For weeks, Berlin and Kiev have been discussing the organization of the Ukraine reconstruction conference to be held in the German capital on June 11 and 12. Previous talks were held in Lugano, Switzerland, and more recently in London. There, the focus was almost exclusively on helping the Ukrainian economy. In Berlin, according to government circles, “4 dimensions of reconstruction” are to be examined. In addition to the economy in general and the specialized workforce and its training, the process of joining the EU will play a role as well as the strengthening of Ukrainian cities and municipalities. The other day the Solz government’s cabinet came up with a 15-point plan to promote the reconstruction of Ukraine. According to a statement from the Ministry of Development Aid, the main emphasis is on “mobilizing the private sector for the reconstruction of Ukraine”.

Guarantees for 22 investments in Ukraine

The package of measures focuses on financial subsidies and interest rate reductions for small and medium-sized enterprises in Ukraine, as well as investment guarantees for German companies. After the pro-European Maidan revolution in 2014, the German Ministry of Development Aid had already given money at the municipal level, and “we want to build on what already exists,” a ministry spokesman now tells Deutsche Welle. And all this while Russia is attacking Ukrainian infrastructure with missile attacks and exerting pressure along the front in eastern Ukraine. The International Monetary Fund estimates the cost of reconstruction at $400 billion. For its part, Robert Hambeck’s Ministry of Economy last year approved 53 applications for investment protection worldwide within the framework of this program, with a total value of approximately 1.5 billion euros. Most are in Ukraine, specifically 22 investments with a total value of 54.8 million euros. When asked how many applications have been submitted for investment insurance since the beginning of the year, a representative of the ministry was unable to answer. The importance of the time dimension lies in the fact that the Russian army has intensified its airstrikes in Ukraine since the beginning of the year.

And while Kiev can often be protected by Ukrainian air defenses up to 100%, the success rate in other parts of the country is much lower. Among the German guarantees approved for investments in Ukraine from 2022 is the continued construction of the construction materials factory of the German group Fixit near the western Ukrainian city of Lviv. The German building materials manufacturer has been producing in Eastern Europe for many years through its subsidiary company Kreisel. Before the Russian invasion on February 24, 2022, the company had already started construction of a new factory near Lviv, but the invasion halted the work. With the approval of the investment insurance, Fixit continued the construction of its second factory in Ukraine.

Kreisel expands into Ukraine

Speaking to DW, Michael Krauss, managing director of the Fixit Group’s Region Ost, expressed confidence that the project will be trialled. “We need to rebuild Ukraine. It is a very beautiful country with very friendly people,” he said last year during a visit to the region. But the war also posed particular challenges to the German manager. Suddenly German engineering companies, which make new construction materials machinery, could not send staff to their facilities in Ukraine, at a time when the country is under attack from Russia. Initially Kraus could not even send his own Ukrainian employees, because they were of military age, they were not allowed to leave Ukraine and had to ask for special permission. Eventually three of his Ukrainian skilled workers were trained in Germany and Poland so that they could install the machines in the new factory near the city of Lviv.

60 people will soon be working at the Fixit group’s second construction materials factory in Ukraine. Fixit and its Ukrainian subsidiary Kreisel plan to create an “academy”, i.e. a training center for their training. This will also be supported by the German state with a soft loan from the Kreditanstalt für Wiederaufbau, KfW. “Ukraine needs more things than weapons to survive this war,” said Svenia Sulce, the minister for development aid. “It also depends on the continued functioning of its economy and the country’s ability to finance reconstruction.