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    Can Ghana’s Debt Trap of Crisis and Bailouts Be Stopped?

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    Emmanuel Cherry, the chief executive of an association of Ghanaian construction companies, sat in a cafe at the edge of Accra Children’s Park, near the derelict Ferris wheel and kiddie train, as he tallied up how much money government entities owe thousands of contractors.Before interest, he said, the back payments add up to 15 billion cedis, roughly $1.3 billion. “Most of the contractors are home,” Mr. Cherry said. Their workers have been laid off.Like many others in this West African country, the contractors have to wait in line for their money. Teacher trainees complain they are owed two months of back pay. Independent power producers that have warned of major blackouts are owed $1.58 billion.The government is essentially bankrupt. After defaulting on billions of dollars owed to foreign lenders in December, the administration of President Nana Akufo-Addo had no choice but to agree to a $3 billion loan from the lender of last resort, the International Monetary Fund.It was the 17th time Ghana has been compelled to turn to the fund since it gained independence in 1957.This latest crisis was partly prompted by the havoc of the coronavirus pandemic, Russia’s invasion of Ukraine, and higher food and fuel prices. But the tortuous cycle of crisis and bailout has plagued dozens of poor and middle-income countries throughout Africa, Latin America and Asia for decades.Joshua Teye, a teacher in Suhum, Ghana. The government’s fiscal crisis has cut investment in schools dangerously short.Francis Kokoroko for The New York TimesThese pitiless loops will be discussed at the latest United Nations General Assembly, which begins on Tuesday. The debt load for developing countries — now estimated to top $200 billion — threatens to upend economies and unravel painstaking gains in education, health care and incomes. But poor and low-income countries have struggled to gain sustained international attention.In Ghana, the I.M.F. laid out a detailed rescue plan to get the country back on its feet — reining in debt and spending, raising revenue and protecting the poorest — as Accra negotiates with foreign creditors.Still, a nagging question for Ghana and other emerging nations in debt persists: Why will this time be any different?The latest rescue plan outlined for Ghana addresses key problems, said Tsidi M. Tsikata, a senior fellow at the African Center for Economic Transformation in Accra. But so did many of the previous ones, he said, and still crises recurred.The last time Ghana turned to the fund was in 2015. Within three years, the country was on its way to paying back the loan, and was among the world’s fastest-growing economies. Ghana was held up as a model for the rest of Africa.Agricultural production was up, and major exports — cocoa, oil and gold — were rising. The country had invested in infrastructure and education, and had begun a cleanup of the banking industry, which was riddled with distressed lenders.Yet Accra is again desperately in need. The I.M.F. loan agreement, and the delivery of a $600,000 installment in May, have helped stabilize the economy, settle wild fluctuations in currency levels and restore a modicum of confidence. Inflation is still running above 40 percent but is down from its peak of 54 percent in January.Cocoa pods at a cocoa farm. Ghana’s economy is dependent on exports of raw materials like cocoa, oil and gold, which rise and fall wildly in price.Francis Kokoroko for The New York TimesDespite the I.M.F.’s blueprint, though, Mr. Tsikata, previously a division chief at the fund for three decades, said the chance that Ghana wouldn’t be in a similar position a few years down the road “rests on a wing and a prayer.”The effects of devastating climate change loom over the problem. Within the next decade, a United Nations analysis estimates, trillions of dollars in new financing will be needed to mitigate the impact on developing countries.In Ghana, the government owed $63.3 billion at the end of 2022 not just to foreign creditors but also to homegrown lenders — pension funds, insurance companies and local banks that believed the government was a safe investment. The situation was so unusual that the I.M.F. for the first time made settling this domestic debt a prerequisite for a bailout. A partial restructuring, which cut returns and extended the due dates, was completed in February. While the haircut may have been necessary, it undermined confidence in the banks.As for foreign lenders, there are thousands of private, semipublic and governmental creditors, including China, which have different objectives, loan arrangements and regulatory controls.The magnitude and type of debt means “this crisis is much deeper than the type of economic difficulties Ghana has faced in the past,” said Stéphane Roudet, the I.M.F.’s mission chief to Ghana.The dizzying proliferation of lenders now characterizes much of the debt burdening distressed countries around the globe — making it also more complex and difficult to resolve.“You don’t have six people in a room,” said Joseph E. Stiglitz, a Nobel Prize winner and a former chief economist at the World Bank. “You have a thousand people in a room.”Victoria Chrappah, a trader, recounts the unfavorable business climate, as fluctuating exchange rates affect prices of imported goods from China.Francis Kokoroko for The New York Times‘Last Year Was the Worst of All.’Outside Victoria Chrappah’s narrow stall in Makola Market, snaking lines of sellers hawked live chickens, toilet paper packs and electronic chargers from giant baskets balanced on their heads. As restructuring negotiations with foreign lenders continue, households and businesses are doing their best to cope. Ms. Chrappah has been selling imported bathmats, shower curtains and housewares for more than 20 years.