Photo: CSIS
This transcript is from a CSIS event hosted on September 22, 2023. Watch the full video here.
Daniel F. Runde: OK, great. Let’s get started. Good morning, and I want to welcome everybody to the second day of the Doing Business In Ukraine Conference. I’m so happy that you all have come back. Thank you all for coming today. I’m Dan Runde, I’m the senior vice president, and I hold the William Schreyer Chair in Global Analysis here at the Center for Strategic and International Studies.
The panels that were held yesterday allowed us to go deeper into different facets of Ukraine’s economic transformation. I look forward to continuing those conversations today. We couldn’t do this without our friends and partners. And one of our key partners has been USAID. USAID is a great force of good in the world. And I’m really looking forward to the remarks of Ambassador Erin McKee. Erin McKee is one of America’s best Foreign Service officers. She represents the best of America. I’m so happy that she is in the key role that she’s in as assistant administrator for the Europe and Eurasia Bureau. I really mean that. So I’m so happy to be introducing her and asking her to come up now and make some remarks. So, Ambassador McKee, please come up here. Please welcome my friend, Ambassador McKee.
Assistant Administrator
Erin McKee: Good morning. It’s wonderful to see you all here so early on a Friday. Thank you for coming.
I want to begin by saying a huge thank you to Dan Runde and the whole team here at CSIS for gathering us together today, for the great partnership and organizing this conference but also our partnership along the journey, particularly over the last 17-18 months. It’s a crucial opportunity, as I’m sure all of you heard yesterday, for us to convene at a crucial moment, and for an extraordinarily important purpose. It is an honor to stand before you today to discuss the role of private sector in Ukraine’s economic recovery – I’m using that word intentionally – and transformation.
We, at USAID, are committed to fostering development and progress around the world. Today, we are here to explore how that partnership between – or, how the partnership between the private sector and Ukraine can drive sustainable economic growth, accelerate anticorruption efforts, and contribute to Ukraine’s ongoing transformation. My job, as Dan briefly described, at USAID is to manage our work in Europe and Eurasia. Until recently, Europe had not been perceived as a traditional development arena. And that’s in part due to our own efforts. Following the end of the Cold War, USAID helped establish market economies and democratic governance across the region. Some with great success and some mixed success.
And it is partly thanks to that work, as a result, that now nearly half of our original partner countries no longer receive bilateral assistance. And in fact, many others have joined institutions like NATO, the EU. And many former recipient recipients of development assistance now partner with USAID as fellow donors. They’re contributing to the development goals of other countries in the region and, frankly, around the world. These 30 years of development partnership were instrumental in the historical wins we have seen in the fight for democracy, freedom, sovereignty, and prosperity across the region.
The entire region now of Europe and Eurasia is at a historical crossroads. And I would say, frankly, that the world is at a historical crossroads. Malign actors, led by Putin’s Russia, are seeking to deepen their influence and promote authoritarian models of governance. They do so not only by the overt use of force that we’re seeing in Ukraine today, but also through less visible but no less insidious means. Whether through misinformation, corruption, or, indeed, through compromised individuals, malign actors seek to create a political environment that allows them to maintain and increase their power.
And yet, in so many other ways our Ukrainian partners have created space for something new and different. Their heroic resistance against Putin’s disastrous decision to reinvade Ukraine, and the unified support that we’re seeing from democracies around the world but particularly in Europe and Eurasia, have created a new unique moment to disrupt the authoritarian playbook in Europe and Eurasia. USAID stands ready to play a part, alongside our Ukrainian partners, in meeting this challenge. And we do that by helping to ensure that Ukraine succeeds in winning the peace, as well as winning the war.
Let me begin by answering a question some of you may be – have in mind. Why USAID? How can a development agency add value in this moment at a regional or even global scale? The answer is clear. Our agency, the United States Agency for International Development, has a unique set of tools available to support national and local governments, civil society organizations, independent media, and the myriad of public and private institutions that are essential to demonstrating that democracy can deliver for its citizens. Crucially, this includes ensuring a level playing field for business to drive economic success.
Let me be clear, economic success and prosperity is the fundamental proof of concept that democracy can deliver, and at the heart of why we’re all gathered here today. Our Ukraine strategic framework, developed in response to Russia’s full-scale invasion, spells out the intent of our assistance. And that will help to consolidate, catalyze, and connect opportunities for continuing transformational change in the region. I call these the three C’s. And they represent three overarching USAID themes of our focused approach in the region – across the region.
