The Financial Times had an oddly long article earlier this week about the departure of Mustafa Nayyem, recently Chairman of Ukraine’s Restoration and Infrastructure Development, which featured comments from Alexander Mercouris (I also noticed when I came across the piece that it was clearly exaggerated in relation to the event) . There have been many articles about Nayyem’s resignation, with Bloomberg speculating that it was the result of Nayyem not being allowed to participate in the “Ukraine Recovery Conference” held in Berlin earlier this week.
The reason this humble blog has resorted to what might appear to be palace conspiracies is that it serves as an excuse to discuss what an absurd and shameful idea this plan to rebuild Ukraine is, or as an excuse to loot. I found it hard to rouse myself to give this dopey show the proper shellacking it deserves.
Even if the excessive media coverage of this exit seems, as Mercouris said, to be another element in the campaign to tarnish Zelensky’s image, I believe that the other reason is to foreground the failure of what he was born into. a fundraising scam.1
Yes, there are always big fools. And the US and the EU will undoubtedly want to (and probably will) throw some money Ukraine’s way for the sake of appearance and to enrich other well-placed interests. But the very fact that the organizers have a conference, unlike street demonstrations that sell exclusively, erm, “opportunities,” shows that this initiative is as important in the sky as Zelensky’s peace conference in Switzerland, which is facing a shameful price. high level of non-representation.
Mercouris believed that the Financial Times article of June 10, Ukraine’s top reconstruction official dismisses Zelenskyy’s contribution, which went on and on about how “Western partners” lost confidence due to Nayyem’s departure and others, showed that Zelensky’s days were numbered.
The story line makes no sense. As Mecouris pointed out, it was on Nayyem’s watch that the funds given by the West to build defense lines in Kharkiv went nowhere, no fortifications were built, and few mines were laid. Allied Western politicians and the media were alarmed by the pace of Russian advances in Kharkiv, at least in part because of the lack of fortifications. Remember that this Russian success caused the US to increasingly authorize a long-range missile attack, to target Russian forces supporting Kharkiv.
In other words, the summary shooting of Nayyem is fully justified. However, the Financial Times article does not mention the looting of defense line funds in Kharviv! Instead it paints Nayyem as a victim, with Zelensky moving step by step to force her out and Nayyem leaving before her eviction is official. This section shows that the pink paper was taking the rhetoric or choosing to mislead:
The gap left by Nayyem and the absence of an infrastructure minister are likely to raise questions about Kyiv’s ability and commitment to protect its critical infrastructure as Russian forces continue airstrikes on Ukraine’s power plants and attacks in the country’s east. Two officials of the agency responsible for anti-corruption and procurement policy resigned with Nayyem on Monday.
The guy who at least made a mistake and probably got a big cut in defense line funding is leaving, and the Financial Times is showing that this is a big loss? Wellie, since Western media often say that blacks are white when they come to Ukraine, I think this misunderstanding should not surprise us.
As Mercouris had said in earlier reports, Zelensky appears to be cleaning up his government with officials close to America. This makes sense as a survival strategy: it makes it difficult for the US to expel him if it doesn’t have a good list of people in the government it considers loyal. It may also somewhat limit the flow of information. The inappropriate level of outcry in the Financial Times article confirms the view that Nayyem was seen in their camp.
The Kyiv Post points out that Nayyem and the US probably go way back. From the Head of Infrastructure That Caused the Revolution’s Reputation Resigns:2
Nayyem, 42, has been serving as a member of parliament since 2014 and is credited with instigating the Euromaidan protest in 2013. On November 21 of that year, Nayyem posted on his Facebook page a call to meet in the “Maidan” of Kyiv, such as Independence Square. it is known, to oppose the decision of then President Viktor Yanukovych to withdraw from the association agreement with the European Union. Within three months Viktor Yanukovych would flee Kyiv.
Now finally to my pet theory, that the second reason for the strange attempt to pump Nayyem is to blame the soon-to-be-obvious failure of fundraising for reconstruction on his exit, contrary to the fact that it was destined for a non-starter.
We will give just a few reasons. Readers are encouraged to add to this list.