“Last year was the worst of all,” she said.Inflation surged, and the cedi lost more than half its value compared with the U.S. dollar — a blow to consumers and businesses when a country imports everything from medicine to cars. The Bank of Ghana jacked up interest rates to cope with inflation, hurting businesses and households that rely on short-term borrowing or want to invest. The benchmark rate is now 30 percent.Because of the rapidly depreciating currency, Ms. Chrappah explained, “you can sell in the morning at one price, and then you have to think of changing the price the following day.”Purchasing power as well as the value of savings has been halved. Doreen Adjetey, product manager for Dalex Swift, a finance company based in Accra, said a bottle of Tylenol to soothe her 19-month-old baby’s teething pain cost 50 cedis last year. Now it’s 110.A month’s worth of groceries cost more than 3,000 cedis compared with 1,000. Before, she and her husband had a comfortable monthly income of 10,000 cedis, worth about $2,000 when the exchange rate was 5 cedis to the dollar. At today’s rate, it’s worth $889.Joe Jackson, the director of business operations at Dalex, said default rates for small and medium-size enterprises “are through the roof,” jumping to 70 percent from 30 percent.The real estate and construction market has also tanked. “There’s been a drastic drop in the number of homes in the first-buyer segment of the market,” said Joseph Aidoo Jr., executive director of Devtraco Limited, a large real estate developer.Construction of an apartment complex in Accra. The real estate and construction market has suffered along with the rise in the cost of borrowing. Francis Kokoroko for The New York TimesWhen the pandemic struck in 2020, paralyzing economies, shrinking revenues and raising health care costs, fear of a global debt crisis mounted. Ghana, like many developing countries, had borrowed heavily, encouraged by years of low commercial rates.As the Federal Reserve and other central banks raised interest rates to combat inflation, developing countries’ external debt payments — priced in dollars or euros — unexpectedly ballooned at the same time that prices of imported food, fuel and fertilizer shot up.As Ghana’s foreign reserves skidded toward zero, the government began paying for refined oil imports directly with gold bought by the central bank.Even so, while the series of unfortunate global events may have supercharged Ghana’s debt crisis, they didn’t create it.The current government, like previous ones, spent much more than it collected in revenues. Taxes as a share of total output are also lower than the average across the rest of Africa.To make up the shortfall, the government kept borrowing, offering higher and higher interest rates to attract foreign lenders. And then it borrowed more to pay back the interest on previous loans. By the end of last year, interest payments on debt were gobbling up more than 70 percent of government revenues.“The government is bloated and inefficient,” said E. Gyimah-Boadi, the board chair of Afrobarometer, a research network. Half-completed schools, hospitals and other projects are abandoned when a new administration comes in. Corruption and mismanagement are also problems, several economists and business leaders in Ghana said.More fundamentally, Ghana’s economy is not set up to generate the kind of jobs and incomes needed for broad development and sustainable growth.“Ghana’s success story is real,” said Aurelien Kruse, the lead country economist in the Accra office of the World Bank. “Where it may have been a bit oversold,” though, is that “the fast growth has not been diversified.” The economy is primarily dependent on exports of raw materials like cocoa, oil and gold, which peak and swoop in price.Manufacturing accounts for a mere 10 percent of the country’s output — a decline from 2013. Without a thriving industrial sector to provide steady employment and produce exportable goods, Ghana has no other streams of revenue from abroad, which can build wealth and pay for needed imports.This model — the import of expensive goods and the export of cheap resources — characterized the colonial system.Senyo Hosi, executive chairman of Kleeve & Tove, an investment company based in Accra, said he had an agribusiness that produced rice in the Volta region and worked with more than 1,000 growers. He can’t do required upgrades to equipment, though, because 30 percent interest rates make borrowing impossible. “I stopped production,” he said.Delivery riders for an online food delivery app. Francis Kokoroko for The New York Times‘For Us It Means Shutdown.’As the global financial system struggles to restructure hundreds of billions of dollars in existing debt, the question of how to avoid the debt trap in the first place remains more urgent than ever. Large chunks of money are required to invest in desperately needed roads, technology, schools, clean energy and more. But dozens of countries lack the domestic savings needed to pay for them, and grants and low-cost loans from international institutions are scarce.Road works continue on sections of the National Route Six, a carriageway connecting Ghana’s