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UK Sees Privatization ‘Opportunities’ in Ukraine War

A recent project update from the Foreign Office is explicit about the goals. It states these should see “the invasion not only as a crisis, but also as an opportunity”

privatisation ……..can create private monopolies, reduce accountability to government and overcharge the public.

British aid is being used to open up Ukraine’s wrecked economy to foreign investors and enhance trade with the UK.

DECLASSIFIED UK, MARK CURTIS,  November 21, 2024 

Amid the devastating war in Ukraine, British economic aid to the country is focused on promoting pro-private sector reforms and on pressing the government to open up its economy to foreign investors. 

Recently-published Foreign Office documents on its flagship aid project in Ukraine, which supports privatisation, note that the war provides “opportunities” for Ukraine delivering on “some hugely important reforms”.

The government in Kyiv has in recent months been responding positively to these calls. Last month, president Volodymyr Zelensky signed a new law expanding the privatisation of state-owned banks in the country. 

It follows the Ukrainian government’s announcement in July of its ‘Large-Scale Privatisation 2024’ programme that is intended to drive foreign investment into the country and raise money for Ukraine’s struggling national budget, not least to fight Russia.

Large assets slated for privatisation currently include the country’s biggest producer of titanium ore, a leading producer of concrete products and a mining and processing plant. 

Ukraine envisaged privatising the country’s roughly 3,500 state-owned enterprises in a law of 2018, which said foreign citizens and companies could become owners.

The process stalled as a result of coronavirus and then Russia’s invasion in February 2022. But hundreds of smaller-scale enterprises are now being privatised, bringing in revenues of UAH 9.6bn (£181m) in the past two years. 

“The resumption of privatisation amid the full-scale war is an important step, which is already yielding results,” Ukraine’s economy minister Yulia Svyrydenko said last month. 

Another law enacted in June 2023 allows large-scale assets to be sold to foreigners or Ukrainians during the current martial law regime.  

‘Good governance’

Britain’s main economic aid project in Ukraine runs from 2022-25 and is called the Good Governance Fund. One of its aims is to ensure that “Ukraine adopts and implements economic reforms that create a more inclusive economy, enhancing trade opportunities with the UK”.

A recent project update from the Foreign Office is explicit about the goals. It states these should see “the invasion not only as a crisis, but also as an opportunity”…………………………………………………………………

Advancing privatisation

One key strand of the Good Governance Fund project is direct support to privatisation in Ukraine. 

This involves a seven-year sub-programme called SOERA (State-owned enterprises reform activity in Ukraine), which is funded by USAID with the UK Foreign Office as a junior partner. 

SOERA works to “advance privatization of selected SOEs [state-owned enterprises], and develop a strategic management model for SOEs remaining in state ownership.” 

UK documents note the programme has already “prepared the groundwork” for privatisation, a key plank of which is to change Ukraine’s legislation. ………………………………………………………………

Declassified made a freedom of information request asking the Foreign Office to provide the briefing notes for then foreign secretary James Cleverly for the conference. It replied saying the request was “too broad”. 

“The UK is hoping to reap benefits for UK firms from Ukraine’s reconstruction”, observes a report on British aid to Ukraine earlier this year by the aid watchdog, ICAI.

Conditionality

Britain’s privatisation agenda in Ukraine is part of a wider push by the World Bank and the International Monetary Fund (IMF), which routinely promote privatisation in low income countries, often as a condition of providing aid.

Zelensky’s recent announcement on state-owned banks is based on World Bank recommendations and gives international donors a role in selecting financial advisers for the sales.

……………………………………….Rustem Umyerov, the head of the State Property Fund, which presides over Ukraine’s privatisation strategy, said in July that “international partners support the start of large-scale privatization and are ready to facilitate pitches to the business communities in their countries.”

……Foreign investment in rebuilding Ukraine’s economy is being coordinated by the world’s largest asset manager, Blackrock. 

…………………privatisation ……..can create private monopolies, reduce accountability to government and overcharge the public. 

The key goal for Western states supposedly ‘aiding’ Ukraine’s privatisation process is to find access to new markets, and to bring Ukraine into their commercial orbit, fully detaching it from their rival, Russia.

A sign that the Ukrainian public needs persuading about this Western-backed privatisation is that the US/UK’s SOERA project includes a public relations dimension. One of its goals is to “assist the government in strategic communications to enhance reforms”.   https://www.declassifieduk.org/uk-sees-privatisation-opportunities-in-ukraine-war/

November 24, 2024 - Posted by Christina Macpherson | business and costs, UK, Ukraine