The Luxembourg-Ukraine Chamber of Commerce (LUCC), which was established in 2017, promotes active business relations between the two countries. It works with EU institutions, other chambers of commerce and business associations, as well as Ukrainian government authorities, regional and city councils to connect investors and boost business in Luxembourg and Ukraine.

Over the last two years, the LUCC has been combining social and business support for Ukrainian refugees in Luxembourg. The chamber of commerce has, for instance, provided assistance in terms of language skills, job-seeking, writing CVs and interview preparation, and it has also collaborated with the grand duchy’s unemployment agency, Adem, to help people find jobs.

War is ongoing, but life also goes on

During a working visit to Ukraine last year, LUCC president Evgenia Paliy had the opportunity to meet with ministries, city authorities and local chambers of commerce, she told Delano during an interview in mid-February to mark two years since the start of Russia’s full-scale invasion. “There is such a huge interest in cooperation and conducting events together.”

“The war is ongoing. We understand. But there are other parts of Ukraine where life is going on, which helps the economy to stay alive, which helps the country stay alive.” That’s why Ukraine needs support, Paliy argued, highlighting several “spheres” of activity where investment could help the country. There is risk, she said, but there are also investment opportunities.

Finance a key sector

First off, Ukraine’s banking sector has gone through changes to meet “the requirements of European integration” and European standards, said Paliy.

A  published in December 2023 stated that the Ukrainian banking system has undergone “substantial changes” over the last 10 years. The first phase of changes followed a banking crisis between 2014-16; the second phase began after the imposition of martial law in February 2022. The banking crisis, said the report, led the National Bank of Ukraine to initiate regulatory and supervisory reforms. Capital and liquidity requirements were also strengthened, banking supervisory reforms were introduced and other actions to “strengthen the operating environment” were implemented.

In addition, a published on 8 November 2023 noted that as part of IMF reform requirements, “important actions were taken to reinforce the stability of the banking sector, including measures to enhance banking supervision and resolution mechanisms, as well as reforms to improve the independence of the National Bank of Ukraine. Ukraine has also taken steps to bolster the transparency of public finances and institutions, in particular by publishing budgetary information, improving the public procurement system and introducing asset reporting requirements for public officials.”

For Paliy, Ukraine’s banking sector is the one that has gone through the most changes in terms of regulation. And the LUCC provides a platform for financial industry experts to discuss topics such as opportunities for international investors, market access, debt sustainability and sovereign ratings, as well as the challenges of keeping the banking sector “healthy” and ensuring that banks can lend to the “real economy.”

Sharing knowledge on fintech regulation

But fintech is also an interesting sector for investment, particularly for the grand duchy. “Luxembourg is the leader of the European market regulating these issues,” said Paliy. An example of Luxembourg’s advanced position in this sector is seen in the country’s blockchain laws.

According to Luxembourg for Finance, the development agency for the financial centre, “Luxembourg is one of the only states to have established a set of rules explicitly permitting securities operations making use of DLT [digital ledger technology] systems.” Two digital bond issuances on a blockchain--both by the Luxembourg-based European Investment Bank--have been carried out under Luxembourg law.

“We want to bring together Ukrainian innovators [so that they] see how it is regulated in Luxembourg,” said Paliy.

Infrastructure and opportunities for energy efficiency

Because of Russian missile attacks on Ukraine’s energy facilities, it will be necessary to rebuild critical infrastructure to ensure that people have power and water in their homes and schools, Paliy continued.

But this also offers the chance to do so in an energy-efficient manner--and herein lies another investment opportunity, she argued. “This is cooperation which is needed, and will also be discussed during our next business forum.”

The LUCC in January 2023 organised a , which brought together ministers from Luxembourg and Ukraine’s governments, as well as representatives from EU institutions and the financial sector. The second forum will be held in May 2024 and will cover Ukraine’s progress on EU accession, the country’s economic and social recovery, space and telecom innovation, cybersecurity and defence, fintech and green investments.

Free transport initiative exported to Ukraine

The LUCC has also “signed a huge amount of cooperation agreements and memorandums with city councils in Ukraine,” added Paliy. “They want to be heard, they want to be invited, they want to be here.”

“After the business forum, there were concrete results,” she said. The city of Bucha (which in March 2022 was the site of a massacre of Ukrainian civilians and prisoners of war by Russian armed forces), for example, has received financial support from the city of Luxembourg.

Another result that came out of the forum, curiously enough, was not strictly related to business but is something that people in Luxembourg now take for granted.

“The mayor of the city of Konotop [in Sumy Oblast, northeastern Ukraine] was impressed by the free [public] transport in Luxembourg. So when he went back to Konotop, he made free transport in Konotop as well! And the mayor of Vinnytsia [in central Ukraine], who was also on the same stage at our forum--he donated several buses. So they are now in Konotop, circulating for free,” said Paliy. Polish trams from Warsaw were also donated to Konotop after the event.

“Everything has to be prepared now”

What the LUCC offers to investors in Luxembourg is its connections with regional chambers of commerce in Ukraine, said Paliy. It’s important to understand the risks, opportunities and benefits associated with each region.

“We also understand that investors are afraid to invest now because of the war. But it will be too late to take a place after,” she said. “If you go to the concert, you need to buy a ticket in advance. Our neighbours--Poland, Romania--they understand this and places are already taken.”

“If the investor is waiting for the day of victory, it will be too late to start doing this. Everything has to be prepared now,” she said, adding that there are Spanish investors that are already “taking places for energy projects.” Logistics are changing--there’s been a shift from transport by sea to transport by land--and this will require new infrastructure. “So people are taking places now already.”

“That’s why our mission is to bring this idea to investors, especially here in Luxembourg, where investors are more cautious than in Poland, for example,” said Paliy. In addition, Ukraine’s parliament in November 2023 in Ukraine against war risks. This, said the parliament’s press release, will allow the country’s export credit agency to “insure and reinsure investments of both international and Ukrainian companies.”

“The country is helping investors to come to Ukraine now,” said Paliy. “So this is what we’re trying to [help] companies in Europe to understand.”