capital to its second largest city, Kumasi.Francis Kokoroko for The New York Times“The fundamental issue is the need for financing,” said Brahima S. Coulibaly, a senior fellow at the Brookings Institution.So governments turn to international capital markets, where investors are foraging the world for high returns. Both political leaders and investors often look for short-term wins, whether in the next election or earnings call, said Martin Guzman, a former finance minister of Argentina who handled his country’s debt restructuring in 2020.This free flow of capital around the globe has resulted in a flood of financial crises. “Inequality is embedded in the international financial architecture,” a United Nations Global Crisis Response Group concluded in an analysis.Even worthy investments — and not all of them are — don’t always generate enough revenue to repay the loans. When bad times hit or foreign lenders get spooked, governments are left in the lurch. This process can be accelerated in Africa, where research has found there is an exaggerated perception of risk, which lowers credit ratings and raises financing costs.Without a safety cushion to fall back on, a small government cash crunch can turn into a disaster. Think of a household in a tough stretch that can’t cover next month’s rent and is evicted. Now instead of being a few hundred dollars in debt, the members of the household are homeless.“For us,” said Ken Ofori-Atta, Ghana’s finance minister, a credit downgrade “means shutdown.”Ghana’s finance minister, Ken Ofori-Atta, at his home in Accra: “For us, a credit downgrade means shutdown.”Francis Kokoroko for The New York TimesSeveral organizations have sketched out escape routes from the debt trap, including more low-cost lending from multilateral banks like the World Bank.Debt Justice, which advocates for debt forgiveness, along with many economists, argues that some of the $200 billion in debt must be erased. It has also called for governments and lenders to publicly reveal the amount and terms of loans, and what the money was used for so it can be better tracked and audited.Other research groups have looked at ways to stabilize the evolving African bond market and help governments survive short-term shortfalls as well as boom-and-bust swings in commodity prices.Mr. Ofori-Atta said he had “extreme confidence” that Ghana would have strong growth after it emerged from this debt tunnel.But the problem of finding manageable amounts of low-cost investment capital remains.Where does an African country — or any developing country — get the type of financing it needs to grow? Mr. Ofori-Atta asked.Before the cycle of debt crises is broken, that question will have to be answered. More

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    What Retail Sales and Other Data Say About China’s Economy

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    Consumers are spending a little more, but apartment prices and the pace of construction keep falling.China’s trains, planes, stores and beaches were a little fuller last month than a year ago, and the pace of activity picked up at factories, particularly those making mobile phones and semiconductors.A batch of numbers released on Friday by China’s National Bureau of Statistics showed a modest improvement in the country’s overall retail sales and industrial production during August. A series of small steps taken by the government over the summer, including two rounds of interest rate cuts, seems to be yielding a slightly better-than-expected improvement in the country’s economy.“The national economy has accelerated its recovery, production and supply have increased steadily, market demand has gradually improved,” Fu Linghui, China’s director of national economic statistics, said at a news conference.But many foreign economists were more guarded.“Some may be of the view that China’s economy has already bottomed out, but we remain cautious,” said a research note from Nomura, a Japanese bank.Real estate remains a persistent risk.The broad troubles of China’s real estate sector continue to cast a long shadow over the country’s economic prospects. Property investment plummeted nearly a fifth in August from the same month a year ago, an even steeper decline than in July.Construction sites around China appear visibly less busy, although activity has not stopped entirely and tower cranes still dot the skyline.Construction of new apartment towers has faltered because of falling apartment prices.Based on data released on Friday for prices of new apartments in 70 large and medium-sized cities across China, Goldman Sachs calculated that prices were falling in August at a seasonally adjusted annual rate of 2.9 percent, compared with 2.6 percent in July.Construction sites around China appear visibly less busy, although activity has not stopped entirely and construction cranes still dot the skyline.Qilai Shen for The New York TimesThe statistics for new apartments considerably understate the speed and extent of price declines, however, as local governments have put heavy pressure on developers not to cut prices.Prices of existing homes in 100 cities across China fell an average of 14 percent by early August from their peak two years earlier, according to the Beike Research Institute, a Tianjin research firm. Rents have fallen 5 percent.Construction and related activities, including public works projects, make up at least a quarter of the Chinese economy. The government has tried to offset the plunge in apartment construction by demanding that already deeply