Rebuilding Ukraine after its victory: What we need to be doing now
Strategists speak of the birth of a new civilisation, "trip wires" on the way, Arab-Ukrainians and innovation
For the recovery of Ukraine as a whole, and the incentive for the growth of the economy and IT industry in particular, a complex set of not simple decisions is extremely needed. Which ones exactly? This was discussed by the speakers of the recent IT Ukraine Legal Conference 2023. Mind noted down the most interesting thoughts.
Hanna Maliar,
Deputy Minister of Defense of Ukraine:
We perceive the war very personally. For each of us, it is a personal tragedy. But we should step out of this "shell" and evaluate the war from the perspective of transformational processes in the world. An evolutionary process is in place. We, as a nation, have matured to a level of consciousness where we are ready to once and for all put a historical end to relations with russia. It just so happened that at this very time geopolitical, transformational, cultural processes are changing in European civilization.
There are several issues that both we and Western society need to resolve during this war. All tools of resistance to war, formed after the Second World War, have failed. After that war, humanity was faced with the question of how such savagery could be stopped.
However, after Nuremberg, the government of no state was brought to justice for crimes of aggression. Despite the fact that everyone pretended that they wanted to fight such crimes. And the wars continued, several dozen at a time. But no one bore international responsibility. This tool was not used. If there were verdicts of international judicial bodies, they were only for crimes that come from aggression itself: war crimes, crimes against humanity.
Ukraine now has a very serious chance to create a special tribunal to hold russia accountable. And finally take on the political courage to convict for aggression itself, not just for the crimes that stem from it.
Another tool is negotiations. They were also worked out as a way to end the war. Now they are not working. Since 2014 there have been so many negotiations... I even managed to complete a course of a war active phase negotiator in the Netherlands during this time. In this field, humanity has invented so much, but nothing works. At all.
The third tool is sanctions. A similar "picture".
So, as of today, we do not have any international tools that effectively work and can stop the war. Therefore, the first question we pose to the whole world is: let's find a solution together. We are ready to manage this process. These can not only be criminological means, but also the transformation of collective security systems. Because they didn't work either. No international organisation has been able to prevent the war.
Another serious question is the division of influence spheres of geopolitical centres. russia does not guarantee security, there is a regressive evolution taking place. On the contrary, we are evolving. Now we have entered into a civilizational war. I am convinced that we are collectively giving birth to a new type of civilization: we confess European values and can resist the aggressor. At first glance, it's a combination of incompatible things, because after the Second World War, the mentality of pacifism, respect for everyone, considering the interests of all was formed in Western society.
Now, Western civilization cannot defend itself against such barbarism as russia. They are shocked that we are resisting an army that is larger than us. Moving ahead is extremely difficult, unless with technological advantage and our courage. Therefore, we have to realise that we are at the peak of the birth of a new civilization, which will, on one hand, have Western values, and on the other – be strong and powerful, capable of defending itself. Despite all the horrors we are going through, I think each of us is fortunate to witness this historical, epochal moment.
Valeriy Pekar,
lecturer at Kyiv-Mohyla Business School:
– If we analyse the countries that got a chance for a qualitative economic leap after the war and managed not to waste this opportunity, we will see five similar conditions.
The first one is a security umbrella. Without it, a country cannot develop peacefully.
Otherwise, most resources go towards ensuring national defence. Such a security umbrella was unfolded over Western Europe after 1945, later over Japan, South Korea. And such an umbrella will undoubtedly be unfolded over Ukraine after victory.
The second one is the rule of law. We currently have problems with this. We see that Ukraine does not even make it to the 70th place in the rule of law rankings. Investors do not come to such countries. A judicial reform is taking place right now.
Unfortunately, society is focused on survival during the war, so it does not see what is happening in the judicial system. This is a more critical matter, because out of 7,000 or so judicial positions in Ukraine, approximately 3,000 are vacant. It's a unique situation. We can change the country by changing nearly half of the judges. That's why there's a massive fight right now for the small number of seats in the judiciary, which will determine who those 3,000 judges will be that will rule Ukraine for the next generation.
The third one is economic freedom. The situation here is even more terrifying. As of January 1, 2022, Ukraine ranked 130th in the world in economic freedom ratings. Countries with such a level have no chance of recovering after victory. The good news is that the government understands this well and plans a significant package of changes after the victory. Although, unfortunately, the government is not always the centre of economic decision-making.
The fourth condition for Ukraine's leap is democracy. This is a specific condition for Ukraine. Not all countries that made an economic leap after the war were democracies. At one time, Japan, South Korea were autocracies. But our situation is specific. Our middle class grew even before we are approaching European integration and an economic leap. Our middle class is the only social group that demands democracy. It would be very easy to kill this middle class by immediately implementing European regulations, for example by abolishing the tax system that exists today for the IT industry.
