Ukraine’s Recovery: How To Help Ukraine Survive the Peace? | PFI at Villa Poranek, 16.06.2023

Ukraine’s Recovery: How To Help Ukraine Survive the Peace? | PFI at Villa Poranek, 16.06.2023 2048 1365 Philanthropy for Impact

In June we hosted our first ‘Philanthropy for Impact’ community gathering at Villa Poranek in Konstancin. The event was attended by over 70 philanthropists, investors, civil society experts and representatives from family foundations. The participants took part in five Salons covering pressing issues for Central Europe’s democracy and development.

The Salon, titled Ukraine’s Recovery: How To Help Ukraine Survive the Peace?, was introduced by Vlad Verchenko and moderated by Philip Boyes. The discussion, held under the Chatham House Rule, looked at how and when the private sector and philanthropists can speed up Ukraine’s recovery, striking a balance between long-term modernisation goals and immediate recovery needs. In particular, the session unpacked what needs to be done to reassure philanthropic backers to help kick-start Ukraine’s recovery.

Please see below for a summary of the key points discussed.

After almost 1.5 years, the war in Ukraine is grinding on without a clear end in sight. The World Bank estimates the cost of destruction in the first year of the war to be $411 billion. This includes 75,000 smashed residential buildings, and more 2,500 schools, 500 hospitals and 100 energy infrastructure facilities.

With this in mind, the session tackled five key questions underpinning Ukraine’s recovery and reconstruction:

  1. How do we strike a balance between long-term modernisation goals and immediate recovery needs?
  2. How do we reduce – or prevent – donor fatigue? 
  3. How can we start reconstruction efforts while the war is still raging on? 
  4. What will investors and philanthropic donors be looking for in terms of reassurance? 
  5. How do we go about engaging civic activists, and community representatives on different stages – from vision and strategy to implementation? And how can we make sure that the voice of the local authorities and local self-government is being heard?

The session kicked off with a discussion about economic growth, in particular the importance of rebuilding well-functioning institutions, without which economic support will fall flat. The participants agreed that Ukraine’s reconstruction provides an opportunity to overhaul the public sector and transform the country for the better. It was noted that the Lugano Conference in 2022 focused on the possibilities for new approaches, including digital transformation, a move to green energy, the creation of new transport systems. The Ukrainian defence sector was highlighted as a useful case study for how Kyiv can push through tough yet important reforms at speed. Furthermore, it was argued that a key focus should be on Ukraine’s internal potential as well as rewiring the economic structure, following the example of Ukraine’s European neighbours, as a large share of the country’s workforce is not generating GDP. There was a consensus that the private sector has an important role to play, not least in cementing its position as a leading player in reconstruction efforts. It was agreed that more could be done to create space for investment in Ukraine, focusing on long-term investments. With this in mind, several participants pointed to initiatives led by Ukrainian women, who are exceptionally entrepreneurial, creative and resourceful. It was noted that in Poland alone, about 5,000 female-led enterprises have been registered since the war began. This suggests that Ukraine’s recovery should be fuelled by a stronger focus on innovation, long-term action and the creation of new progressive tools.

It was agreed that the success of Ukraine’s recovery will largely depend on channelling support to local communities, which have demonstrated their independence and self-sufficiency, and are ready to join the recovery. It was also noted that decentralisation reform has been one of the most successful reforms in Ukraine, in part thanks to the role played by Ukrainian civil society actors. With regard to reassuring potential investors and philanthropic donors, attention was drawn to the problem of endemic corruption and the influence of oligarchs, which is why building a robust legal system is the key to delivering long-term change. The status quo is certainly not viable, and painful compromises will be needed given that Ukraine’s financial regulatory environment was deemed to be immature and nascent before the war. It was proposed that private-sector donors insert anti-corruption benchmarks into aid contracts: this could serve as a template for future investment agreements and a catalyst for political reform and economic modernisation. It was also discussed whether a new vehicle is needed to oversee the recovery process and funds, or whether existing structures can be used. At the same time, it was pointed out that political and social actors in the West need to communicate the progress Ukraine has made in combating corruption, to reassure their citizens that reconstruction funds will be well spent. In terms of philanthropic support that can be delivered before a cessation of hostilities, participants pointed to ongoing demining efforts, especially in those territories which have been recently liberated. Without demining, further investment and reconstruction will be very difficult. Other international initiatives were also highlighted, such as IsraAid’s support in providing Israeli seawater desalination systems to Mykolaiv after its water system was bombed and the deployment of 60 psychologists to provide mental health services in Ukrainian hospitals.

In conclusion, it was agreed that the foundations for Ukraine’s recovery – and long-term modernisation – need to be set now, even while the conflict is ongoing. The philanthropic sector can play a leading role in propping up Ukraine’s civil society and anchoring the country in Europe’s political and defence structures. Financial support for reconstruction will need to be paired with training, capability building and the sharing of technical knowhow to keep Ukraine’s reforms on track. This will need to be done with the scrutiny provided by a robust civil society, to help Ukraine build ever-improving governance structures.