indebted local and provincial governments undertake a debt-fueled wave of large projects, including new subways, municipal water systems, highways, public parks, high-speed rail lines and other infrastructure.Banks are being squeezed.Loans that China’s banks have made to property developers, dozens of which have defaulted on debt payments, are in trouble. So are loans to local governments and their financial affiliates involved in real estate. Banks are allowed to demand immediate repayment if work on a construction project has stopped, but they are reluctant to do so. Demand for new real estate loans remains weak.The central bank, the People’s Bank of China, announced on Thursday that it was freeing banks to set aside smaller reserves and start extending more credit. The move was widely seen as intended to accommodate an upcoming large batch of bond issuance by local and provincial governments to pay for their infrastructure projects.Investment in fixed assets was held back by property woes.Overall investment in what are known as fixed assets was up 3.2 percent for the first eight months of this year compared to the same months last year — infrastructure spending plus some manufacturing investment offset the property nosedive. The pace through August represented a slowdown from 3.4 percent the prior month.The value of China’s industrial production, a proxy for the activity of factories, rose 4.5 percent in August from a year ago.Agence France-Presse — Getty ImagesThe production of semiconductors rose 21.1 percent in August from a year earlier. The government has more heavily subsidized chip-making as the United States has restricted the export to China of a few of the highest-speed computer chips and of the gear to manufacture them.The value of China’s industrial production, a proxy for the activity of factories, rose 4.5 percent in August from a year ago after adjusting for considerable deflation in wholesale prices for factory goods over the past year. The increase had been 3.7 percent in July.Consumers are changing how they spend.Retail sales were up 4.6 percent in August from the same month last year, as rising energy prices likely pushed up retail sales, Nomura said.A main reason that retail sales rebounded was because a year ago, people in China were still living under stringent “zero Covid” measures that restricted their activity.Beer and wine production dropped from a year ago while output rose for bottled water, carried by many Chinese people during outdoor activities, and production of fruit and vegetable juices climbed sharply. More

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    A Crisis of Confidence Is Gripping China’s Economy

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    China’s economy, which once seemed unstoppable, is plagued by a series of problems, and a growing lack of faith in the future is verging on despair.Earlier this year, David Yang was brimming with confidence about the prospects for his perfume factory in eastern China.After nearly three years of paralyzing Covid lockdowns, China had lifted its restrictions in late 2022. The economy seemed destined to roar back to life. Mr. Yang and his two business partners invested more than $60,000 in March to expand production capacity at the factory, expecting a wave of growth.But the new business never materialized. In fact, it’s worse. People are not spending, he said, and orders are one-third of what they were five years ago.“It is disheartening,” Mr. Yang said. “The economy is really going downhill right now.”For much of the past four decades, China’s economy seemed like an unstoppable force, the engine behind the country’s rise to a global superpower. But the economy is now plagued by a series of crises. A real estate crisis born from years of overbuilding and excessive borrowing is running alongside a larger debt crisis, while young people are struggling with record joblessness. And amid the drip feed of bad economic news, a new crisis is emerging: a crisis of confidence.A growing lack of faith in the future of the Chinese economy is verging on despair. Consumers are holding back on spending. Businesses are reluctant to invest and create jobs. And would-be entrepreneurs are not starting new businesses.“Low confidence is a major issue in the Chinese economy now,” said Larry Hu, chief China economist for Macquarie Group, an Australian financial services firm.Mr. Hu said the erosion of confidence was fueling a downward spiral that fed on itself. Chinese consumers aren’t spending because they are worried about job prospects, while companies are cutting costs and holding back on hiring because consumers aren’t spending.In the past few weeks, investors have pulled more than $10 billion out of China’s stock markets. On Thursday, China’s top securities regulator summoned executives at the country’s national pension funds, top banks and insurers to pressure them to invest more in Chinese stocks, according to Caixin, an economics magazine. Last week, stocks in Hong Kong fell into a bear market, down more than 20 percent from their high in January.From its resilience to past challenges, China forged a deep belief in its economy and its state-controlled model. It rebounded quickly in 2009 from the global financial meltdown, and in spectacular fashion. It weathered a Trump administration trade war and proved its indispensability. When the pandemic dragged down the rest of the world, China’s economy bounced back with vigor. The Global Times, a mouthpiece for the Chinese Communist Party, declared in 2022 that China was the “unstoppable miracle.”China’s president, Xi Jinping, speaking at in Shanghai in 2018, when he gave a rousing defense of the economy: “You have every reason to be confident.”Pool photo by Johannes EiseleOne factor contributing to the current confidence deficit is the prospect that China’s policymakers have fewer good options to fight the downturn than in the past.In 2018, with the economy in a trade war with the United States and its stock market nose-diving, Xi Jinping, China’s leader, gave a rousing speech.Mr. Xi was addressing an international trade fair in Shanghai and sought to quell the uncertainty: No one should ever waver in their confidence about the Chinese economy, despite some ups and downs, he said.