Selling State Assets During Wartime
Dmytro Natalukha, head of the State Property Fund of Ukraine, has suggested that privatizing state-owned assets during the war could serve as a source of investment and a security measure for the country. He argues that discounted asset prices may attract foreign investors willing to operate under elevated risks. Natalukha emphasized that the presence of foreign capital in strategic industries is a component of security guarantees.
“Foreign investment and the presence of foreign capital in Ukraine’s strategic sectors should be part of our security guarantees,” Natalukha stated in an interview with the Ukrainian outlet Glavcom.
Natalukha also pointed out that attracting foreign investment requires acknowledging the high risks brought by war. However, for many investors, this could present an opportunity for higher future returns. He noted:
“The more international business is integrated into Ukraine’s economy, the less likely it becomes that Ukraine’s partners will take a passive stance in the face of Russian aggression,” he said.
Leadership Overhaul at State Enterprises
Against this backdrop, the State Property Fund is conducting a major leadership overhaul at state-owned enterprises following an audit. The new SPF team has been in place for four months, having announced dozens of competitions for executive positions. Several enterprises have seen changes in directors and supervisory board members. Natalukha noted that while foreign capital does not provide absolute protection against Russian attacks, it could reduce the risk of partner passivity, as seen in 2014 and 2022.
He remarked: “Yes, we have a war here, high risks, but if you want high profits, be ready for high risks.” Natalukha also touched on the political influence of foreign investors, noting that “there are various assumptions” about their impact depending on the specific situation. Thus, the State Property Fund continues to work on attracting foreign investment and reforming state enterprises amid the challenging wartime conditions.
Attracting foreign investment during wartime is a complex but crucial step for Ukraine, as it can aid economic recovery and enhance stability. Strategic assets slated for privatization open new opportunities for investors willing to take wartime risks. The State Property Fund’s efforts to reform state enterprises and draw in capital could become a key element in shaping a more proactive foreign economic policy for Ukraine in the face of current challenges.
As the State Property Fund of Ukraine navigates the complexities of privatization during wartime, it's crucial to understand the current state of its assets. Recent revelations indicate that a significant portion of the Fund's assets are not readily marketable. For a deeper insight into these challenges, including the implications of having non-liquid assets, explore our detailed report on the subject.