The government representative for the reconstruction of Ukraine: the West has stopped calculating the damage

The war in Ukraine is not over. Russia continues to attack and destroy civilian objects and infrastructure, including energy and deep inland. Have you ever encountered Czech companies helping to repair or build something, which was then destroyed again?

Not yet. But the similar technology we managed to get there was destroyed. I specifically mean, for example, cogeneration units. These are sources of electricity and heat operating on diesel or gas, for a relatively large populated area, for example twenty thousand people. Unfortunately, such cogeneration units are practically irreparable after successful Russian interventions.

Isn’t that a bit of a Sisyphean job?

I’ll say one thing about that. When the plan for the reconstruction of Ukraine was discussed in the European Commission a year ago, the 50 billion euros (1.3 trillion crowns, the aid was approved in February this year – editor’s note)so no one wanted to associate it with the theme of military support.

The European Union is beginning to realize that investments in Ukraine also need to be defended militarily

That is changing today. Because several projects that were built there were destroyed from the funds of the European Union from last year. So everyone in the European Commission is aware that it is a fifty-billion dollar investment that also needs to be adequately protected, for additional resources. And that we simply cannot rely on the Americans alone.

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When was the last time you were in Ukraine with representatives of Czech companies? Can you mention an example of how a contract was concluded on the spot?

The last time I was there with the largest delegation up to that time was in February, a week before the anniversary of the invasion, there were about thirty companies there. What one of them managed to arrange on the spot was the supply of disinfectant for the hospital in Dnipro and sprayers for that disinfection. Not only for the hospital as such, but also for the trenches.

And that’s important. One of the biggest problems that Ukraine faces besides the lack of ammunition is personnel, soldiers. Tens of thousands of mobilized are today in Ukrainian hospitals and are missing from the front. Disinfection gel helps to solve simple basic diseases, infections, fungi.

The company has already obtained financing, transported a few thousand liters of disinfectant and is working on expanding the project.

Who will pay her? Probably not the hospital, the Ukrainian municipality or the government, if they don’t have money…

Specifically, this company of ours was clever. She obtained humanitarian financial assistance for the project from some regions in the Czech Republic and from some investment funds.

They took it as such a first model, which, once it takes hold and you create references, will then be applicable to larger projects.

After the last mission, about nine other companies gave us feedback that they immediately established business relations in Ukraine, but like every company, they are facing the problem of where to get financing.

In most cases, the partner takes out a loan from a Ukrainian or Czech bank, insured for example by the Export Guarantee and Insurance Company. We also go through the possibilities of the European Investment Bank, the European Reconstruction and Development Bank and others with them.

For example, the state agency CzechTrade has started to create a large database where, based on its knowledge of Czech companies, it is already preparing invitations from these banks so that they can apply to them.

In general, I advise companies at meetings – and dozens of them come to us – to prepare a project that is already based on some specific needs. With that project, it is appropriate to look around and send it to all places where programs for the restoration of Ukraine are prepared. Whether it’s European institutions, the World Bank, development agencies from all over the world… Now this is how we deal with the Korean, Taiwanese or American side.

But on the face of it, there is a lot of work behind it. Filling out those forms is quite difficult and, as I said from the beginning, it will not be a subsidy eldorado.

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What is the most in demand in the attacked country. Where are the opportunities for Czech companies?

Healthcare and energy are clearly the most important for Ukraine in terms of non-military humanitarian aid. And then there are the water treatment plants in the places affected by the destruction of the Nová Kakhovka dam. We focus on these three areas the most.

Regionally, we try to operate as much as possible in the Dnepropetrovsk and Kharkiv regions. We call it frontal recovery. Basically, it’s about modernizing hospitals and building them not a thousand kilometers away, so that a wounded soldier can get there for a psychiatric examination or a leg amputation within a day.

Which companies are already operating there or have large orders under negotiation?

It still operates there, and already decades before the invasion Moravské naftové doly from the company KKCG Karl Komárk was operating there. Škoda JS is still active, it has great potential for the future, as it can play a significant role in the modernization and renewal of the Ukrainian nuclear energy sector.

The ammunition that the Czech Republic is helping to procure will last the defenders for several months

It is also, for example, Škoda Transportation, which supplies and negotiates the supply of trains, trams or subway cars. And in the field of agriculture, the largest Czech investor is Petr Krogman’s company Agromino.

She works in Kharkiv. Do you have any information on how she is doing there?

It doesn’t work. They’re not done, but they’re having an extremely hard time.

The experience of working with them and supporting their activities is very enriching and helps to understand the reality that prevails in Ukraine today. And that is the reality of the huge difference between the east and the west of the country. The east is bombed and destroyed. This means risks, so big investors don’t flock there and no one wants to insure it compared to the West. Some rockets have also landed in the Western Zakarpattia or Lviv regions and are causing damage, but what people live under in the east of the country, where there is no work, is incomparable.