“The Chinese economy is not a pond, but an ocean,” Mr. Xi said. “The ocean may have its calm days, but big winds and storms are only to be expected. Without them, the ocean wouldn’t be what it is. Big winds and storms may upset a pond, but never an ocean. When you talk about the future of the Chinese economy, you have every reason to be confident.”But in recent months, Mr. Xi has said little about the economy.Unlike past crises that were international in nature, a convergence of long-simmering domestic problems is confronting China — some a result of policy changes carried out by Mr. Xi’s government.After the 2008 financial crisis, China unleashed a huge stimulus package to get the economy moving again. In 2015, when its real estate market was teetering, Beijing handed out cash to consumers to replace run-down shacks with new apartments as part of an urban redevelopment plan that gave rise to another building boom in smaller Chinese cities.Now, policymakers are confronting a far different landscape, forcing them to rethink the usual playbook. Local governments and businesses are saddled with more debt and less leeway to borrow heavily and spend liberally. And after decades of infrastructure investments, there isn’t as much need for another airport or bridge — the types of big projects that would spur the economy.China’s policymakers are also handcuffed because they introduced many of the measures that precipitated the economic problems. The “zero Covid” lockdowns brought the economy to a standstill. The real estate market is reeling from the government’s measures from three years ago to curb heavy borrowing by developers, while crackdowns on the fast-growing technology industry prompted many tech firms to scale back their ambitions and the size of their work forces.When China’s top leaders gathered in July to discuss the rapidly deteriorating economy, they did not deliver a bazooka-style spending program as some had anticipated. Coming out of the meeting, the Political Bureau of the Chinese Communist Party presented a laundry list of pronouncements — many rehashed from previous statements — without any new announcements. It focused, however, on the need to “boost confidence,” without detailing the measures that showed policymakers were ready to do that.“Whether you have confidence in the Chinese economy is actually whether you have confidence in the Chinese government,” said Kim Yuan, who lost his job in the home decoration industry last year. He has struggled to find another job, but he said the economy was unlikely to worsen significantly as long as the government maintained control.

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    China consumer confidence index
    Source: China National Bureau of Statistics via CEIC DataBy The New York TimesConfronted with dwindling confidence, the government has fallen back on a familiar pattern and stopped announcing troubling economic data.This month, China’s National Bureau of Statistics said it would stop releasing youth unemployment figures, a closely watched indicator of the country’s economic troubles. After six straight months of rising joblessness among the country’s 16- to 24-year-olds, the agency said the collection of those figures needed “to be further improved and optimized.”The bureau this year also stopped releasing surveys of consumer confidence, among the best barometers of households’ willingness to spend. Confidence rebounded modestly at the start of the year, but started to plummet in the spring. The government’s statistics office last announced the survey results for April, discontinuing a series it began 33 years ago.Instead of giving people less to worry about, the sudden removal of closely followed data has left some on Chinese social media wondering what they might be missing.Laurence Pan, 27, noticed that something was beginning to go awry in 2018 when customers at the international advertising agency in Beijing where he worked started to scale back budgets. Over the next few years, he hopped from one agency to another, but the caution from clients around spending was the same.He resigned from his last employer three months ago. Mr. Pan said that he had secured new jobs quickly in the past, but that he was struggling to find a position this time. He has applied for nearly 30 jobs since last month and has not received an offer. He said he was considering part-time work at a convenience store or a fast-food restaurant to make ends meet. With so many uncertainties, he has cut back on his spending.“Everyone is having a hard time now, and they have no money to spend,” he said. “This might be the most difficult time I’ve ever been through.”The Shanghai skyline. Consumers in China are holding back on spending, and businesses are reluctant to invest and create jobs. Alex Plavevski/EPA, via Shutterstock More

