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March 7, 2025 18:09-19:05 - CSPAN
55:58
Discussion on Reconstructing Ukraine
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Speaker Time Text
unidentified
And if you just want to have a break, so fundamentally in some moment it would backfire and it would be fire for everyone in the sense of lost or in translation and would backfire also in the sense of total loss of credibility.
And it's a fundamental point people should understand.
Thank you.
Thank you so much.
Those were very good last words here.
It's also a great lead over to the next session, which will discuss also Ukraine's economic needs, reconstruction, and so on.
So we have a coffee break.
Thank you so much for our panelists for joining us today.
Also from the Council on Foreign Relations, former Ukrainian finance officials look ahead at rebuilding efforts once Ukraine's war with Russia concludes.
This is about an hour.
So welcome, and thank you for sticking around for our third panel today.
I think we had a good segue from the last panel into the conversation on reconstructing Ukraine.
This is obviously session three, Council on Foreign Relations Reconstructing Ukraine as our symposium closes.
I'm Heidi Privoretiker.
I'm a senior fellow with the Council on Foreign Relations.
I'm delighted to have two of the leading thought leaders and experienced negotiators and basically my go-to people on all things Ukraine here in Washington.
This is on the record and I think what we're going to do for the first 30 minutes or so is have a conversation amongst ourselves about literally what we need to do, how we need to think pragmatically, what has been done, what is ongoing, because there has been reconstruction going on throughout the second round of the war post-2022.
And so I want to touch on that as well as what the plans are in the future and what still needs to be done.
So introducing Natalie Jurasco, she is the former finance minister of Ukraine from 2014 to 2016.
And she's also a CFR member, but she's also the chair of the Aspen Institute in Kiev right now.
Vlad Rashkovan is on the board of the IMF.
He represents Ukraine, has done so since 2017, and he also represents a number of other European countries on the board of the IMF, deeply involved with the conversations around the official sector and private sector components of the reconstruction question.
So we're not going to touch on the politics because both of my guests today have some lines that they are not able to cross.
And so we're going to stick to that question of reconstruction.
And starting with the fact that the World Bank, together with the government of Ukraine, the European Commission, and the UN, just released their updated figure of what it will likely cost to reconstruct Ukraine.
And that number is $524 billion.
That is for social infrastructure, schools, hospitals, energy, transportation, you name it.
And I want to emphasize the fact that the reason that they have $524 billion of reconstruction needs is because Russia has destroyed $524 billion of Ukraine's social and energy and even cultural infrastructure as well.
So that is why we're here to talk about reconstructing Ukraine.
To level set, I think we are also optimistic.
In a post-war situation, it's rare that you have the talent and the opportunity as Ukraine is on the path towards EU integration.
It has a lot of friends and a lot of support from official institutions, from the IMF, World Bank, EBRD, EIB.
You have bilateral support.
You have multiple different fora that have gathered in order to provide support for Ukraine.
So I'd like to get a sense.
I'll start with you, Vlad, on just level set.
What have we seen so far in terms of support for Ukraine in the midst of this horrible war that has been brought about by Russia's 2022 invasion?
Thanks, Heidi.
Thanks, Sifar, for organizing this event, especially in this time.
There has been a lot of things done in the last few years.
And I keep my Molly skin, and it's from the start of the war, the 12th edition of the Molliskin, which is notes.
It means that a lot has been at least written there.
And it's a road to victory, not only to peace.
And so I think one of the major things which happened in the last three years is acceleration of the Ukrainian path to European Union.
And I would remind that what we see now is an attack on Ukraine by Russia, a brutal attack.
I would say it started in 2004 when Ukraine chose the European Union vector of development and decided actually to run away from Soviet Union.
And the actions of what the European Union did, what Ukraine did in the last three years in order to accelerate this process are remarkable.
And this was a part of the previous discussion.
The second thing is IMF programme.
IMF program for Ukraine now has been approved in March 2023.
And this is the first ever IMF program for the country which is in active war.
And the program is done under the framework of exceptional uncertainty, lending under exceptional uncertainty.
And I think what we have at least the last weeks is pretty fitting to these words.
But the program is working.
We just came back from Kiev and we had to reach the staff level agreement on the seventh review.
And IMF program is in the center of a lot of the different financial flaws to Ukraine as a catalyst for other programs.
It's not so big by size.
It's big, you know, it's $15 billion.
But the total amount of money which Ukraine received already during the war, I'm speaking only about the budgetary support, not mentioning the military and humanitarian, is $120 billion.
And this is for three years, and IMF plays an important role in that.
There are other institutions which did a lot.
