Investment Follows Trust: How Will Ukraine Rebuild Post-War?
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Imagine for a glorious moment that the War in Ukraine is over. Ukraine has regained its sovereignty, and the country is enjoying the blessings of peace.

Alas, not so fast. Even with peace, Ukraine will still face a long and expensive recovery process. According to World Bank estimates in May of 2023, reconstruction will cost $411 billion dollars. More current estimates put the figure at half again that amount. Where will the money come from?

The Trust Deficit

A major obstacle to Ukraine’s receiving the reconstruction funds needed is Ukraine’s reputation for corruption. During my recent visit to Kyiv, a businessman told me, “One of the worst legacies of the Soviet occupation was deep-rooted, everywhere-you-look corruption. The Soviets turned Ukraine into a low trust society.” 

The man didn’t want his name used because he didn’t want to turn himself into a target for speaking openly, but even so, he went on to say, “Who wants to invest in a country when the money may end up paying for an oligarch’s $20 million condo in Dubai?”

Technology to the Rescue

The good news according to Junaid Islam, a man with 35 years’ experience in secure communications and who’s founded multiple start-ups in Silicon Valley, there’s an answer to the corruption problem. “Today, we have tools that can create virtually total transparency. We can do this by combining relatively new tools, like blockchain and social media, with our old-fashioned accounting tools.”

As Islam goes on to say, accounting has always been good at discovering and rooting out fraud.  Modern social media can be excellent at putting a global spotlight on transactions. Add blockchain to the mix, and suddenly there’s a record that can’t be changed or fudged. This newly available combination of tools means a high likelihood not only of getting caught but getting caught in a highly visible way.  

Landmine Clearance, an Example

To see how this works, take one of the Ukrainian Government’s priorities for reconstruction. Landmine clearance is an essential first step for Ukraine’s recovery. Forty percent of Ukraine is contaminated with landmines and unexploded bombs. Finding and destroying them will cost billions of dollars.

Under normal circumstances, this multi-billion dollar honeypot would be a perfect target for corruption. As the Kyivian businessman told me, “I guarantee there are a bunch of people right now trying to figure out how they can game the system.”

He gave a typical scenario of how a corrupt individual might go about this. The corrupt person, (let’s call him Danylo,) wants a piece of these billions and learns that all he needs to do to get a lucrative contract for mine clearance is to give the right bribe to the right person. 

The "right person" arranges everything with a corrupt government official, who stays in the shadows while getting his cut. The corrupt government official quietly arranges for all the other bidders to be "ineligible" for a variety of plausible reasons that he’s carefully crafted.   

As the businessman told me, “On the surface - everything looks legal and right for the outsiders. The reality is entirely different–if you know where to look.   Danylo gets the contract, and only 20% of the money is ever spent on landmine clearance. The rest goes to Danylo’s Ferrari, and the right person’s stay in Monaco, and the corrupt official’s new beautifully furnished apartment for his mistress.

Addressing the Trust Deficit 

Potential situations like this make donors hesitant to contribute. To address this trust deficit, a collaborative effort is underway involving the US Agency for International Development (USAID), the US State Department, and Ukraine's Ministry of Digital Transformation. The goal of this initiative is to leverage technology to create transparency in aid distribution, making it more accountable and efficient.

How It Works

To tackle this issue, the initiative combines traditional accounting systems with the power of social media to create a transparent e-government platform. Here's how it works:

  1. Data Collection: Ukrainian officials and citizens assemble data on landmine locations, incidents, and casualties.
  2. Online Database: This information, along with maps and photos, is made accessible through an online database.
  3. Expert Involvement: A select group of international experts in landmine clearance is invited to assess the terrain and history of specific areas and estimate the cost of demining.
  4. Public Request for Proposal: Ukraine publicly issues a Request for Proposal (RFP) based on the experts' estimates. The responses are made available to the public.
  5. Bidding Process: Landmine clearance experts, possibly from several different countries evaluate the bids and the bidders’ qualifications.  
  6. Funds Tracking: The project milestones and payments to winning bidders are all posted online.

Advantages of the Approach: The proposed approach offers several advantages:

  1. No New Technology Required: The initiative doesn't require new technology. It leverages existing tools such as accounting methods, blockchain for audit trails, and social media for information dissemination.
  2. Transparency and Accountability: Transparency discourages corruption, as all transactions are public. Anyone attempting to skim funds will be flagged and subject to scrutiny.
  3. Enforced Accountability: Artificial intelligence can detect irregularities, leading to investigations by relevant authorities, such as the FBI in the case of U.S. taxpayers' money.
  4. Increased Trust: The transparency created by this initiative builds trust among donors and funders. Donors can monitor what’s happening with their money and can have confidence in where it’s going.

In a world where trust is essential for aid distribution and also for investing, leveraging technology to create transparency is crucial. This approach not only ensures that funds reach their intended recipients but also accelerates the recovery process in conflict-torn regions like Ukraine. 

War correspondent Mitzi Perdue has visited Ukraine three times in the last year.  She is a landmine clearance advocate, businesswoman, author, and anti-human trafficking advocate. She holds a B.A. degree with honors from Harvard University and a Master's from George Washington University.

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