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    China’s Second-Quarter G.D.P. Shows Post-Covid Rebound Faltered

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    The NewsChina’s economy slowed markedly in the spring from earlier in the year, official numbers released on Monday showed, as exports tumbled, a real estate slump deepened and some debt-ridden local governments had to cut spending after running low on money.The new gross domestic product data for the second quarter — from April through June — underlined what has been apparent for weeks: China’s recovery after abandoning its extensive “zero Covid” measures will be harder to achieve than Beijing and many analysts had hoped.The NumbersCovid not only still hangs over China’s economy; it also skews some of its official data. The main G.D.P. number reported by Beijing on Monday, comparing this year with the same quarter last year, showed that the economy expanded 6.3 percent. But that reflected improvement from a sharp slowdown in 2022’s second quarter, a period when China’s largest city, Shanghai, was in a two-month lockdown. More

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    Rural Georgia Factory, Flush With Federal Funds, Votes to Unionize

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    Friday’s victory by the United Steelworkers at a factory building electric school buses was a test for Democratic hopes that clean-energy funding from Washington could bolster organized labor.Workers at a rural Georgia factory that builds electric school buses under generous federal subsidies voted to unionize on Friday, handing organized labor and Democrats a surprise victory in their hopes to turn huge new infusions of money from Washington into a union beachhead in the Deep South.The company, Blue Bird in Fort Valley, Ga., may lack the cachet of Amazon or the ubiquity of Starbucks, two other corporations that have attracted union attention. But the 697-to-435 vote by Blue Bird’s workers to join the United Steelworkers was the first significant organizing election at a factory receiving major federal funding under legislation signed by President Biden.“This is just a bellwether for the future, particularly in the South, where working people have been ignored,” Liz Shuler, president of the A.F.L.-C.I.O., said Friday evening after the vote. “We are now in a place where we have the investments coming in and a strategy for lifting up wages and protections for a good high-road future.”The three bills making up that investment include a $1 trillion infrastructure package, a $280 billion measure to rekindle a domestic semiconductor industry and the Inflation Reduction Act, which included $370 billion for clean energy to combat climate change.Each of the bills included language to help unions expand their membership, and Blue Bird’s management, which opposed the union drive, had to contend with the Democrats’ subtle assistance to the Steelworkers.Banners appeared outside the Blue Bird plant in the period leading up to the union vote.Jonathan Weisman/The New York TimesBlue Bird stands to benefit from the new federal funds. Last year, it hailed the $500 million that the Biden administration was providing through the infrastructure bill for the replacement of diesel-powered school buses with zero- and low-emission buses. Georgia school systems alone will get $51.1 million to buy new electric buses, but Blue Bird sells its buses across the country. Still more money will come through the Inflation Reduction Act, another law praised by the company.But that money came with strings attached — strings that subtly tilted the playing field toward the union. Just two weeks ago, for instance, the Environmental Protection Agency, which administers the Clean School Bus Program, pushed a demand on all recipients of federal subsidies to detail the health insurance, paid leave, retirement and other benefits they were offering their workers.They also required the companies to have “committed to remain neutral in any organizing campaign and/or to voluntarily recognize a union based on a show of majority support.” And under the rules of the infrastructure bill, no federal money may to be used to thwart a union election.The Steelworkers union used the rules to its advantage. In late April, it filed multiple unfair labor practice charges against Blue Bird’s management, citing $40 million in rebates the company had received from the E.P.A., which stipulated that those funds could not be used for anti-union activity.“The rules say if workers want a union, you can’t use any money to hire anti-union law firms, or use people to scare workers,” Daniel Flippo, director of the Steelworkers district that covers the Southeast, said before the vote. “I’m convinced Blue Bird has done that.”Politicians also got involved. Georgia’s two Democratic senators and southwestern Georgia’s Democratic House member also subtly nudged the plant’s management, in a union-hostile but politically pivotal state, to at least keep the election fair.“I have been a longtime supporter of the USW and its efforts to improve labor conditions and living standards for workers in Georgia,” the Democratic congressman, Representative Sanford Bishop, wrote of the United Steelworkers in an open letter to Blue Bird workers. “I want to encourage you in your effort to exercise your rights granted by the National Labor Relations Act.”Blue Bird’s management minimized such pressure in its public statements, even as it fought hard to beat back union organizers.