World Bank used a lot of the instruments, the trust funds, in order to route the money from the UK, from Japan, from other countries.
The EBRD created a platform, co-investment platform, with 19 different DFIs, G7 and European DFIs, in order to co-invest in Ukraine.
And EBRD is playing the role of the lead investor there, is one of the biggest investors in Ukraine, and therefore other DFIs outsource the underwriting to EBRD.
EAB does a great job on Ukraine, but all of these, together with the EU facility, 50 billion Euro program, which has been approved by the European Union, and 50 Billion ERA initiative, all of this is done somehow under the umbrella of the IMF program.
And there is a lot that has been done in terms of building also infrastructure for reconstruction.
There is an agency for reconstruction that was created in Ukraine.
Under the IMF program, we substantially improved the so-named public investment management framework for Ukraine, which is also important for future investors and for future economic treaty, which General Kellogg was saying.
I think it will be very important for also for U.S. investors to see the results of that.
Thank you.
Natalie, can I ask you the same question, but also try and give us a sense of what is left to be done in terms of preparing, hopefully, for a period where we have a reduction in hostilities and aggression against Ukraine and an opportunity for a peace that can actually underpin Ukrainian growth.
Thank you very much again for having me today.
Thank you, Heidi.
I'm going to go back a little bit and give you a little color on those numbers that we talked about so that we all have a sense of the size of what we're dealing with.
First of all, that World Bank number, the $524 billion, is for only the war beginning with the full-scale invasion.
So three years.
I want everyone to understand that it's more than that because this war has been going on for 11 years.
And we have no idea today in the temporarily, illegally occupied territories, what kind of damage has occurred.
We don't know what in Mariupol is the extent of the damage, what truly has been rebuilt.
So that number is an understatement to begin with.
Second, I think it's important to note that that number increases daily.
And yesterday, they bombed a hotel with a ballistic missile.
They have promised to go from 150 drones to 500 a night.
And this is in light of the intelligence being shut off, which I think you'll see naturally increased activity, increased destruction.
The last point I'll say about the 524 to give you a sense of how large it is, it's about 2.8 times 2024 GDP of Ukraine.
And it's estimated that that amount would be invested over 10 years.
Certainly, it's important, I think, also to note that this isn't about just when peace comes or when there's a cessation of violence.
As Vlad said, urgent reconstruction has been going on every day since the first day.
And there are multiple reasons for that.
One is just pure need.
When the Russians blow up the Kahovka Dam, you need to get water back to people in the southern part of the country who've been denied potable water.
Other parts of it have to do with creating a sense of confidence amongst the people that we have the capability to build back.
So after Bucha and after Idipine, it was important to rebuild quickly to show people that we have that capacity.
I think it's also important to note that for Ukraine, it's important in terms of giving those refugees seven million or more confidence that there's going to be something to come home to.
And so, you know, when you look at what's been done, the number one damage point and the number one rebuilding point has been housing.
And there's a reason it's housing.
That's what I described.
I agree with Vlad that a great deal has been put in place in terms of structures.
Ukraine has moved very far along in terms of creating a public investment management system, in producing something called the DREAM system, which is a portal developed by civil society together with the government that has right now over 10,000 or so projects inputted.
Donors can use it to identify if I want to work on school bunkers or I want to work on hospitals.
You can try to identify partners there.
And it can also be used for monitoring going forward as these projects move forward.
I think it's important to note that Ukraine does this not only in line with their needs, but also with a couple other goals, and that is EU accession.
So reconstruction is supposed to also fit the commitments of reaching the EU acquis.
And that's a very difficult thing.
As you can well imagine, rebuilding a road per EU standards and rebuilding a road per, you know, kind of emergency standards in Ukraine are very different and very different cost.
Not to mention that the legal basis is not fully there to use EU standards yet in Ukraine.
But that's an element.
I think Ukraine is very focused on inclusivity and on sustainability.
So it is building back better to the extent that we understand the society that we have today and will have tomorrow.
Private sector engagement.
There is no way that bilateral governments, international financial institutions will be able to afford or should be in the position to afford that $524 or more billion dollars.
There should be a significant and substantial private sector contribution.
I think the challenge for Ukraine today is very much in keeping people aware that we need to do this now, not to wait.
And so that's why I'm going to go back to it doesn't have to be the cessation of violence.
There may be areas you want to avoid that are on the front line.
But there are many things that can be done today.
Again, in restoring medical and restoring and putting bunkers into schools, there are things that need to be done today and can be done.
I think the donor platforms and the systems that have been put in place, to some extent, are probably all we're going to get in terms of systems and institutions.
But I think Ukraine is prepared for that, both with its internal recovery agency and its Strategic Investment Council, the work that they're doing to create a single project pipeline.