The fifth condition is human capital. We have problems with both quality and quantity. We need a generation of united and self-confident winners, not a generation of offended and traumatised winners. We need to squeeze out the captive legacy, distorted historical memory, Soviet ideas about the economy, the state, law and other consequences of the Soviet mentality from this generation.
The demographic problem will be the biggest in post-war Ukraine. Currently, sociologists say that 70% (80%, 90%) of people plan to return. These figures currently don't mean anything. Migrants will make decisions in the future. People who left with children think in terms of academic years, not calendar years. And each academic year seems to halve the likelihood of returning. People will consider safety, the availability of jobs, schools, nurseries, hospitals, and business opportunities. But even if a significant number of people return, we won't have enough of them in the economy. Soon, there will be two pensioners for every worker.
This means that we will need significant migration. Ukrainian society is unlikely to accept ethnic Ukrainians living in russia. Therefore, people of a different race, culture, language, and religion will come. This means we need a strong language and culture to enable these people to assimilate. Moreover, we need inclusivity in Ukrainian identity, society, and readiness to accept these new people – Afro-Ukrainians, Arab-Ukrainians, Uzbek-Ukrainians – if and when they are ready to become new Ukrainians. Currently, it's not certain whether society is ready for this. However, studies on the recovery of the Ukrainian economy show that preserving democracy and the willingness to embrace new people are key to development.
After the war, we will face many challenges and “trip wires” where we will have to find a balance. For example, a balance between short-term and long-term solutions. Khrushchev-era apartment blocks were a temporary solution after the Second World War. Yet, they still define the face of our cities. As Ukrainian architect Anna Kiriya says: "Winners don't build Khrushchevkas. Winners have the space of freedom to choose and opt for long-term options."
There is also a significant contradiction in the development of recovery projects. Ukrainian authorities tell international partners that Ukraine should be a priority. Partners hear: "Give us money and don't ask anything" and insist on transparency and accountability. The Ukrainian ear hears: "We won't give you any money."
One Ukrainian philosopher referred to this dialogue as a conversation between an autopilot and an autoresponder. Obviously, there is no prospect of reaching a third dimension without applying Einstein's principle: no problem can be solved from the level it has matured. We need to add the next dimension, and then the equation will be solved. In other words, Ukrainian business needs to become the "point" that it should be. It is aligned with the government in terms of Ukrainian priorities and agrees with international partners on transparency and accountability.
There are even more complex challenges. For example, the choice within the strategic triangle: reconstruction of the destroyed, modernisation, and EU Integration. We desperately need all three of these "things". But currently, the triangle resembles a classic business school example: "Our hospital provides quick, cheap, high-quality treatment.
Choose any two points out of three." We may have reconstruction with modernisation, but without European integration. Then we end up with a backward country – just restoring what existed in the previous century. We may have modernisation with European integration, but without reconstruction – a country in ruins for 15 years. Finally, we may have reconstruction with EU Integration... This requires complex decisions and people who are willing to implement them. Perhaps technological solutions will enable us to do so.
Stepan Mitish,
Vice President, Head of EPAM Ukraine:
– Ukraine’s future lies in innovation. Currently, we are going through a storm: russia's war against Ukraine, the end of the digitisation boom, and a slowdown in global economic growth.
Let's recall the COVID crisis. At that time, the whole world believed it would be something critical and shocking for everyone. However, for the IT industry, those were golden times. From 2021 to the second half of 2022, IT had tremendous expansion both in Ukraine and worldwide. It's important to remember that.
Undoubtedly, in 2022, the war was the main factor slowing down industry growth. But we should consider a broader picture because in the second half of last year, we started seeing signs of a macro situation – a slowdown in global economic growth. Currently, the interest rate is at its highest level in the past 15 years since the 2008 crisis.
2023 could be very challenging – even more so than 2022. Last year, we were showing growth by inertia. But I am confident that we will face it honourably. In my personal opinion, the impact of the war on the industry is now fading into the background (although it doesn't give our clients and investors an “appetite” to enter Ukraine). Instead, macro indicators and the behaviour of players in the global market are coming to the forefront.
When money is expensive, CEOs of businesses question whether it is worth investing in something new, complex, and innovative. Perhaps not. We observe many companies now pausing the development of new innovative products. They are waiting to see where the market goes, whether it will turn around, and if the interest rate will gradually decrease. This is currently affecting the IT industry.
On the other hand, such a situation cannot last for years. Any business is now heavily reliant on IT. If global players pause the development of new IT systems, someone else will do it and gain an advantage. Therefore, we believe that we will have quarters of slowdown rather than years. There are restrained expectations that macro indicators will start softening. Hopefully, we will see a push towards growth again by the end of 2023 or the beginning of 2024.
In any case, the war is going to end with our victory. And now is the right moment to invest in the future, in innovative things that will give us an advantage.