Daniel Aspleaf, an American engineer based in Kyiv, spends more hours of his working days at a restaurant near his office than he would care to. Apart from the delicious Texas ribs on offer, the restaurant has an underground dining room with good wi-fi that doubles as a bomb shelter, so he can work in relative safety, without having to worry too much about Russian drones and missiles.
Aspleaf is managing director of CDM Engineering Ukraine, which has been engaged in full-scale project management, including design and procurement support, as well as technical supervision and quality control from start-up through commissioning.
As the international community gathers in Rome for the Ukraine Recovery Conference to discuss how to better rebuild Ukraine, Aspleaf has been working on nothing else for more than a decade.
Kyiv Post: What are the most important issues to address at the Ukraine Recovery Conference being held in Rome right now.
Daniel Aspleaf: In my view, the key issues are going to be 1) the financing, and 2) how should this financing be managed and implemented. In order to answer these two questions, other relevant topics will de facto need to be addressed, such as when reconstruction is starting in terms of the current status of the war, as well as other pertinent topics. Past events have, in my opinion, provided little relevant clarity on these two topics.
KP: What are the most pressing non-military projects that need to be undertaken?
DA: The reconstruction of the energy sector is certainly near the top of the list, if not at the top. Taking the current national plan and developing regional plans with sufficient detail to elicit investment is critical, as this will further provide clarity for municipal planning.
National transportation projects are also important, but I am of the opinion many of these projects need to be put on hold pending reform of some of the state companies involved.
Beyond the national level, municipal infrastructure development needs to continue to be a priority.
KP: What are the main risks to reconstruction in Ukraine? Corruption? Incompetence?
DA: The main risks to reconstruction include 1) failure to address the financing – its management and implementation – and 2) a failure to reform the engineering and construction regulatory environment.
The first point is, to an extent, due to the incompetence or unwillingness of Western stakeholders to provide realistic solutions. The second point is a combination of incompetence of the Ukrainian government (somewhat agnostic in terms of the presidential administration), with an element of corrupt motivations involved.
From what I have observed, the challenges associated with the first point are generally well-understood. The challenges associated with the second point, however, are not well understood by Western stakeholders, and are seldom brought up in the context of how they pose a risk to reconstruction.
KP: Why are the current reconstruction efforts not generating more interest from foreign investors?
DA: The current reconstruction efforts are generating little interest because they are being pushed without having addressed the issue of financing, its management and implementation. At the moment, most of the reconstruction funding is being provided by various donor agencies or other International Financial Institutions (IFI). These efforts collectively are not working together, and so the needed planning, cohesion of investments, and how they all fit into a comprehensive plan at the national level (or any level, for that matter) are making limited progress.
Additionally, many of the IFIs don’t even consider the funding they are providing as a part of reconstruction – they call it something different, like “recovery” or “support.” As such, the investments made under these umbrella terms are often void of any larger strategic value and run counter to the goals of other IFIs they are working beside.
In terms of foreign private investment, I have long been of the opinion that there will be little private foreign investment to support reconstruction, particularly while financing issues remain unanswered. Timothy Ash and others have written about the low likelihood of such investments into Ukraine in terms of driving reconstruction, and I fully agree with them.
KP: Can the US be expected to live up to expectations?
DA: It is very hard to put expectations on the Americans at the moment. My own expectation is that the Trump administration intends to push Europe to take the lead on reconstruction, both in terms of financing and security.
KP: How would you structure reconstruction in Ukraine to better attract foreign engineering and construction companies?
DA: There are two key facets to structuring reconstruction:
- The planning and implementation of reconstruction of infrastructure should be centralized and managed by a consortium of private engineering/construction companies from Western countries. This consortium would be responsible for the procurement of all planning, engineering, and construction of the physical infrastructure associated with reconstructing a modern EU state at the national, regional, and municipal levels. The planning phase should, when feasible, include options for private sector investment.
- The engineering and construction sector in Ukraine needs to be reformed, largely through deregulation of many of the existing license requirements, certification driven approvals, and dated Soviet-era legislation. This should be accompanied by downsizing (if not eliminating) many of the state companies in accord with EU pre-accession requirements, and in eliminating long-running corruption schemes.
These two pillars will attract foreign engineering and construction companies (in addition to the consortium described in point 1) by establishing clear rules of the game in terms of form of the contract – FIDIC (International Federation of Consulting Engineers) most likely – and company compliance requirements, with a long-term perspective of opportunity to work towards Ukraine’s reconstruction. It will also facilitate the development of a thriving private sector engineering and construction sector among local companies in Ukraine, something that is currently lacking.
KP: What are some success stories you’ve seen in terms of reconstruction since the full-scale invasion began?
DA: Probably the biggest single success that I would classify as “reconstruction” would be municipalities adapting decentralized power generation sources after the destruction of a number of Ukraine’s thermal power plants. This step has forced municipalities to consider more efficient, localized models of power generation that will help the country modernize away from centralized, coal-burning thermal power generation towards combined heat and power sources using natural gas at the regional level to support these municipal efforts.
I am not convinced many of the municipal solutions are long-term sustainable by themselves once the overall cost-benefit is calculated, but the demonstration of the technical efficacy of such models will serve to drive regional planning in the future that will accelerate the country’s energy sector.
Prior to the war, the country’s dependence on inefficient, coal burning thermal power plants monopolized by a single operator (no names needed!) was often identified as a major barrier in the development of the country’s energy sector. Russia’s destruction of these facilities has indirectly solved at least a part of this problem.