I think the challenge is not in institutions.
The challenge in Ukraine is capacity.
This should not be, and it will not and cannot be, according to Ukrainian law, a centralized system.
It has to be decentralized.
Ukraine has a very decentralized governance system.
And that's why in that dream portal, they're being encouraged to bring projects in, even if they're not at the top of the central government's list.
At the same time, the capacity at that local level is much, much less than at the central level.
And I won't even say that at the central level, there's sufficient capacity today.
Yes, EBRD and World Bank are putting in two different centers, a project preparation unit and a project preparation facility.
I can't tell you what the difference is.
But it won't be enough.
And there is a labor shortage in Kiev right now.
And so the skill sets to do this, project management skill sets, appraisal skill sets, all of those things are in dire need.
To move projects along, you have to have more than a desire and an idea.
You have to have feasibility studies.
You have to do a lot more than just identify the problem.
So from my perspective, the international community is there.
They're doing things now.
They're doing them consistently.
You know, there's about $7 to $10 billion probably of work being done a year.
I think the needs have been outlined at $14 to $17 billion a year.
So it comes a little bit short.
I think that the governments have done well in trying to provide war insurance for that private sector contribution.
So you've got an EBRD project, you have the American DFC project.
There are various ways to accelerate insurance available to private sector.
But right now, I think what we need to do is increase Ukraine's capacity and create the platform, create the environment that will get the private sector back in slowly until cessation, but back in one way or the other.
Can I just pick up on the important point of the private sector investment because the numbers are large and the opportunity is actually enormous because it goes far beyond the critical minerals in rare earths, the titanium, the uranium, the gallium, the lithium.
Ukraine has enormous high-tech talent, leading cyber talent.
It has a mining and metallurgy-trained workforce that is largely out fighting a war right now.
But it also has the leading edge of defense technology, and they're building this whole miltech valley with literally the cutting edge of where the future of warfare is and the overlay of artificial intelligence, the creation of anti-electronic warfare systems, how you actually prosecute and innovate on the ground.
I think it's really an under-reported story of just how far Ukraine has been able to provide for its own ammunition and its own defense.
So I think when you think in a broader picture of what Europe needs to do and how Europe needs to actually, on a cost-effective basis, build up its own industrial, defense industrial base, Ukraine seems like an obvious opportunity for actually making that investment.
So how do you get the private investors back to look at those opportunities?
I mean, I also want to make sure that we understand that even if defense mill technology is not a part of reconstruction, it provides for jobs, it provides for exports, hard currency, and it provides for tax revenues in a country that's going to need them, right?
So I mean, all of that contributes in its own way to reconstruction.
I think on the defense mill side, countries are becoming very aware through their militaries, through the Pentagon, through others, that the Ukrainians have been able to, in a very accelerated fashion, not only learn what's useful and successful in the field, but also to adapt.
And if you take the Pentagon as an example, that adaptation cycle is much, much longer, and it's unrelated, let's say, to what's happening on the battlefield.
And so what Ukraine offers is direct experience day by day.
As the Russians day by day change their electronic warfare, the Ukrainians are responding with theirs.
And so I think on the mill side, I think that community, and you're seeing venture capital funds focused on this, is starting to develop.
And I think the world is becoming cognizant of that value.
I think overall, we need to get private sector to understand that not all of the country is equally at risk.
There is, through the National Security Council of Ukraine, a map of Ukraine that shows the data of what's happened to date, where the bombings have been, where the destruction is.
You can look at it by sector, you can look at it by region.
And I think we need to be starting to show that not all of Ukraine is equally at risk.
I'm not saying not all of Ukraine is at risk, because it is.
The ballistic missiles reach the border of NATO for sure.
But it's not equally at risk.
I think the second thing is we've got to continue to create confidence that this is not the country that we all talked about for the last 10 years.
In other words, Ukraine has changed since, I'll say, 2014, changed psychologically since 2004.
But from a reform standpoint, from an anti-corruption standpoint, from an institution standpoint, from the role of civil society in monitoring this government, any government, Ukraine is a different place than it was prior to 2014.
And I think too many members of the private sector in particular kind of tell stories from pre-2014 about corporate raids or about legislation that's already been changed.
And there's not a good script that's been developed to say it's not that anymore.
There has been a piece of work done by the Ukrainian Bar Association that's very valuable for corporates to see that legislation that's changed.
But Ukraine has a big job to do to convince people that this is not the country you thought it was back in the 1990s or the 2000s.
The governments since 2014, we were part of that, have proven that those reforms are stable.