In Ukraine, this means we are catalyzing Ukraine’s growth as an independent, democratic, prosperous, and resilient country. We’re consolidating the gains that Ukraine has made in partnership with the United States, the European Union, and other likeminded, free democratic nations. And connecting Ukrainians to each other, to their government, and to new partners and opportunities in the West.
In the service of these three overarching goals, our strategic framework outlines four primary lines of effort. First and foremost, Ukraine’s immediate economic recovery and sustainable, EU-oriented rebound, including the empowerment of small and medium enterprises. Irreversible democratic governance gains, including the continued fight against corruption, and strengthening the national governments and local governments as part of democratic decentralization.
Third, energy sector reform to cement Ukraine’s European integration, including support of renewable energy and the orientation of Ukraine’s energy sector towards the EU so that is irreversible – so Putin cannot wield the weapon of energy and winter against the Ukrainian people and the rest of Europe. And lastly, and most importantly – and often this doesn’t get the attention it deserves – improved health services, advancing the dignity and wellbeing of every Ukrainian, including support for more resilient, responsive local health systems and strengthening psychosocial help and support.
Our programs are deliberately designed with sufficient flexibility to respond to changing conditions on the ground. And we prioritize, of course, Ukrainian-led, Ukrainian owned, and Ukrainian-managed approaches to our work. Not one single – Ukraine was the largest mission in Europe and Eurasia after 2014, for obvious reasons. After Putin’s invasion on February 22nd, 2022 – sorry, February 24th, 2022, none of – our programs didn’t stop working for one moment. But the agility, and the networks, and the strength of that investment over the last, at that point, eight years enabled us to respond to the moment.
And that’s the power of long-term engagement, and sustained responsiveness of the demand signals of the people Ukraine and what they want to see in their future. Whether it’s access to justice, whether it’s improved health care services, whether it’s a modern, decentralized, deregulated, and diversified energy grid, so that the Damocles sword that Putin likes to wield over everybody’s head in Europe is no longer – is blunted, and blunted irreversibly.
And I’d like to pause a moment here to explain or express how delighted USAID is at President Biden’s appointment last week of Penny Pritzker, I think you all heard from her yesterday, as a U.S. special representative for Ukraine’s economic recovery. I understand that her address was extraordinary, and I want to underline how much we are looking forward to collaborating with her in her crucial role. I also want to emphasize how much we agreed with several of the main points that she made at the podium here yesterday, which you will hear echoed in my own reflections.
First, Ukraine’s economic transformation cannot wait until the war is over. And in fact, it is already well underway, as many of you in this room can attest to. Second, the economic transformation is fundamentally geopolitical, and is an opportunity for Ukraine to move to an entirely new model, to dismantle the political economy that they have suffered under for the last 30 years – they inherited as part of the Soviet Union.
Third, I would like to echo Special Representative Pritzker’s thanks for the generosity of the American people and their congressional representatives. The continued support and funding that we’re receiving from the American people through the generosity of Congress has been essential. However, as generous as it continues to be, it will be insufficient to achieve our aims and those of our Ukrainian partners without the full engagement and dynamism of the private sector, again, underlining the value of the president’s appointment and of your participation in the conference today.
Just like Secretary Pritzker, and so many of you here, we also see a Ukraine that is open for business. And I appreciate the opportunity to be here today to tell you about our work to catalyze the private sector’s contribution to Ukraine’s economic recovery. Our top priority is to ensure that we mobilize the investment necessary for Ukraine to realize this future. In Ukraine, strengthening the private sector will create more transparent, liberalized markets and deepen collaboration between the government and civil society. USAID and its partners are working to pave the way for this lasting transformation, particularly in the agricultural sector which is vital for Ukraine’s economy and for helping feed the world.
Russia suspension of the Black Sea Grain Initiative and its subsequent attacks on Ukraine’s port infrastructure and food commodities are expected to continue. As you know, this has affected farmers’ livelihoods and Ukraine’s export capacity, with unpredictable long-term impacts on global food prices and food insecurity. Russia’s months-long disruption of maritime commerce has severely choked to the amount of grain that Ukraine is able to provide to the world amid a global food crisis.