Having the private sector build the infrastructure is a bad idea. Even the less conservative forms of government generally concede this point. Among the reasons is that the additional costs and fees that the private sector developer will receive can act as a trade tax, harming the competitiveness of businesses. Look in the US how many infrastructure deals have failed (toll roads are available worldwide for structural reasons) or hurt local businesses (the parking meter deal in Chicago).
So anyone looking at investments in Ukraine that depend on a functioning infrastructure can wonder if it will be done, and even if it does, if the costs can stifle their performance.
Can Ukraine keep the lights on? This is completely out of control in the West, let alone investors. Russia is well on its way to eliminating it completely or almost completely. Russia can keep cleaning up and repeating where there is no negotiated end to the war, something the West cannot sign on to.
Western officials got the memo that the restoration of the power system is essential, but they have lost the plot they have to agree with Russia to make it happen. From the Financial Times article of June 11:
Ukrainian officials have asked their western counterparts to provide billions in aid to their country’s battered energy sector…
Chancellor Olaf Scholz said the World Bank estimated that rebuilding and modernizing Ukraine would require investments of nearly $500bn over the next ten years.
But power is the focus. “Everything is disappointing,” said Arvid Tuerkner, managing director for Ukraine at the European Bank for Reconstruction and Development (EBRD). “It always comes back to strength.”…
But incessant Russian bombing was rendering the major reconstruction effort futile. “Usually it takes two to three months to renew the unit and it works three weeks before the next strike,” he said.
Bright ideas on the topic include increasing energy imports (where the first phase of an attack on the grid includes taking out transmission lines) and increasing air defenses (which no one seems to be able to admit is impossible).
The best investment proposals for a depressed country found almost no buyers. Remember the great Greek asset sale of 2015? That proved promising enough that the organizers held a road show in London. But even though Greece was a very depressed economy, as there were many IMF tender management programs, the only thing that was sold was the port of Piraeus.
Looting is easier said than done on a battlefield. The West had a great history of plundering USSR Russia. Its businesses were stable even if it suffered from low investment. The transactions were amazing: I know one investor who bought aluminum stocks for pennies on the dollar. Well, not only did the government loot, but many well-placed Russians believed that neoliberal shock therapy would be helpful, so there was no turning back.
In contrast, people like Lindsay Graham (who is a bad policy indicator) who complain about the estimated $10 to $12 trillion in mineral assets in Ukraine need to look at a map. 85% of Ukraine’s natural gas flows to the east are currently or almost certainly controlled by Russia. As of August 2023, per DW, Russia was already holding significant deposits of the metal. Another large deposit they have not yet included is in the Kryvyi Rih area, which Russia is sure to take if it captures Odessa (on the main railway line from the east to Odessa). Russia at the time had taken 80% of Ukraine’s black coal. Russia already controls two of the four largest lithium deposits.
And how will any mineral wealth be extracted, even with a generous take on electricity, if Russia controls the Ukrainian Black Sea and keeps its western railways out of business?
So Nayyem’s high profile move is actually a good face saver. The bankers tasked with rebuilding the thankless project no doubt silently thanked Zelensky.
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1 But, but, but, the reader may say….why are big, well-known firms like BlackRock so openly involved in a business like this if the chances of it bringing much are so slim? On the new deal/product side of capital finance, most deals don’t close. The key to success in those businesses is figuring out how to focus your energy on things that are likely to close.
However, there are many things that institutions like to pursue because they have motives beyond a quick kill. One wants to be seen as a person of high quality. Another, which is very much at play here, is building relationships with powerful people. The third is to ensure that your company is seen as a key player in at least your major lines of business. You want to see every opportunity in your space even if you don’t want to pursue it.
This effort received good media attention and several top Eurocrats attended its meetings. The reconstruction chimera is a great excuse to seize Russian assets (if it shines through von der Leyen’s eye, punishing Russia is the goal). It also allows the officials to associate themselves with the exciting Ukrainian story/ That construction fund in the section “must hold the phone” to the big financiers, even though they know it’s in the Hall of Empty Powers.
2 Forgive me for not explaining that Nayyem received funding from the National Endowment for Democracy. But he probably did since Soros’ Open Democracy. I was in the room when Chrystia Freeland interviewed George Soros in 2015. Soros boasted that Open Democracy has given a grant to every top official in the new Ukrainian government, directly or a close family member.
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