As an example for Vlad, I mean, when we came into government, I think we had to close about 100 of 300 banks because it was collapsing.
The system wasn't properly regulated.
Today, in a full-scale war, the banking system stands.
Not a single bank has failed.
That's because of the strength of that regulator that Vlad was involved in ensuring, and it's the strength of the fiscal system today.
And I think we have to change our view for the private sector to understand that there's not only opportunity, because I think everyone's always thought Ukraine has opportunity, but that you can realistically make those investments and the risk is not what you thought it was.
Please.
Yeah, I fully agree with Natalie.
And maybe just to add still few elements, just responding to the previous question and what has been missing.
You know, you mentioned the RDNA and therefore the reconstruction needs.
While I appreciate the World Bank job and also Kiev School of Economics was doing partially the job, I look at this figure with a little bit of skepticism and Natalie said already about that because the war isn't continuing and it's only a static figure.
It doesn't include everything.
We don't know a lot about unknown controlled territories and it does not include everything from 2004.
But it's not only that.
The reconstruction needs is not only the function of damages, it's a function of the post-war vision.
And this vision is so far is, I mean, it's not well formulated.
We had a number of conferences in Lugana, in London, in Berlin.
It didn't come yet.
It's true because it's difficult when you are in a hot war to think about the longer-term vision and hoping that the war will be ended soon.
So there will be a next conference in Rome in July.
So maybe this will be a good moment to discuss it.
Second thing, which I forgot to mention, one of the important things which has been done also with a big support of IMF and the IMF leadership is this was created the so-named multi-donor coordination platform.
It was done by G7, but now it's much wider.
There are 23 different players, including the seven major global financial institutions, a member of it.
And this group already met 12 times.
So it's a steering committee.
They're meeting like every 40 days with a structured agenda, with the steering committee there, the different work streams.
I mean, it's really an institutional mechanism.
And I think in order to go further in the reconstruction, this institutional framework should be now probably evolving to something similar which we had during the Marshall Plan, the ECA, so special agency, which could be 100% time dedicated for Ukrainian reconstruction.
I agree with Natalie that Ukraine is a very decentralized process and the majority of the reconstruction is not in Kyiv but in the regions and the capacity there should be increased and definitely the ownership of the vision should come from Ukraine.
But still, you know, there can be an input and there should be an input from our partners, foreign partners, European, American partners, you know, how we can build.
And this is also the business opportunities because I fully agree with Nathalie.
The majority of this money which will be spent for reconstruction is not public money.
It will be still private money.
And this is important.
The third thing is there is this discussion on how much money Huku gave to Ukraine.
In reality, we have today several things.
We know what is the budgetary support, because this is the tracking of the record of both IMF program and Ministry of Finance.
But when you go a little bit wider, including the reconstruction, the complexity of the process, number of the projects, number of the deals in the regions, the number of potential players, starting from bilateral countries, from DFIs, IFIs, philanthropes, business, this is just too complex project now to monitor even how much money is provided to Ukraine on reconstruction.
The World Bank says that the 524 billion is already net of what has been done, but I'm still questioning if there really could capture all the amount.
So probably one of the things which could happen at the next stage, and this is we can discuss it later about the Russian assets, there should be some sort of the Ukraine Development Bank or fund, a special fund, which could be still used for Ukrainian reconstruction.
We were writing last year the CPR paper on that.
Because if this kind of fund or development bank could work together with these reconstruction agencies, you know, like ECA type agency, this could bring together money and also could be a backstop for a lot of the private investors' investments to Ukraine.
So let's go there with the Russian sovereign assets.
There are a lot of conflicting views about how to utilize them, whether they should be used for military support, should they be used for reconstruction, and should they be just provided to Ukraine for reconstruction, pledged as a deterrent or a reward to Russia for good behavior.
There are a lot of ideas out there and then still some pushback against what the implications would be around actually utilizing those assets and reminding that there was a G7 initiative for the 50 billion that's actually using the proceeds that are generated from those assets to actually provide funding through the G7 platform to Ukraine for a variety of different purposes.
So just if I can get your views on what do you think would be the best way to utilize the 200 billion sitting in Europe right now?
From my perspective, you have to use it for the most critical need.
And if today military is our most critical need, so be it.
I don't believe this money is in any way going to serve as a deterrent for Russia or as a carrot, as the discussion earlier said, because I think for the most part, I think Russia knows that this money is not going to be theirs.
And it would be wrong to not have some type of reparations for the damage that one party has created in this country.
And so, you know, I would love it if it was available for reconstruction.
However, reconstruction, in a sense, really depends on peace, and peace depends on Ukraine having strength.
