This time, I would like to once again return to an issue which has come up several times in my blog posts: the reconstruction of Ukraine. Why do I insist on dealing with this issue? It has a concrete reason: in connection with the rebuilding of Ukraine, I have learned an expression that was completely unknown to before, and that is ’war insurance’. Have you heard about it? The scheme is quite interesting. Frankly speaking, it is about selling out a state, this time, Ukraine.
The whole issue is based on two principles:
A) Taking into account that according to preliminary estimates by the World Bank alone, Ukraine’s reconstruction needs amount to $411 billion, it is obvious that these needs cannot be covered by funding from partners (i.e. foreign governments) alone, consequently other actors must be involved in the process.
B) An investor agrees to invest money only when the potential return exceeds the risk of losing it.
This is where ’war insurance’ comes in. The Ukrainian government plans to attract private investments by providing special military risk insurance. The process is led by the Ministry of Economy of Ukraine. The system consists of four pillars.
1.) Insurance from international organisations
• Multilateral Investment Guarantee Agency (MIGA), which is part of the World Bank Group
• The Ukrainian government is also working with the US-based Development Finance Corporation (DFC), which insures war risks.
2.) Insurance from foreign governments
Some countries create special funds to insure their own investments in Ukraine.
• The Danish government, for instance, is active in Ukraine’s Mykolaiv and Kherson regions, and also facilitated the investment of the beer company Carlsberg in Kyiv.
• The French Export Credit Agency set up credit risk insurance in Ukraine, and similar projects have been launched in Germany and Japan.
• The European Bank for Reconstruction and Development (EBRD) has launched a separate trust fund to invest in Ukraine, and Switzerland and Norway pledged to replenish it in London.
3.) Involvement of reinsurance companies
The Ukrainian government is setting up an international reinsurance pool that would allow companies such as Lloyd’s or Marsh McLennan to participate in war risk insurance. However, it should be noted that major reinsurers refuse to work with Ukraine.
It should be emphasized that the government of Ukraine signed a memorandum with Marsh McLennan. The government wants this foreign company to analyse the real level of investment risk based on data on the effectiveness of Russian missile strikes… I am not kidding. To accomplish this task, the National Security and Defence Council of Ukraine will join Marsh McLennan in providing data on Russian shellings. They plan to create a specialised platform available to authorised professional users of the insurance market around the world. This information will allow them to assess the likelihood of risk. Ukraine admits that data on the effectiveness of Russian shellings is classified. How Ukraine will disclose this information to international insurers remains an open question.
4.) Involvement of Ukrainian insurance companies
Unsurprisingly, they make a less significant contribution to the whole process. I will not spare a word on them.
I agree with experts who claim that no insurance can replace the lack of preconditions for investment. Currently, these basic preconditions simply do not exist in Ukraine. But what is the Ukrainian leadership doing? It is selling out Ukraine today to get money tomorrow. According to President Zelenskyy and his advisors, it is an investment in Ukraine’s future, but on the contrary, it is not for the sake of Ukraine and its future, but against any sovereign Ukrainian future.
What sovereignty can we talk about in case of a state that is functioning and living on foreign financial aid, has an abundance of foreign weapons on its territory, and offers its classified national security data and the all of its own future to global or American insurance companies? Europe needs a sovereign and free Ukraine, not a vassal. A country held in slavery has no value at all. Is there insurance against ’de-sovereignization’ of Ukraine? If there is no such thing, the world needs to invent it as soon as possible, in order to save my free Ukraine!
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