“Although we respect and support the right for employees to choose, we do not believe that Blue Bird is better served by injecting a labor union into our relationship with employees,” said Julianne Barclay, a spokeswoman for the company. “During the pending election campaign, we have voiced our opinion to our employees that a union is not in the best interest of the company or our employees.”Friday’s union victory has the labor movement thinking big as the federal money continues to flow, and that could be good for Mr. Biden and other Democrats, especially in the pivotal state of Georgia.“Workers at places like Blue Bird, in many ways, embody the future,” Mr. Flippo said after the vote, adding, “For too long, corporations cynically viewed the South as a place where they could suppress wages and working conditions because they believed they could keep workers from unionizing.”The Blue Bird union shop, 1,400 workers strong, will be one of the biggest in the South, and union leaders said it could be a beachhead as they eyed new electric vehicle suppliers moving in — and potentially the biggest, most difficult targets: foreign electric vehicle makers like Hyundai, Mercedes-Benz and BMW, which have located in Georgia, Alabama and South Carolina in part to avoid unions.“Companies move there for a reason — they want as smooth a path toward crushing unions as possible,” said Steve Smith, a national spokesman for the A.F.L.-C.I.O. “But we have federal money rolling in, a friendly administration and a chance to make inroads like we have never had before.”The Blue Bird plant, which rises suddenly off a rural highway lined with peach and pecan orchards, has long made it a practice to hire less educated workers, some of whom have prison records and most of whom start at $16 or $17 an hour, said Alex Perkins, a main organizer for the United Steelworkers in Georgia.A union was a tough sell for such vulnerable workers against a management that was fiercely opposed, organizers conceded. Coming off the last shift of the day on Thursday, most workers declined to speak on the record. A clutch of about a dozen workers stood on Friday at the Circle K gas station across the street from the plant in the predawn darkness, holding pro-union signs as the first workers arrived to cast ballots under the gaze of National Labor Relations Board monitors.But Cynthia Harden, who has worked at the plant for five years and voted in favor of organizing, did talk about the pressure workers were under to vote against it. Slide shows on the voting process, which showed ballots marked “no,” said that the company could go broke if the union won, and there was a sudden appearance of food trucks at lunch and banners on the perimeter fence reading, “We Love Our Employees!”“They’ve made some changes already, but if the union hadn’t started, nothing would have happened,” she said.The letter that Georgia’s Democratic senators, Raphael Warnock and Jon Ossoff, wrote to Matt Stevenson, Blue Bird’s chief executive and president, was remarkably timid, praising the company for its cooperation and its well-paying jobs before “encouraging all involved, whatever their desired outcome, to make sure that the letter and the spirit of the National Labor Relations Act are followed.”Mr. Perkins fumed at that tone, considering the work that unions had put in to help Mr. Warnock win re-election last year. “I won’t forget it next time,” he said.Both senators declined requests to comment on the election. More

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    After Pandemic Rebound, U.S. Manufacturing Droops

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    The pandemic had a bright silver lining for Elkhart, Ind.The city, renowned as the capital of recreational vehicle production, had a surge in demand as cooped-up families took to the highways and avoided hotels. The cluster of manufacturers enjoyed record profits, and workers benefited as well: The metropolitan area’s unemployment rate sank to 1 percent in late 2021, and average weekly wages jumped 35 percent from their level in early 2020.That frenzy, however, has turned to a chill. Dealers, who stocked up on as many trailers and vans as they could, have been discounting them to clear their lots — and new orders have dried up. The area has lost nearly 7,000 manufacturing jobs over the past year, and unemployment is now above the national average. Thor Industries, which owns a wide portfolio of RV brands, saw its sales tumble 39.4 percent from the quarter a year ago.“In 2022, manufacturers overproduced, and you’re seeing some of the impact of that from the staffing standpoint,” said Chris Stager, chief executive of the Economic Development Corporation of Elkhart County. He foresees new projects propelled by recent federal energy and infrastructure legislation, but rising interest rates are taking a toll in the meantime.“It’s not bad, but it’s not what it was,” Mr. Stager said.That’s manufacturing in America in 2023.Factory construction is proceeding more rapidly than at any time in recent memory, heralding what may be a resurgence in domestic production powered by a move away from long, fragile supply chains and by the infusion of billions of dollars in public investment.At the same time, after an extraordinary boom fed by cooped-up consumers, manufacturing is suffering something of a hangover as retailers burn through bloated inventories. Inflation-fighting efforts by the Federal Reserve, which is expected to announce another interest-rate increase on Wednesday, have squelched big-ticket purchases. New orders have been declining since last summer, and a widely followed index of purchasing activity has been downbeat for six months.Working on sponge rubber automotive HVAC drain seals at Colonial.Whitten Sabbatini for The New York TimesManufacturing employment bounced back quickly after the pandemic — which is unusual for recessions — but has contracted for two months. While layoffs in the industry remain low, job openings and hires have sunk from recent highs.