So I think it is incumbent upon Europe today, which is struggling with how do we fund this, to go ahead and find that way, not to be afraid of threats that Eurobonds won't be purchased, not to be afraid of what this means to the Euro, because, you know, I'm kind of a student of Larry Summers.
Whatever it meant to the Euro, it happened when we froze it.
It's not going to be anything that happens going forward.
So I think we need to find the way and find it fast.
I think we need to start from the one simple principle.
Russia must pay.
And this is important.
Any idea to appease Russia with this money, any idea to use as a collateral for meeting their obligations under ceasefire is a wrong way to do it.
I agree with Nathale.
Russia already does not assume this money to return back.
But definitely they will try.
They will put it on the table.
And it would be interesting to discuss what General Kellogg and Witkov could do with that.
But I think it's right.
I like the approach General Kellogg said today.
So we need to use this money.
And he also mentioned today the fact that some Ukrainian cities completely vanished after the result of the Russian destruction and invasion.
And apparently it's true.
So let's use this money to rebuild Ukrainian cities.
Let's build them.
Let's build new cities according to the new standards.
And this is also, again, business opportunity, even for American companies.
It can be done, you know, to participate in the large, let's use this word, real estate projects.
And you can build there, and you can build also the factories there and the business there.
And this could be also, you know, American business and European business, which could be also interested in this economic treaty, which we also discussed today.
You know, but I also agree that the current stage is this money could be also used for the military, you know, for buying again European American weapons as a deterrence, as to fight.
This is already depending on how far we go with the end of the war.
But Russia must pay.
So at this time, I would like to take some questions from the audience.
We will do the next 30 minutes or so of QA, both from Washington, D.C. and from all of the viewers that we have on Zoom right now.
But if you have any questions, please raise your hand.
I've got one right here, sir.
Thank you, Paul Jones, from Squire Patton Boggs.
I wonder, speaking of the whatever we call it exactly, the economic agreement or the critical minerals agreement, a rare earths agreement, I wonder if you could each provide your assessment of the importance of that agreement for Ukraine's economy, for reconstruction.
Is it significant?
Is it realistic?
Under what timeframe, quite apart from the issues we spoke about this morning: is it a security guarantee or what are the political impacts?
I'm just wondering, from your economic expertise, how do you assess that agreement?
Thank you.
So I'm happy to take, I wrote about this before anyone actually talked about Ukraine having critical minerals.
And so I think that with the Trump administration, absolutely the shared economic security is the way that President Trump would see as the ultimate guarantee of national security.
The devil is in the details in terms of what the terms of the term sheet or the framework, whatever it is that Ukraine's being asked to sign, but the geology and the assets that are underground to be developed over the long term.
And it's not just critical minerals and rare earths, there are oil and gas, infrastructure that's related on the table right now from the last version that I saw.
I think that Ukraine really does need to make sure that it works in their interest and that there is a shared economic development element to this that really binds the U.S. and particularly this administration to open the channels so that they can actually move forward and release the pause on the military provision of weapons and military support and intelligence provision.
And I think until that actually it's like fixated right now in the president's mind and until that is signed that I think Ukraine is going to be struggling.
From an economic standpoint, I think it's important that the last version had the monies going into an investment fund for reconstruction for Ukraine.
I think that's critical.
That was not in earlier versions.
And I think, you know, again, the doubles in the details.
I think it's important, though, also to note that much of this has not yet been truly geologically explored.
As General Kellogg said, he'd like to go send in USGS.
So I don't think you could expect that this is going to provide an immediate economic benefit to Ukraine or the United States.
It's going to be over a period of time.
This is something that has to be properly surveyed.
Then, you know, mining doesn't take a short period of time.
So I think it's extremely valuable symbolically in terms of our relationship with the United States.
It's certainly very valuable to the Trump administration, according to General Kellogg.
I just think that, You know, it's not going to do, it's not going to put U.S. investors on the ground tomorrow.
And that's, I think, we should just be clear about that.
It's kind of a long-term strategy, medium-term strategy.
If I may comment here, I see it as positive, you know, if we look at the current version of the agreement, because it touches the future revenue flows, not the previous ones.
So it's not like extracting what has been already done and what was already, let's say, in the Ukrainian budget, assumed.
For IMF, it was important.
And therefore, we need to look, I agree with Natalie, that most of these things will require not only time, but also investments, you know, for exploration, you know, for even for building infrastructure.
And would I like to have American investors in Ukraine?
For sure, yes.
You know, can we do it together?
I hope yes.
You know, can we do it also with other countries?
I hope yes.
And this is what exactly will be the reconstruction of Ukraine, because you create a new added value.
And this is, I think, positive.