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Ukraine was known as a country of corrupt authorities. Didn’t you yourself or our companies come across that officials there would ask for so-called notices?

I encountered that, for example, after the delivery of the cogeneration unit, the official demanded some absurdly high connection fee from the company. I dealt with it. I called there and said that if we deliver something for free, with the money of the Americans, then we will not approach such a thing at all. In the end, the connection went as it should, without charge.

So it’s a phenomenon that exists, and sometimes it has to be addressed.

Last summer, you estimated that repairing the damage in Ukraine would cost up to a trillion euros. Today it will probably be more…

Unfortunately, I am convinced of that. Official numbers stuck at some $486 billion almost two years ago, which the World Bank is still working with, although Ukrainian officials are documenting more new damage.

Some power plants and infrastructure will have to be rebuilt completely, it’s literally a scorched earth there. It will be solved mainly through investment insurance.

The levies of employed Ukrainians began to exceed the cost of social benefits and expenses

I don’t want to say any other hausnumero because, frankly, that number has stopped counting. For political reasons, because the necessary resources are not generated. For example, when the European Union approved aid of 50 billion euros, that figure is an order of magnitude lower, let’s say twenty times lower than what is needed.

It is clear that, in addition to organizing delegations with businessmen, you closely monitor the security situation, the supply of weapons and ammunition. How important is the approved American aid for 61 billion dollars or 1.4 trillion crowns to the defense of Ukraine?

It is essential. In a few weeks, it will provide Ukraine with the necessary supplies for many months. But it certainly won’t solve Ukraine’s defense for two or three years.

That is why Europe will have to get involved in this in an orderly larger volume. The Czech munitions initiative is aiming for units of billions of dollars in the first milestone. But we have to talk about tens of billions if we want to help Ukraine in the long term.

The Czech initiative, which involved two dozen countries, aims to purchase 800,000 pieces of artillery ammunition…

We’ll see, we have 500k in funding at the moment.

What is the price of those 800 thousand pieces?

Two to three billion dollars (more than 70 billion CZK – editor’s note). It will be closer to the three billion. The Financial Times recently reported 1.5 billion, but this does not correspond to reality.

And how long does such a portion of ammunition last?

But there will probably be a lot more weapons from American aid.

Washington’s aid consists of several components. Only a small part goes to the purchase of new equipment and ammunition. Some decommissioned American technology will go to Ukraine, it could also be Patriot anti-missile systems. But as far as the artillery ammunition chapter is concerned, there will probably be billions of dollars comparable to our initiative.

Ukrainian military equipment is also being repaired in the Czech Republic. There was also talk of a joint arms enterprise. What stage is it in?

Compared to the situation a year ago, we managed to specify the parameters of what the joint venture will look like in the area of ​​both small-caliber ammunition and in the area of ​​small hand weapons, such as pistols, submachine guns, assault rifles.

It should be a collaboration between Česká zbrojovka and the Ukrainian partner. It is in the stage of some eighty to ninety percent readiness. Cooperation takes place intensively, but separately in terms of legal structure. This means that there is no joint venture.

However, even at this moment, the cooperation, whether through repairs or the supply of spare parts, is increasing.

Roughly how much money has the Czech Republic spent since the beginning of the war to help the invaded Ukraine?

I’ll say it chapter by chapter. In total, the Czech Republic gave a billion and a half to the Ukraine program, to the humanitarian development aspect. This mainly pays for the supplies of Czech companies, such as cogeneration units, equipment for hospitals or the sending of Czech doctors to Ukraine.

Older equipment from the warehouses of the Czech army was transferred for higher units of billions of crowns. But for that we received compensation in money and new technology from the USA and Germany.

As Prime Minister Fiala said, we will contribute hundreds of millions of crowns to the ammunition initiative.

So, in total, aid from our budget can be around ten billion crowns, which is returned to us in tax collection and military equipment.

The question of expenses on the one hand and income from levies from Ukrainian refugees repeatedly returns to the fore in the Czech Republic…

There are one hundred and twenty thousand employed Ukrainians here, and now in the first quarter their contributions have begun to exceed the cost of social benefits and expenses. It is true that there are over 300,000 of them here, but a large percentage of them are children or people of retirement age.

Even though so many refugees have joined the labor market, we still have one of the highest unemployment rates in Europe. No one really knows how to deal with it, the social system does not motivate enough.

It is therefore necessary to intervene in the regulation so that, for example, top surgeons in the healthcare sector do not do inferior work because they do not have the appropriate certificate, which is happening. And so that our university-educated technicians do not work somewhere in McDonald’s or in cleaning, when companies have been complaining to the government for years that they need tens of thousands of such people.

Tomáš Kopečný

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