Ukrainian Prime Minister Denys Shmyhal’s and Finance Minister Sergii Marchenko’s participation at the IMF and World Bank Spring Meetings last week in Washington in effect returned the multilateral organizations to their Bretton Woods origins, the 1944 agreement signed at a New Hampshire resort to rebuild the world economy after World War II.
The International Monetary Fund and World Bank named Marchenko, a 42-year-old corporate tax lawyer turned finance minister, as chairman of their board of governors during their annual meetings in October.
The week-long visit to Washington by Shmyhal and Marchenko ended with the IMF granting a further US$15.5 billion extended funding facility (EFF) and an additional $4.9 billion in US support through the World Bank, and was honored by America’s Fortune 500 companies and US Commerce Secretary Gina Raimondo at the US Chamber of Commerce.
Even more than chairing the IMF World Bank and bilateral meetings with US Treasury Secretary Janet Yellen, Ukraine used the meetings to become the de facto new G8 member of the Group of Seven industrialized nations, a position former US president Bill Clinton orchestrated for Russia in 1997 as a move to bring the “bear inside rather than outside the tent” of the international community.
Russia was expelled as a G8 member after its annexation of Crimea in 2014.
Almost as important as winning economic and war-materiel support, Shmyhal and Marchenko were able to use the high-level US-Ukraine Partnership summit at the US Chamber of Commerce to push major US corporations such as the Bechtel construction group of Brendan Bechtel; the Flour Corporation; Honeywell; and Goldman Sachs chief executive David Solomon off the “wait-and-see” fence over investing in Ukrainian private companies through M&A or greenfield/brownfield investments.
Shmyhal and Marchenko say they cannot stress enough that private-sector investment in Ukraine is mission-critical for the country not only to achieve its war goals against Russia but also win to the postwar peace.
Shmyhal told the US Chamber audience that Ukraine has met all the requirements to join the European Union in two years’ time and that the country will use seized Russian assets, rather than Western tax dollars, to fund the $411 billion to $500 billion needed to reconstruct Ukraine from Russian destruction.
Microsoft president and vice-chairman Brad Smith said the Seattle-based company will continue to invest in Ukraine after its 10-year partnership agreement with Kiev-based game cloud hosting company Boosteroid as part of its planned $70 billion acquisition of Activision Blizzard.
“This is a great deal for all of us. But even without it [Microsoft/Activision], we became the third service in the world in terms of the number of users,” Boosteroid CEO Ivan Shvaichenko said, adding: “We have known Microsoft for a long time and we are grateful to Microsoft because it helps Ukraine not only in words.”
An antitrust lawyer and the widely mooted successor to CEO Satya Nardella, Smith told Capitol Intelligence that Microsoft has always been impressed with Ukraine’s software sector and will continue to increase its footprint in the country today and tomorrow.
The Boston-based General Electric conglomerate will continue to invest in all sectors of the Ukrainian economy as it has done since Ukraine became an independent country in 1991, GE Gas Power managing director George A Pickart said.
Even Steven Rattner, the Obama-era Treasury official who saved the US car industry during the 2008 financial crisis, told Capitol Intelligence that he will now order his Willett Advisors fund to look for Ukrainian companies for buy-outs or pre-IPO investments.
Goldman Sachs CEO Solomon must now play catch-up to his arch-rival, JPMorgan CEO Jamie Dimon. Dimon has positioned the New York company to become the main investment bank for the $400-billion-plus reconstruction of Ukraine while smaller institutions, such as Poland’s PKO Polski Ukraine subsidiary Kredobank, are already on the ground executing mid-market M&A deals.
Marek Magierowski, the Polish ambassador to the US, organized the state visit of his prime minister, Mateusz Morawiecki, to the IMF World Bank Spring Meetings and with US Vice-President Kamala Harris.
Deputy Secretary of Commerce Don Graves, whom Raimondo appointed as the US government’s Ukraine investment czar, said he agreed with the sentiment that Ukraine is safer than Silicon Valley thanks to project finance and political and war risk insurance provided by the US International Development Finance Corporation (DFC) headed by Scott Nathan and loans guarantees from the US Export-Import Bank (Exim Bank).
The new White House chief of staff, Jeff Zients, is pushing for Raimondo’s Commerce Department to merge operations with the US DFC and US Exim Bank, much to the displeasure and consternation of the head of the United States Agency for International Development (USAID), Ambassador Samantha Powers.
It is no fluke or whim of fate that Ukraine has brought the World Bank and IMF back to its Bretton Wood roots as many of their front-line soldiers are made up of the country’s elite of bankers, lawyers and entrepreneurs whose sacrfices and bravery mirrors the same citizen soldiers the United States sent to Europe and Japan during World War II.
Those returning WW2 veterans, after seeing and living the worst horrors of war and inhumanity, went on to build and create the companies, banks and law firms that made the United States the largest and most powerful economy on earth and why they are forever known as the Greatest Generation.
Peter K Semler is the chief executive editor and founder of Capitol Intelligence. Previously, he was the Washington, DC, bureau chief for Mergermarket (Dealreporter/Debtwire) of the Financial Times and headed political and economic coverage of the US House of Representatives and Senate.