And if I may come back to the IMF program, IMF program apparently is complementary to that because what we do, you know, building up the macro financial stability, this is important for any investors who will come to the country.
You don't want that the country will be devaluated, you have inflation, because if you put especially investments in the foreign currency, you want to preserve the value of your investments.
And what you will have, because in Ukraine you operate in local currency in Grivna, not in foreign currency, so you need to convert money.
And therefore, you want this to be preserved.
Second thing is the IMF program currently is also about the right policies, right fiscal policy.
So you want to avoid that the budget will be in a bad shape, but also governance reforms which are under the program, which should also protect the investors.
I think a rule of law, the courts, the anti-corruption, all of these issues, I think, are very important elements of the potential economic treaty in the future.
So I see it positive.
But Devil is in the tails.
I have a question right here, sir.
Thanks.
Hi, Matt Morigi, Evolution Space.
I want to circle back to the Miltech Valley piece of this, because I do think that is a really dynamic part of the Ukrainian economy that's developed as a result of the current circumstances.
But a lot of that is still being fueled by public money, which is obviously being driven by the exigencies of survival for Ukraine.
So the question is, in a future scenario where there is peace, what does the future of that Miltech Valley and military spending in Ukraine look like?
Is it going to crater and go down by a substantial margin?
Do you think that current needs will continue to be sustained?
Is the plan to become a defense material exporter?
But what is the future of that asset that's currently just being used for the battlefield conditions right now?
Thank you.
If I may, I slightly disagree with you because what the government is not public money now per se.
The government makes an order.
So the government is saying we are buying this.
And like 10 years ago, it was majority in Ukraine.
It was the government, you know, public holding, which was producing the military and defense industry objects.
So what happened now is actually a big portion of the regulation.
So there is a lot of the private companies which are producing drones, but not only drones.
And there is a lot of investments coming also from foreign ventures.
There is a venture funds which are investing to Ukraine in the defense sector.
Also, Ukrainian businesses are investing and producing there.
And we really made it scale up.
And when I spoke, I'm not a military expert, just to be very accurate in saying that What I heard from an expert is when you speak about drones, but not only drones, our defense technologies, they are not only battle tested, but they also battle innovated.
So you have these, I mean, the loop from the changes, loop of innovation is so short.
I spoke with some guys who were producing drones.
They say, we made a drone which brings like X killers for 15 kilometers, and in two weeks we managed to bring it three X to three times bigger territory distance.
And because this is what they do both with SOFT, and you Heidi mentioned, you know, the tech forces in Ukraine, tech tech expertise in that.
But this is ongoing because there is an order for that.
When I speak with those guys who are producing now, I say, A, invest now, and the standard is very difficult.
Invest now to documentation because a lot of these things are done on the fields.
Second is invest in the IP rights.
If you see there is an innovation, try to register this.
And if this happens, and invest in the still in corporate governance, in the companies that tomorrow to be bankable as projects, because I'm sure, speaking about the European security, no matter of the deal in Ukraine, we saw what happened in the last days in Germany.
We saw what happens in general now and today with a US summit.
There will be a big demand for military technologies.
And Ukraine now, being battle tested and battle innovated, is a good potential supplier for that.
If managing corporate governance, IP rights, and also documentation.
And from technology perspective, believe me, they are not bad, considering that we are fighting with such a powerful system.
I'll just add two things.
Again, I'm not a military expert either, but I think we've seen that the field of war has changed forever.
And it's only moving forward in terms of the use of technology and away from the big tanks and the big armored personnel carriers.
I was told recently that a tank lasts less than 10 minutes on the field because of drones.
And when we think about drones, I also think it's important to note, I mean, government buying is public money.
That's going to continue even if there's a ceasefire, folks, because you're not going to stop innovating and stop producing.
We have a neighbor next door that for 600 years or more has been trying to commit genocide.
So we're going to have to keep producing.
But also, I think drones are something that I don't know if we even think about this in the United States, but they are a very inexpensive way to control the streets.
And so we have to worry, I think, globally about how these things are used by gangs, how these things might be used by terrorists.
I mean, they're small and they're easy to find.
So I think everyone will have an interest in this technology.
And I think Ukraine will have an export market.
And as Vlad said, it's important to note that almost all of it right now in Ukraine is produced by the private sector, maybe purchased by the government.
But it's not the state-owned arms company that's manufacturing the competitive drones.
Yes, and if I may, just the important here comes that these, when we speak about the modern defense, definitely we are not on a way of patriots or high marshes, okay?
We are not there.
But when we speak about drones, for example, this is not about only technical thing.
It's a combination of AI, it's a combination of the computer vision, it's a combination of the connectivity.
