Status: 10/25/2022 3:36 p.m
Chancellor Scholz relies on German companies to help rebuild Ukraine. The government in Kyiv is also courting her. However, many companies hesitate. And not just because the war is still going on.
When Russia begins to attack residential buildings and critical infrastructure facilities in Ukraine again, Michael Kraus is about to travel to Lviv. It’s October 10th and the CEO of the Fixit Group from Bavaria is right on the border between Poland and Ukraine when the electricity goes out and the border is closed. He drives back to Germany without having achieved anything. Kraus actually wanted to talk to his colleagues about building a second plant in the west of the country. He reschedule the appointment.
International conference on the reconstruction of Ukraine – Chancellor Scholz speaks out in favor of the “Marshall Plan”.
Stephan Stuchlik, ARD Berlin, daily news at 12:00 p.m., October 25, 2022
Consistent exceptional situation
Kraus’s Fixit Group operates a building materials factory 80 kilometers south of Kyiv. Around 130 employees work there and at the headquarters in the capital, producing insulation material and paints. The medium-sized company is one of around 2,000 German companies that are active in the Ukraine – sometimes under extremely difficult conditions. The German manager reports frequent air raid alarms and supply bottlenecks. “There are also power cuts, or there are no trucks or rail wagons. Nevertheless, we managed to increase annual sales by 80 percent compared to the previous year.”
No wave of new investments
German companies like the Fixit Group could play a crucial role in the reconstruction of Ukraine. Chancellor Olaf Scholz even just made it clear at the German-Ukrainian Economic Forum that nothing will work without them. How this can be achieved has been discussed in the Eastern Committee of the German economy for weeks. The interest of German companies is great, reports Managing Director Michael Harms. At the same time, he is dampening expectations and calling for more realism in the reconstruction debate. “As long as the hostilities continue, we won’t be able to speak of a large wave of new investments. First of all, it’s about keeping the companies that are already there running.”
Expensive war insurance
An assessment shared by Friedrich Haas. The Bielefeld creates risk analyzes and security concepts for medium-sized companies that want to settle abroad. “Many companies are in the starting blocks. At the same time, there is a great deal of reluctance on the part of German companies.” According to Haas, this is partly due to the ongoing combat operations and partly to insurance problems.
Because war is raging in Ukraine, normal insurance policies taken out by a company or an employee no longer apply, such as insurance for accidents or disability. The companies therefore have to take out expensive war cover. The daily rates for an employee have been between 100 and 500 euros in the past few months. “For a medium-sized company that just wants to send a salesperson to the Ukraine for a few days, this is often a major challenge in terms of insurance,” says the risk analyst.
Corruption remains a problem
Another issue that concerns German companies is corruption in Ukraine. In the Transparency International index, the country ranks 122nd out of 180. On the European continent, only Russia is worse off. A topic for Scholz too. In addition to democracy, more transparency and a determined fight against corruption are the basis for cooperation between Germany and Ukraine, said the Chancellor. The managing director of the Fixit Group, Kraus, has known the Ukraine first-hand since 2007. Since 2014 he has seen a positive development in the areas of compliance and commercial law. “The direction is right and Ukraine knows exactly what homework it needs to do in order to become more attractive to investors.”
Networks for the time after the war
It’s not just Ukrainian politicians like Prime Minister Denys Schmyhal who are currently in Germany to talk about reconstruction. Anna Derevyanko also came and has been having one conversation after the other for days. She is the Executive Director of the European Business Association, a business interest group. The woman from Kyiv establishes contacts with companies and promotes German involvement in Ukraine. It is about a network for the time after the war. She reports uncertainty, rocket fire, but also that most companies just keep going, adapting. Buy generators, for example, to be able to continue producing. “Of course it is possible to make money in Ukraine right now and you can also be successful as a company without paying bribes.”