Amo, Kean, Whitehouse Call for Greater Private Investment to Bolster Ukraine’s Economy
Bipartisan and bicameral letter urges maximum effort to expand private sector investment in Ukraine
WASHINGTON, DC – Today, Congressman Gabe Amo (D- RI) and Congressman Tom Kean, Jr. (R- NJ) joined U.S. Senator Sheldon Whitehouse (D-RI) in a bipartisan and bicameral letter to help scale up private sector investment in Ukraine through partnerships with American businesses, American investment funds, and other development finance institute. The letter encourages the Secretary of State, Antony Blinken, and the Chief Executive Officer of the Development Finance Corporation (DFC), Mr. Scott Nathan, to leverage federal funding passed by Congress in the Ukraine Security Supplemental Appropriations Act, 2024. Given Ukraine’s economic vitality is essential to both its success in the fight against Russia’s unlawful invasion as well as its capacity to recover and rebuild following the war, this bipartisan push for greater investment by American businesses, American investment funds, and other development finance institutions is part and parcel of supporting Ukraine and reducing its reliance on future foreign aid.
“We ask that State and DFC set aside a portion of the Ukraine Supplemental funds to scale up US-led private sector investment in Ukraine. We hope the initiative would target Ukraine’s urgent investment needs, namely real economy companies and projects in industrials, energy, agriculture, and logistics, focusing on projects with planned exits in the near future,” wrote the lawmakers. “Investment by American companies could help enable companies to reform their corporate governance now, amid the war, and prepare for future investment opportunities, and strong returns for American investors, during reconstruction.
Today’s letter to Secretary Blinken and Mr. Nathan was led by Congressmen Gabe Amo (D-RI) and Tom Kean Jr. (R-NJ) alongside U.S. Senator Sheldon Whitehouse (D-RI). It was cosigned by U.S. Senator Amy Klobuchar (D-MN) and Representatives Colin Allred (D-TX), Jake Auchincloss (D-MA), Jim Costa (D-CA), Dan Goldman (D-NY), Jonathan Jackson (D-IL), Brad Schneider (D-IL), Juan Vargas (D-CA), and Joe Wilson (R-SC).
BACKGROUND
On April 24th, 2024, President Biden signed into law a national security supplemental appropriations package, which included the Ukraine Security Supplemental Appropriations Act, 2024. The Ukraine Supplemental authorized the DFC to use a portion of the funding provided under the act to assist Ukraine.
On May 7th, 2024, the House Foreign Affairs Committee held a hearing titled “Reviewing DFC’s Efforts to Out Compete China’s Belt and Road Initiative.” In that hearing, Congressman Gabe Amo questioned Mr. Scott Nathan, the CEO of the DFC, about how the agency plans to use congressionally-appropriated funds to increase private investment in Ukraine and bolster its economy.
FULL TEXT OF THE LETTER SENT TO SECRETARY BLINKEN AND MR. NATHAN
Dear Secretary Blinken and Mr. Nathan:
We write to ask that the Department of State (State) and U.S. International Development Finance Corporation (DFC) use a portion of the funding and authorities provided under Title IV of the Ukraine Security Supplemental Appropriations Act, 2024, (“the Ukraine Supplemental”) that Congress passed and was recently enacted into law on April 24, 2024, to help scale up private sector investment in Ukraine in partnership with American businesses, American investment funds, and other development finance institutions (DFI). Ukraine’s economic vitality is essential to its success in the fight against Russian aggression. A stronger Ukrainian economy can boost the war effort, increase tax revenue, support Ukraine’s capacity for recovery and reconstruction, and likely reduce future reliance on foreign aid.
We appreciate your continued calls “to drive private sector investment into Ukraine”1 and for the DFC to use “all of [its] tools and partnerships to mobilize more private capital for Ukraine …while Ukraine fights.” 2 Ukraine needs consistent foreign investment to generate economic growth. Economic output in Ukraine fell by 29 percent in 2022 and grew only five percent in 2023.3 We were happy to see that DFC is providing a $15 million loan portfolio guarantee to a bank in Western Ukraine to support small businesses.4 But new foreign investment has been limited to reinvestment by foreign companies of domestic revenue and select DFI projects, including several by DFC. We commend DFC for mobilizing more private capital in Ukraine during the war, but we recognize that DFC’s competing global priorities constrain its resources for Ukraine.
We ask that State and DFC set aside a portion of the Ukraine Supplemental funds to scale up US-led private sector investment in Ukraine. We hope the initiative would target Ukraine’s urgent investment needs, namely real economy companies and projects in industrials, energy, agriculture, and logistics, focusing on projects with planned exits in the near future. A public announcement of the initiative, perhaps at the Ukraine Recovery Conference in June, a corresponding Request for Applications, and a commitment to make available insurance coverage for new investments could help maximize private sector interest and expand the pipeline for high quality projects and high-quality investment fund requests. The initiative would likely have a significant multiplier effect by catalyzing further investments from private markets and other DFIs. The State Department should transfer to DFC funds for only those projects or investment funds that pass DFC evaluation.
Looking ahead, Ukrainian businesses need foreign investment now to prepare for recovery and reconstruction. Ukraine’s capital markets were underdeveloped before Russia’s full-scale invasion in 2022, with the market cap of its stock and bond markets totaling only $14 billion, a symptom of corporate governance structures that failed to meet U.S. and European Union norms. Investment by American companies could help enable companies to reform their corporate governance now, amid the war, and prepare for future investment opportunities, and strong returns for American investors, during reconstruction.
We thank you for your consideration, and look forward to working with you on this request.
Sincerely,
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