In response to Russia’s aggression, in July of 2022 we launched the Agricultural Resilience Initiative to help Ukrainian farmers to feed Ukraine and countries across the globe. Together with private sector partners, like Bayer, Corteva Agriscience, USAID initially contributed 100 million (dollars), which leveraged more than 250 million (dollars) in private sector and other donor investments. Our partnership has expanded to the Grain Alliance, Kernel, Nibulon, and we got the World Bank to move forward and join us in this effort and align their resources to bolster what we could and ensure that the next harvest, the next planting cycle, and that those livelihoods in the agriculture sector could be sustained.
On the one-year anniversary of Agri Ukraine, in July of 2023, Administrator Power announced another 250 million (dollars). And we have the goal to leverage an additional 250 million (dollars) on top of that from private sector partners, other donor countries, and foundations, based on the success of our last year. I was with Administrator Power in Odessa on July 17th, when Putin pulled out of the Black Sea Grain Initiative. Many of you, probably all of you, have been to Odessa. Not only is it a UNESCO heritage site and an amazing city, but the port is the lifeline and connection for Ukraine to the rest of the world and the global markets.
We were there on July 17th. And it was empty. Empty of people, empty of ships. It was like a ghost town. On our train back, the missiles were raining down. We had to run dark. We have this alarm app on our phones, and it meant for no sleep. That was just one night. That was just one experience. But the Ukrainian people are living through it every single day.
But there was hope. We met with our private sector partners there. We have been continuing to work with Romania and looking towards Moldova to expand alternative routes. It will never solve the export capacity chokehold with the Black Sea ports being closed. But it is a solution. And watching everyone respond to creative, adaptive ways to help solve this blockade has been truly remarkable. And this is the power of private-sector partnership and governments around the world, working hand in glove to make sure that livelihoods are sustained and that Ukraine can continue to not only sustain its agricultural sector, but play its vital role in feeding and providing food to the rest of the world.
Together we are supporting crop drying and storage, we’re processing seeds, we’re improving export logistics, as I mentioned, and we’re increasing access to agricultural finance. Together, we have provided nearly a third of Ukraine’s registered agricultural enterprises with seeds, fertilizers, crop protection, and services to help plant, store, and deliver these crops. And we’ve increased the speed, quantity, and efficiency of food exports to the world, despite Putin’s efforts to weaponize food in his war against the free world.
In addition to Putin’s weaponization of food, he has also weaponized winter. Russia’s targeted attacks on civilian infrastructure were intended to terrorize the Ukrainian people and break their indomitable spirit. But the power of partnership prevailed. To help our Ukrainian partners keep the lights on, water flowing, and the temperature survivable USAID delivered more than 85 kilometers of steel heating pipes to restore damaged heating systems in 23 cities across the Ukraine. We delivered 3,600 power generators to keep hospitals, schools, emergency services, government agencies, and other public service providers keep the lights on amid the war and amid the attacks on civilians, and civilian infrastructure.
USAID’s assistance was critical for helping Ukraine survive last winter, and we are now preparing for the coming winter. Much of the equipment that we delivered last year will be useful again in the coming months, such as the generators, emergency repair vehicles, mobile boiler houses, excavators, and emergency tents. Our response is, of course, to design – is designed to meet demand immediate humanitarian needs, however we are also intentionally working with our Ukrainian partners to drive towards Ukraine’s vision for a modern, decentralized, agile energy grid, one that is grounded in renewables and one that is market based.
Recognizing that the energy sector has significant potential for noncompetitive tendencies, sort of the heart of kleptocracy, USAID is focused on helping Ukraine accelerate energy reform and foster and develop a new system. We applaud the Verkhovna Rada’s recent passage of the law on the prevention of abuse in wholesale energy markets. This law is a step towards effective regulation of the energy markets, but we must work even harder and faster to identify and avoid market abuse and manipulation. Flows of foreign investment and a welcoming business environment are critical to this effort to achieve the requisite growth and independence of Ukraine’s energy market.
And a cornerstone, as exemplified in the energy sector, of Ukraine’s economic recovery is the battle against corruption. This is the other front in the war for freedom. Strengthening ways to combat corruption is the highest priority for the U.S. government, and implementing these measures is a critical step towards the development of a transparent, liberalized market in Ukraine. It will benefit both market actors, consumers, and is a key milestone towards Ukraine –for Ukraine’s path towards European integration. But it is also what Ukraine is fighting for every day. They are demanding of their government, and the government is delivering, a new political economy that is not rooted in kleptocracy, but one that investors and the people can have faith in, that they can trust, that is transparent, that is accountable. And that is what we are all working towards.
