On Friday 28 May, the Deputy Prime Minister and Minister for Reintegration of the Temporarily Occupied Territories of Ukraine, Oleksii Reznikov, put forward the Ukrainian government’s idea of promoting the economic development of the Donbas, in particular by setting up a consortium fund in which EU Member States could participate.
In Brussels, the Minister told EUROPE, Politico and Reuters that his government wanted to create a “regime of territories of priority development” in order to create “attractive conditions for investors in regions suffering from war” and which are under Ukrainian state control.
“I want to create a belt of success along the contact line, and show people living under occupation that a pro-European and pro-democratic Ukraine is better for them”, he said.
The Minister proposed the establishment of a consortium fund, and explained that the aim was not to obtain loans, but to attract investors. “We expect EU Member States to be ready to participate in this fund”, he clarified. Highlighting the fact that many European states were supporting Ukraine as donors, Mr Reznikov hoped that these states would participate in the fund, “become partners, and earn money in this project”. In turn, the Ukrainian state will insure the political and military risk for investors.
In these regions, the Ukrainian government proposes to use international arbitration in case of disputes, pending a full reform of the country’s justice system. According to the Minister, companies will trust the international judges and will be ready to participate in this project. The administrative aspect will also be simplified as much as possible. The scheme will be valid for 10 years, until 2030.
The Minister said that there would be three categories of action. The first of these concerns fifteen communities along the line of contact - those most affected by the conflict - which will benefit from an attractive investment regime. According to Mr Reznikov, “they will have the maximum facilitation in terms of taxation to develop the budget of local communities”. Industrial parks will also be created in the Luhansk and Donetsk regions. These parks may be industrial or agricultural, depending on investor demand. Finally, the entire territories of Donetsk and Luhansk, which are under Ukrainian control, will have a simplified customs procedure.
Remembering the supply difficulties that EU countries may have had at the beginning of the Covid-19 crisis in obtaining masks, for example, Mr Reznikov mentioned that his country had highly skilled workers, as well as an association agreement and a deep and comprehensive free trade area with the EU.
According to the Atlantic Council, the conflict has cost the Donbas region $120 billion; and according to the Vienna Economic Institute, the reconstruction and recovery of the region will cost at least €21.7 billion. (Original version in French by Camille-Cerise Gessant)