The EU Ukraine Investment Framework was groundbreaking in scope and has started to shift more financing towards private-sector solutions in Ukrainian reconstruction. Two years in, there is enough experience to draw lessons for the next chapter of EU support to Ukraine.

Most of the rebuilding will remain publicly financed and around two fifths of project- level IFI-support in the first four years of the war went to publicly owned companies. To an extent this is logical; much of the damage sits in assets that never earned or whose earnings the war has interrupted. But at $200 billion and rising, international public finance is no longer only filling a gap; it is allocating who will own Ukraine's productive assets after the war.

Where private capital has appeared alongside IFI project finance, it has concentrated in a small number of large, strong-balance-sheet companies — unsurprising, since lenders go where earnings are visible and exposure is survivable. The exception is telling: growth in private investment in Ukrainian defence technology has outpaced reconstruction by a wide margin, despite the same country, war, courts and currency. The difference lies in the shape of the return. A defence tech company holds a claim on demand that can grow and travel; a wind farm earns only from itself, and a strike on its substation stops the earnings while leaving the asset physically intact.

Ukraine does not principally lack public financial instruments for reconstruction; what is less understood is where they fail to connect viable economic activity to capital, and what additional investment they crowd in. The connection breaks at different points: between an export credit agency and an exporter, an IFI and a Ukrainian mid-market company, a municipality and a private investor, an infrastructure project and its capital stack, and between international finance and domestic capital formation. In energy
specifically, this often means the break sits between generation-side investment appetite and the transmission and distribution risk that sits between the asset and the offtaker. Other sectors share that shape - water, district heating, grain storage and logistics are fixed and visible too, and their earnings may stop either on a direct strike on the asset or on infrastructure required for transport or production.