Without an effective investment screening mechanism, Ukraine remains vulnerable to the infiltration of corrosive capital into strategic sectors of the economy. This concerns not only direct investments, but also control over assets, technological dependencies, and contractual arrangements that Russia may exploit for long-term political, economic, and security influence.
The Economic Security Council of Ukraine has analysed an unpublished draft Law on the Screening of Foreign Direct Investments prepared by the Verkhovna Rada Committee on Economic Development. The research is based on a comparative analysis of screening models in the United States, the United Kingdom, Taiwan, Latvia, Germany, Japan, South Korea, Romania, Sweden, and Finland, as well as a series of interviews with representatives of governments, civil society, and the business community.
The ESCU study demonstrates that the proposed FDI screening model could serve as the foundation for a modern mechanism to protect national security. At the same time, the draft law requires targeted amendments before it is formally registered.
These include, in particular, mandatory screening of investments in assets related to dual-use goods, enhanced scrutiny of investors’ links to the aggressor state, a uniform approach to capital originating from the Russian Federation and the Republic of Belarus, clarification of key definitions, and the removal of fines for minor procedural errors.
“Ukraine’s post-war reconstruction needs are estimated to exceed half a trillion US dollars over the next ten years. Such an amount cannot be mobilised exclusively through domestic sources, while attracting foreign investment creates the risk of corrosive capital infiltration, particularly of Russian origin. At the same time, it is important that the investment screening mechanism remains clear and predictable for bona fide investors and does not create unnecessary administrative barriers to financing Ukraine’s reconstruction”, said Volodymyr Landa, Head of Investment Screening at the Economic Security Council of Ukraine.
The full study is available in the attached file.
Authors:
Volodymyr Landa, Head of Investment Screening, Economic Security Council of Ukraine (ESCU)
Anastasiia Opria, Project Manager, Economic Security Council of Ukraine (ESCU)
Andrii Skitenko, Analyst, Economic Security Council of Ukraine (ESCU)
Maksym Hrushchenko, Analyst, Economic Security Council of Ukraine (ESCU)
Denys Dmytruk, Analyst, Economic Security Council of Ukraine (ESCU)
This material was prepared with the support of the International Renaissance Foundation. The material reflects the views of the authors and does not necessarily represent the position of the International Renaissance Foundation.