significant multi-disciplinary capabilities.

The investors into the insulation project are by no means a unique case. Other Agency members are hard at work developing projects ranging from pre-cast concrete, plate glass and ceramic block production facilities, medical rehabilitation centers, gas and agricultural infrastructure for transportation and storage, and expansion of healthcare facilities for cancer and neo-natal patients.

I am often being asked if the the Agency’s representatives will be attending various rebuilding Ukraine related forums, which have been springing up across several countries. My answer thus far has always been “NO”. While some of these forums are important and highlight policy discussions, international cooperation programs and legal scholars’ theories on subjects of whether it will be possible to use frozen Russian assets towards the cost of reparations, the Agency is laser-focused on its core mission of developing and fulfilling specific projects in key areas of Ukraine’s economy.

In the the movie “Schindler’s List”, the main hero was not able to save all the Jews from the horrors of holocaust, but he was able to make a huge difference by saving over a thousand souls, who in turn gave birth to a new generation. Thus far, the Agency’s approach has been similar. We monitor the policies and trends for rebuilding set by the Ukrainian government, follow various aid announcements etc. and keep our members informed on the developments. Yet, we are primarily concentrating on developing and executing as many specific impactful projects as possible, all while realizing that the Agency will not be able to solve all the problems caused by the war, but every project we successfully realize will make a difference.

I would like to congratulate all the Agency’s Members, Officers and Directors with this small, but important milestone in the life of the Rebuilding Ukraine Agency and I want to thank all the folks in Ukraine, US, Canada, UK and EU countries, who have supported our organization and have helped it move forward. Ukraine will overcome and we will be there to help it rebuild!

Bomb shelter to protect from Americans!

Oh, what cruel ironies life can serve. I woke up this morning to learn that the Russian aggressors have started bombing additional Ukrainian cities, including Dnipro (or Dnirpropetrovsk, as it was formerly known).

I shuddered and could not shake a thought of how despite malicious propaganda and bias informational barrage, life sometimes serves up cruel ironies and unequivocal empirical truths, which define the real state of affairs.

About 15 years ago, my team and I were working in Dnipro as contractors on the US Government’s feasibility study to rehabilitate the aging heat and powerplant located at the famous Yuzhmash facility. During the multiweek stay in Dnipro, we got to tour the once secret plant multiple times and on one particularly memorable visit, our guide explained how the workers’ locker rooms were built to double as bomb shelters against American bombs. The building essentially was constructed on giant springs and able to withstand a nuclear blast.

Well, since the fall of the Soviet Union, Americans have invested hundreds of millions of dollars to help Ukraine convert the Yuzhmash Soviet missile factory to civilian use, prop up Ukraine’s space program and created several international joint ventures, which use Yuzhmash’s rockets to lift international satellites into space. Russia has done largely the opposite.

The bombs and rockets, which the builders of the Yuzhmash facility were afraid of, came not from the US, but as a backstab from Russia. It pains me to think that the bomb shelters built to protect against the nation, which has done nothing but help, will now be used to protect Ukrainian people against a devastating betrayal by the “brotherly people”.