It's also important, and Heidi was mentioning about the, or Natalie was saying about the skills.
We trained thousands of people who are operators of drones, who are managing them.
We train them how to make them the managing number of drones, the army of drones.
So it's a combination of all the things, and this happened in such a leapfrog way that this is, I think, very remarkable.
And everybody looks at it now in the world.
There already are, I mean, the Danes have been pouring their funds into Ukrainian drone manufacturing, which is like it started as artisanal a couple of years ago and it's just ramped up, produced 4 million drones out of Ukraine.
96% of all of the production has been from Ukraine.
You've got the Turks investing in actually manufacturing facilities in Ukraine right now.
I think you're going to see a lot of increase of the investment in that sector because it is unique and cutting edge, literally the cutting edge that we have in the world right now.
People also forget that during the Soviet days, 13% of the Soviet production of the most advanced missiles and tanks, military warfare capability came out of Ukraine.
So there's a long-standing expertise in that defense manufacturing sector.
There's also an important thing.
You know, when people say that Ukraine is not recruiting young people to the military, I want you to understand that the young people are definitely involved in all of this miltech.
It wouldn't have happened without them.
So they're fighting.
They're just fighting with a different set of tools.
And I should be very frank just to finish on that.
I would love still to build cities.
But if some of these cities are tech valleys and miltec valleys, it's not bad.
I think we had a question from online.
Is Kerry?
We'll take our next question from Toby Gaddy.
Hi, Toby.
Ms. Gatty, please accept the unmute now prompt.
Yes.
Toby Gatti worked in the NSC and in the State Department, the Clinton administration.
My question is the connection between the military and the security situation.
America's misguided policy is now that there can be no Ukrainian attacks into Russia, but Russia attacks continue today, even literally today, into Ukraine.
So doesn't there have to be a priority to end those attacks?
Because otherwise, what you're really doing is making it more difficult to rebuild and making everything you rebuild a potential target of the Russians, of an attack.
So my question is, what is the connection between reconstruction and the future conduct of the war, which will go on for a while?
And also, none of you have mentioned the fate of the nuclear power plants, which is a separate issue, but one I think that is potentially, I want to say explosive, but in every sense of the word.
So thank you very much.
And your panel is a really good one.
Thank you.
Thank you, Toby.
Thank you, Toby.
I was the one who organized the first forum for reconstruction.
It was May 2022, we did it in the LSEA, bringing together like 40 people, mostly Europeans and Americans, to think what to do.
And one of the questions which was there, should we plan reconstruction after the war finishing?
So it means the end of the war is a prerequisite for reconstruction or not.
Nathalie mentioned already that the reality in Ukraine showed absolutely not, because reconstruction is ongoing.
And World Bank evaluates that as well.
So without that reconstruction, none of the foreign leaders would be able to come to Ukraine, you know, because the roads would be not done, the bridges would be destroyed, you know, and the railroad would not work, etc.
So this is the reconstruction is ongoing.
There is a lot of done on the building, the bomb shelters, the protection for the energy objects.
This has been done in the last years.
But even if you take this out, if we would plan to build some to have some big investments today, even speaking about the economic deal, economic treaty, as General Kellogg said, you need to have the exploration, you need to understand, you need to send the geological services.
If you plan the building cities from the moment when you have this idea, to maybe the moment when you put the first brick in the city, will take probably two years.
It will be on a very optimistic way, because you need to put a lot of people together, you need to find funding, you need to design what it can be, designing a business model, finding construction companies.
And later you will build this maybe for years.
So therefore, the end of the war is definitely not the prerequisite for reconstruction.
We should have done this before.
And moreover, if the war, I maybe should say that if the war finishes soon, we are not ready for reconstruction, for the full-scale reconstruction, because there is still no vision.
And we need to do it now.
We need to work on this and therefore to make it happen.
What I say, going back to the Marshall Plan, I say what we need to avoid, we need to avoid the 1948 moment, because the Marshall Plan was designed in 1944, but started working in 1948, which means like three years after the end of the Second World War.
And we don't have this privilege to wait three years after the end of the war, because we have several millions of people outside of the country and we have millions of people internally displaced.
And these people, many of these are already three years in Europe.
The majority of them are kids.
And if kids already study languages, they have new friends there, the families, by the way, already a lot of the divorced families and the people going there with finding new families in Europe, we will lose this.
And this is one of the biggest losses.
It's not only reconstruction loss for Ukraine.
The human capital, which we can lose as millions of people, this is the biggest loss for Ukraine.
Therefore, we need to think, we need to show the opportunity to people, we need to show some sort of the vision for the future which people could use as an anchor, why they need to come back to Ukraine.