Earlier this week, I was in New York to attend the U.N. General Assembly. And as part of those meetings, USAID’s Deputy Administrator Isobel Coleman demonstrated the high importance we place on this issue by hosting a public event featuring the minister of justice for Ukraine, and the foreign minister of Moldova. It focused on the core importance of anticorruption and the rule of law reforms to these countries’ Euro-Atlantic integration. What was remarkable about the event is that it gave these senior leaders an opportunity to describe the extraordinary progress they have made in pursuing difficult reforms, as well as their intent to stay the course and continue the necessary efforts to tackle remaining corruption-related challenges within their countries.
And make no mistake about it. They are pursuing these reforms in large part because they understand very well that they are prerequisites for investors, such as those of you in this room. And to deepen your engagement and boost your confidence in the market that has so much opportunity, we’re proud to continue to work – to walk this path with these partners. USAID has a strong track record in this space. To name only two examples, we helped Ukraine establish an electronic asset declaration system for elections and a whole-of-government whistleblower protection reporting portal that provides a platform for corruption reporting and whistleblower protection.
Our efforts to ensure that Ukraine develops a world-class business climate are also evident in the work that we’ve done with our Ukrainian partners in the tech sector. USAID has helped to foster the growth of the Ukrainian IT industry by shaping a regulatory environment that encourages growth rather than stifling it. USAID supported the ministry of digital transformations launch of Diia City in February of 2022, which is a digital platform designed to foster new investment, jobs, and cutting-edge technological development. We’ve also supported business internationalization projects, including Lviv Tech portal, the IT Export Alliance, and tech workforce development initiatives – all of which contribute to a quick recovery for this critical economic sector.
The IT sector in Ukraine last year, amidst the war, grew. Grew! Which shows not only tremendous resilience, but the potential that we know that Ukraine has to offer not only for its own economic recovery but for the rest of the world. I’m also proud to share that USAID is the largest supporter of Ukraine’s world-class, award-winning, e-governance or public procurement system, which is called ProZorro. And it has saved – this is just to give you a sense of the power of these tools – it has saved the government of Ukraine $6 billion since its introduction in 2016.
Ukraine’s continuing economic transformation occurs against the backdrop, as we know, of political, geopolitical challenges in the entire region. And I want to take a final moment of your time to argue that for Ukraine to be ultimately secure, the international community must stand up for democracy and freedom within Russia and Belarus as well. We have seen over the past year and a half that Putin’s war on democracy and freedom is not supported by all in Russia. Putin’s strategy has been to isolate, intimidate, and imprison individuals, and silence any opposition. It is important that we support, where we can, those who disagree with the war, who support democratic values, and who want a better future.
The government of Belarus is also complicit in Russia’s aggression against Ukraine. Belarusian authorities have enabled the war by putting Belarusian air, land, and infrastructure at the disposal of the Russian military. For Belarus, the private sector has been, and will continue to be, an integral part of Belarus’s potential pathway to democracy and prosperity. And we want to see Belarus become an independent, sovereign nation, with the ability to choose its own path. This is a tough neighborhood. And we can’t ignore the fact that if we are going to win the peace, we need to obviously prioritize and support, for as long as it takes, Ukraine. But we also need to continue to support vital voices, economic opportunity, and integration in the region so that – whether it’s Putin or another despot – that the resilience of these nations makes them think twice or never to invade the sovereign territory.
Ladies and gentlemen, I hope I’ve given you a sense of USAID’s engagement and supporting of Ukraine and our prioritization of economic prosperity as fundamental to winning the peace. The future of Ukraine and the future of the region hang in the balance right now. USAID and the broader U.S. government are fully mobilized to deliver on the president’s direction that we stand shoulder to shoulder with Ukraine, winning not only the war but winning the peace. The path to Ukraine’s future as a prosperous, democratic, secure, European state needs more than the assistance of the U.S. government and that of our partners and allies. It needs you.
I’m sure you’ve spent much of this conference discussing the many opportunities that are available to you right now in Ukraine, and how potentially profitable your engagement could be. You’ve heard about the exceptional technical workforce in Ukraine, the dedication of its people, their rich land, and other attributes. I’m not here to repeat what you’ve already heard elsewhere, but I’m here to encourage you to seize those opportunities. And I’m here to commit to you that USAID stands ready to partner with you and with Ukraine every step of the way.
Thank you for your attention. Slava Ukraini.
(END.)