James Brooke, an American journalist, is one of the best-known and authoritative expat figures in Kyiv. He is editor-in-chief of Ukraine Business News, a free English-language news site based in Kyiv (www.ubn.news). He is a former Russia/former Soviet Union bureau chief for Voice of America, based in Moscow, and a former Moscow bureau chief for Bloomberg. Before that, Mr. Brooke reported for 24 years for The New York Times, largely overseas in countries such as Japan, South Korea, Ivory Coast and Brazil. He was interviewed by Bohdan Nahaylo for The Ukrainian Weekly on October 4 in Kyiv.
What were your impressions on the Think Invest forum?
It was great! We started with this brand-new highway linking Zaporizhzhia airport to Mariupol. You can now drive it in two and a half hours. It was built by Turkish and Ukrainian contractors. That made it a lot easier to get there. Also, Zaporizhzhia is ready to inaugurate their $30 million new airport terminal next month. When we got to Mariupol, it was a lot of people under one roof – very useful for us as journalists. The president, the prime minister and half the Cabinet. It was wonderful exposure to bring all these opinion makers and financial leaders out of Kyiv and down to Mariupol, which essentially is a frontline city. And they came bearing baskets of goodies.
So, it wasn’t just a PR exercise?
No, no, no – there were real events, real investments announced. Now mostly with the IFIs, international financial institutions. To start with you have the new highway that was inaugurated. They’re going to have a new daily train service from Kyiv. The French are investing heavily in rebuilding sewage and water. The EBRD [European Bank for Reconstruction and Development] has brought in new tramways. For the port, China’s COFCO announced a $50 million investment in expanding grain handling.
Now the Russians are playing games again, slowing up ships going in and out of Mariupol. The delays have doubled to two-three days. It’s very arbitrary, and obviously adds costs. That said, port cargo is up 3 percent this year so it isn’t a total disaster.
What was missing were the private companies. The mayor of Mariupol went to the French business school INSEAD and speaks French, so he played that card very adroitly. The new French ambassador came with 20 French companies – real live private sector companies, so that was good. But it was mostly the alphabet soup of the EBRD, World bank, IFC [International Finance Corporation], etc., but they were announcing concrete investments.
So what were the takeaways? Let’s say from a non-financiers point of view.
The takeaways were positive in that this is an interesting city. Actually, because of the refugees coming from Donetsk, Mariupol now has a growing population city, now over 500,000. It is Ukraine’s largest port on the Azov. The IFIs are the pioneers doing infrastructure. What they really need is an airport. And for obvious reasons, they don’t want to fly to Mariupol because it’s only 30 kilometers west of the conflict zone. But Zaporizhzhia Is emerging as a regional airport. SkyUp is going to base a Boeing there. They have international flights going to Barcelona, Minsk and the Emirates. In March, Wizzair will start flying out of Zaporizhzhia to six EU [European Union] cities.
How far is Zaporizhzhia from Mariupol?
Now it’s only two and a half hours. It was previously a nightmarish four-hour drive of dodging potholes. It is interesting to see how a brand-new strip of smooth asphalt attracts traffic. There’s a startling amount of traffic on that two-lane highway. But it was smooth and seemed to be well-built and lasting.
Briefly, on the performances of the president and prime minister.
It was good that people got to get close to them. People could mingle a bit with the PM. The number one concern for foreign investors is what will happen to PrivatBank. Will PrivatBank be returned to the man who emptied $5 billion out of it – Ihor Kolomoisky. President Zelenskyy and PM [Oleksiy] Honcharuk very directly said that’s not going to happen. Now some people weren’t quite happy with it. It wasn’t direct enough for them. That was a key issue. The top guy from the EBRD said: We’re tired of mixed messages, mixed signals. So the jury is still out on that. And that is a deal breaker for the IMF [International Monetary Fund]. Are they really serious about this. To some degree they raised the bar further. Are you going to get the $5 billion back? We don’t know the answer to that.
As we know, Mariupol is near the frontline. Isn’t it a bit isolated? What’s being doing to break down the isolation?
I talked about the asphalt highway. The doubling of trains from Kyiv. There is now a daily night train that goes down there. But equally important for the hearts and minds of people in Donbas, USAID has helped to fund 11 digital TV transmission towers that are dotted along the 400-kilometer ATO line. These will be broadcasting TV in Russian and Ukrainian to people in the occupied parts of Donbass and also Crimea. So you’re breaking down the information isolation. Secondly, at the Mariupol conference, the PM signed with the executives of the top three mobile companies to provide 4G to 90 perent of Ukraine’s population within a couple of years. So that again is breaking down the digital divide from areas that are physically remote from the center.
What was the general atmosphere like amongst the participants? Some have told me they felt that the tone was a bit too upbeat.
Well, I think it was realistic. There was a lot of buzz, a lot of people exchanging biz cards, introducing each other. I think there is a bit of realism there. How far will the peace process really go? I bet if you took a poll many people would say that in one year from now we’ll have a Transnistria in the east, that Ukrainian sovereignty will not be restored short term, that Russian troops will not leave short term.
You made a good point in UBN – noting that a war is going on, but there are many countries where wars are going on and that should not deter investors from investing if conditions are right.
Bohdan, right. After the Mariupol event I went to the inauguration of the second largest solar plant in Europe, largest in Ukraine. DTEK inaugurated that on Thursday. Then on Friday they inaugurated a major wind power plant. If you can imagine 26 towers each one higher than the Monument to the Motherland in Kyiv. These are big, 100 meters high, they are marching across the Azov coastline picking up the wind. They are part of DTEK’s investment of $1 billion to build 1 gigawatt of power from renewables solar and wind in this year alone. It was impressive. DTEK and the Chinese built the second largest solar plant in Europe in six months.
And the city itself – did you get a feel that it was the war zone? Or were things relaxed?
I think things are relaxed. They got Metinvest to turn off, or turn down the steel factories. The cab driver said: Breathe deeply! So that was nice. Sure it’s a run-down, post-Soviet city, but you see new stores and renovations. It may well be that we have fixed positions. If you look at the map, Seoul is only 50 kilometers from the DMZ. So you can have a kooky neighbor nearby, and, if you respect your lines, you can thrive.
What’s your take at this stage on the Zelenskyy administration?
You have to keep your eye on the ball. As early as next year or two years from now, you’re going to see a different country. There’s going to be a lot of privatization. These public private partnerships are going to bring in foreign capital to build ports and airports.
The prime minister was explicit about the need for legal reform. Clearly, they understand that the courts must work, that investors must be assured. Was there much talk about this?
It’s at the top of every foreign investor worry list – corruption and the lack of really effective courts here. So that is a turn-off for foreign investors. More so than the situation with Russia in the southeast. There was talk about fixing this. It’s difficult to gauge the progress. The high anti-corruption court has started. We hope it isn’t the type of thing you saw in the past: For my enemies the law, for my friends everything. That it’s not selective justice.