The economic aspect of Ukraine’s integration into NATO - Alona Lebedieva on why Ukraine's membership in the alliance will be beneficial for both Ukrainian and European entrepreneurs

The recent visit of NATO Secretary General Jens Stoltenberg to Kyiv proved that these aspirations are within the realm of possibility.

In a meeting with the Ukrainian President, he stated that the allies agreed that Ukraine does not need an action plan for membership, and also assured that strong support from all alliance states would remain unwavering.

Stoltenberg also noted that this was a conversation between de facto allies, and it is only a matter of time until Ukraine de jure joins the alliance.

Alona Lebedieva

However, what does it mean for Ukraine – to join NATO?

This is not only a civilisational choice and a guarantee of joint defence – it is also a significant incentive for the development of the state’s economy – something that is rarely discussed in this context. While integrating into the institutions of the European Union, the new member states also joined the North Atlantic Alliance, bolstering their own democratic path of development with security guarantees as a member of a powerful military bloc.

Researchers notice a direct connection between the state of external security and the economy. Thus, looking at the experience of the countries of Eastern Europe, it is possible to see a significant increase in direct foreign investment.

For example, in 1999, Poland, the Czech Republic and Hungary joined NATO. In 1997, when Poland announced its decision to join the alliance, $2.7 billion in direct foreign investment was invested in its economy, $5 billion a year later, and in 1999 (when the country joined NATO) – $8 billion.

The Czech Republic and Hungary show even more impressive figures: in the Czech Republic in 1997 – $4 billion, in 1998 – $9.8 billion, in 1999 – $12.8 billion; in Hungary – in 1997 – $6.2 billion, in 1998 – $10.2 billion, in 1999 – $14.5 billion. This was the case later on in other countries joining the alliance.

In Slovenia, the year after the announcement of the decision to join NATO, direct investment increased from 3.6 billion euros in 2002 to 5.1 billion euros in 2003. In Romania, in 2004, when the country joined NATO, foreign direct investment increased by 141% compared to the previous year.

The same trend can be observed further – even Montenegro, which joined NATO in 2017, already reported a 67% increase in foreign capital investment a year later. Similar trends are currently observed in North Macedonia and Finland.

Another important aspect is the change in the image of a country due to joining NATO. This is especially noticeable in the countries of the Balkan Peninsula, which have long been stereotyped as unstable states with a high risk of unpredictable political or economic situations, or even military incidents. The assets of these states were traditionally perceived as risky, which did not contribute to the inflow of foreign investments and a number of Western brands entering the market. Joining NATO had a significant impact on the image, because joining the Western military bloc is to a certain extent a manifestation of the state’s will, a civilizational choice of the people and choice to comply with the appropriate political and economic model, business rules inherent in Western countries.

Plus, of course, a guarantee of the inviolability of borders and reliable military protection, resulting in a stable foreign policy. These factors not only contribute to the growth of investment attractiveness of states, but also significantly boost the pace of their economic development.

Ukraine, too, can definitely be more attractive for a foreign investor. According to open data, our state is one of the richest states on the continent resource-wise: we occupy the first place in Europe in terms of uranium ore reserves, the second – in terms of iron ore reserves, titanium and mercury.

Ukraine also has the largest reserves of hard coal in Europe and the largest deposits of manganese ores. And also, surprisingly, the second largest deposits of natural gas in Europe, second only to Norway! However, it is important to note that the main regions of Ukrainian gas deposits are located in the east of the country and on the shelf of the Black Sea – that is, those territories where active hostilities are currently taking place. The material by the Washington Post, in particular, mentions this when analyzing the economic potential of Ukraine.

Ukraine is also a leading producer of agricultural products, a key exporter of wheat, barley, sunflower oil, corn and rapeseed. According to experts’ estimates, the fertile “chornozem” – black soil – lands of Ukraine can provide food for 600 million people, which in the conditions of globalization is an incredibly important factor in world food security.

Another very important factor is rare-earth metals, which acquire extraordinary value in the context of the development of world technologies.

Currently, China is the leader in their production, however, according to geologists’ data, in Ukraine there are more than a hundred deposits of lithium, zirconium, yttrium, cobalt and other rare earth metals, which are currently not being developed.

Most of them are located within the Ukrainian Shield, which experts consider the largest rare earth metallogenic province in Europe. To say that this is an extremely profitable and investment-attractive asset for investors and the entire Western world is an understatement.

Personally, I am a firm believer that Ukraine’s place is in the EU and NATO. This is the path defended by the heroes of the Revolution of Dignity, and it is now enshrined in the Constitution of our country. And when we talk about NATO in the context of security guarantees, it is not only in the military sphere, but also in the economic sphere.

This is the guarantee of the safety of investments, infrastructure, entrepreneurship and the macro-financial climate. Using the example of the countries of Eastern and Southern Europe, we can see how important it is to enhance one’s membership in the European Union with reliable military protection of the North Atlantic bloc. This motivates even less motivated investors to invest and see more opportunities and potential assets in Ukraine, especially at the stage of post-war reconstruction and recovery. So, in my opinion, this will be a key factor that can ensure the economic growth of our state after the end of the war.

Already today, Ukrainian entrepreneurs feel how significant these security guarantees could be, both for internal scaling of production and for attracting foreign partners and international cooperation. I am sure that when our state becomes a full-fledged member of the North Atlantic Alliance, it will be a guarantee of a future economic leap, which will allow our enterprises and entrepreneurial businesses to return Ukraine to pre-war growth indicators, as well as surpass them by attracting additional foreign capital investments.

When it becomes safe and profitable to invest in Ukraine, a number of global players will see our underground deposits, and our human and industrial potential as very valuable assets.

However, for this to happen it is very important to end the war with the victory of Ukraine, and our future literally depends on this.

It is important that not only in our country, but also in the entire Western world there is an understanding of how valuable Ukraine is for the world economy.

After all, investments in Ukraine, its industry and economic growth begin exactly with the military aid that our allies are providing us today.

The effectiveness of the regular Ramstein-16 meeting, at which about 50 countries of the Contact Group pledged to allocate more than 33 billion dollars for direct security assistance to our country, adds confidence to Ukraine. Every dollar invested in the Armed Forces of Ukraine will definitely return to everyone a hundredfold.

Keeping in mind the protection of the territorial integrity of the state, its subsoil, natural resources and sovereignty, joining NATO really seems to be only a matter of time. To achieve this, we must exert our utmost efforts today, so that tomorrow we have every opportunity to create our own Ukrainian economic miracle.