We, the members of the International Council of Business Associations and Chambers of Commerce in Ukraine (ICBAC), confirm the urgent need for political risk insurance to become readily available to cover conflict and related political risk for investment and lending in Ukraine. Although further military coercion against Ukraine should be highly unlikely, the possible risk significantly discourages Ukrainian investment and lending. This risk needs to be covered by a suitable political/conflict risk insurance program, so that Ukraine can benefit economically from the much greater foreign as well as domestic investment and lending that should flow from the other reforms being proposed for the Ukraine Reform Conference to be held in Toronto, Canada on 2 to 4 July 2019.
To provide for this, we request that the countries attending the Ukraine Reform Conference support the creation of a special multilateral political/ conflict risk insurance program for Ukraine through the World Bank’s Multilateral Investment Guarantee Agency (MIGA), as has been done for most other countries subject to conflict, as well as for the West Bank and Gaza, to facilitate investment and lending despite any conflict risk. This should be based on the creation by the World Bank of a trust fund program, modeled on MIGA’s program for the West Bank and Gaza, backed by donor standby guarantees, to:
(1) support MIGA to make much greater political/conflict risk insurance available in practice for foreign (cross-border) investment and lending into Ukraine, despite the conflict risk; and
(2) to give MIGA authority also to issue political/conflict risk cover to insure domestic, as well as certain existing, investment and lending in Ukraine.
Such insurance should be readily available at reasonable cost for all bona fide investments and lending in Ukraine (excluding the occupied Ukrainian territories) to cover the risks ordinarily covered by MIGA, including from war, conflict and civil disturbance. Currently, without such special support, MIGA is generally unwilling to insure investments and lending, in particular for large projects, in Ukraine.
The Ukrainian Government should, to facilitate MIGA’s providing this insurance cover, give a counter-guarantee to MIGA for loss claims due to anything that is under the Government’s control, including improper exchange control actions, expropriation, etc. – basically guaranteeing everything other than conflict risk due to the actions of a third country.
Ukraine’s economy should, based on such political/conflict risk insurance and the legal and anti-corruption reforms being proposed for the Ukraine Reform Conference, benefit from the much greater investment and lending required for its development.
Adopted on 27 June 2019 by:
British Ukrainian Chamber of Commerce (BUCC)
Canada-Ukraine Chamber of Commerce (CUCC)
Chinese Commerce Association (CCA)
German-Ukrainian Chamber of Commerce and Industry (AHK)
Franco-Ukrainian Chamber of Commerce and Industry (CCIFU)
International Turkish Ukrainian Businessmen Association (TUID)
Swedish Business Association in Ukraine (SBA)
Ukrainian-Austrian Association (UAA)
Ukrainian Chamber of Commerce and Industry (UCCI)
U.S.-Ukraine Business Council (USUBC)
Executed by Alfred Praus, General Secretary, on behalf of ICBAC: ____________
*Please see the Commentary on this Resolution here.
Photographs from the ICBAC Meeting on Political Risk Insurance held on 31 May 2019 with Daniel Bilak, Chairman of UkraineInvest, Alfred Praus, General Secretary of ICBAC, Bate Toms, Chairman of the BUCC and Morgan Williams, President of the USUBC, at which the ICBAC Resolution was discussed.