Not only because it's their legacy or the nostalgia, etc., not only because it's their home, but because they want to be there, they want to participate in this revival.
And I think it will be the next big thing in Europe, because speaking about 500 billion, even more, reconstruction, these will be big projects.
There will be a lot of the demand for labor force, which, as Natalyna said, we are missing already, and we need to have that in Ukraine.
So we need to plan now.
I'll just quickly say, Toby, I was trying to make the same point you were making when I began.
The destruction is going to come faster and much harder going forward if we're not able to have in Ukraine the air defense capacity to protect our cities.
And so, look, it doesn't require a genius or a military expert to understand that there's a limited number of patriots, interceptors, there's a limited number of things, and if we're not able to protect our cities, the other side's going to bomb them.
I mean, I think yesterday and the day before are examples of that.
So, you know, it makes reconstruction much more expensive.
But at the same time, it also makes air defense probably the number one, the number one demand on the side of Ukraine because of that.
Because it's civilian lives, because it's civilian infrastructure.
And Ukraine can manufacture a lot of its own weapons, and Europe can provide weapons, but air defense is critical to not allowing for the destruction of a nuclear power plant, as you just said.
Yes, to answer that part of the question, they have control, illegal, and temporary control of Zaporizhia, the largest nuclear power plant in Ukraine.
Not unlike the illegally occupied territory, they don't have a right to it, and it's extraordinarily dangerous.
They've been using it to store military equipment, to have military teams in there.
So I think we definitely should be negotiating to get that nuclear power plant back.
I do think Ukraine has done a reasonably good job in expanding its ability to provide electricity to its population without it, meaning increasing the amount of electricity that can be imported from Europe.
Now, a project to expand nuclear power capacities at the existing facilities and more.
But I think there's a huge danger to the world in allowing that to remain illegally occupied and controlled.
If I may just two words here, we had a it's not the joke, but we had a saying that the best instrument of monetary policy is a good air defense system.
Because actually this helps you to keep the economy better, it's for sure.
And on nuclear factory, even for economic deal, I think Zaporizhia was generating six gigawatts of electricity before.
If you want to have cheaper electricity in Europe, also for many different data centers which you may need, or even for the production, this definitely should be on Ukrainian territory and controlled by Ukraine.
One question right here, sir.
Hi, thanks very much.
James Siebens, I'm with the Stimson Center.
I wanted to ask about how much cooperation Ukraine has had from European partners in locating its displaced citizens who are now living abroad and potentially making sure that everybody is filing their taxes on time, that sort of thing.
We have a foreseeable need for tax revenue for reconstruction in Ukraine, some of which will be answered, I think, by some of the displaced population.
So also thinking through repatriation, beside creating the kind of pull factors that you're talking about, how much cooperation has the Ukraine government had from other European governments?
In October 2022, I was speaking in the conference in Poland and Warsaw.
And after the conference, somebody came to me with Vlad that don't be afraid.
Your people here can feel themselves at home.
I said, thank you very much.
I would like to feel themselves more as good guests.
Let's be very frank.
The Ukrainian people who moved to Europe is a majority is young women, in the working age, intelligent, educated, and kids.
And the kids are not only on the birth age, but school age.
School age, as you know, the majority of investments you need to do in the first few years, but later is becoming human capital.
So I think there will be a competition for these people in the future.
But so far, what we see is a good cooperation.
So, we are thankful to the European government and not only European, also to the US, to Canada, to other countries, who helped to host Ukrainians, who provided them the temporary statuses, provided access to education, access to health.
I was in Kiev two weeks ago and met with the Minister of Unity.
We have created a Ministry of National Unity, which actually the task is to incentivize, to find the economic incentives and social incentives to bring people home and also to think what needs to be done.
For sure, security is one of them, but also the housing, what Natalie was saying, because this is the major element, but also jobs.
It is about the economic deals and economic developments, and what IMF is doing also to bring the economic growth to the country.
So, these are important things.
But the minister was coming just from the visits in Poland and Germany, where they also built some special hubs for Ukrainians, where they provide the consular services, the job opportunities, the notaries, etc.
So, just to become hubs together with the Minister of Foreign Affairs.
But so far, we see the big support there throughout Europe.
We'll leave this here for remarks from House Judiciary Committee Ranking Member Jamie Raskin.
He's part of a discussion on civil rights, civil liberties, and the rule of law, hosted by Politics and Pro's Bookstore.
Live coverage on C-SPAN.
Wow, thank you, Brad, and thanks so much to everybody for coming out.
This is so energizing to see a room full of people here for what I know will be an incredible discussion.
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