“It’s not one of these really concerning plunges, where we’re shedding a bunch of manufacturing jobs, but it seems kind of stalled,” said Scott Paul, president of the Alliance for American Manufacturing. “And I think the longer that lasts, the harder it’s going to be to rev things up.”A bigger question for the American economy is whether this heralds a broader downturn, since cooling demand for goods usually signifies that consumers are feeling financially strained. “Manufacturing is always at the forefront of the recession,” notes Barbara Denham, a senior economist at Oxford Economics.To understand the current slump, it’s important to dissect the manufacturing moment from which America is emerging.For example: Those new manufacturing jobs weren’t all for people making steel coils and oak cabinets. The production of consumable items — including food, beverages, and pharmaceuticals — represented an outsize portion of the job growth from 2020 through 2022. But it tends to pay less well, requires less training and has fewer unions than heavy manufacturing in airplanes and automobiles. And it can disappear more quickly as demand returns to normal.Factory employment bounced back, but is now leveling off Number of manufacturing jobs as a percentage of the total in February 2020

    Source: Bureau of Labor StatisticsBy The New York TimesThe pandemic-era manufacturing boom also didn’t happen equally in all places. States like Nevada, Arizona, Florida and Texas surged far above their prepandemic baselines, while longtime manufacturing centers — Michigan, Illinois, New York and Ohio — have not fully bounced back. That imbalance reflects recent migration trends, as people have moved out of urban areas for more space, more sunshine and a lower cost of living.The factory construction underway is poised to further reshape the geography of American manufacturing, with the largest increases in investment happening in the Mountain West.LaDon Byars, who runs Colonial Diversified Polymer Products, said reinforcing domestic supply chains would be worth the effort.Whitten Sabbatini for The New York TimesAll that new building is propelled by several factors. Former President Donald J. Trump’s trade war raised the cost of importing from China and other countries, while the pandemic snarled ports and idled suppliers, hurting manufacturers who depended on far-flung sourcing networks.In recent months, the war in Ukraine — for which the United States has furnished more than $36 billion in weaponry — has generated more long-term contracts for defense manufacturers, mostly restricted to domestic production.Steve Macias, a co-owner of a small machine shop in Phoenix, said orders from the semiconductor industry have slowed as the demand for home electronics crested. But in the past few weeks, he has been busy serving military clients — because the Defense Department has been getting planes and ships back into fighting shape, as well as refilling empty stores of munitions.“There was a lot of deferred maintenance,” Mr. Macias said. “So you’ve got two things going on — this kind of catch-up, and this war that broke out that nobody was really anticipating.”Finally, over the last two years the passage of three major bills — the Infrastructure Investment and Jobs Act, the Bipartisan Infrastructure Law and the CHIPS and Science Act — made available hundreds of billions of dollars for the production of items like semiconductors, solar panels, wind turbines and bridge spans. Private funders have rushed to capitalize on the opportunity, even if much of it is still in the planning stages.“A lot of manufacturers are reacting to what they see as a lot of long-term structural factors in their industry,” said Adam Ozimek, chief economist at the Economic Innovation Group, an entrepreneurship-focused think tank. “They’re seeing more demand for domestic production long term. That’s a bet on the future. It’s going to take a while to really translate to employment.”Even when it does, however, that investment might not yield as many jobs as factories with similar levels of output did in the past.Freshly built production lines tend to be more automated and more efficient than those designed in the 1950s and ’60s — which they need to be, to compete with the lower cost of labor overseas. And some companies are adding robots to their plants, given the difficulty of attracting and retaining enough skilled workers to replace those retiring. The median age of workers in manufacturing is two years older than the national median.“These facilities are desperate to try to get the work force,” said Mark Farris, chief executive of the Greenville Area Development Corporation in Greenville, S.C. “And instead, I think they’re convincing the officers of the company, ‘Let’s think about robotics, let’s think about 3-D printing, the technology investment that would take the place of those workers we cannot find.’”Employers’ ferocious need for factory workers is easingManufacturing job openings surged in 2021, but have receded.

    Bureau of Labor StatisticsBy The New York TimesFor businesses that depend on industries related to fossil fuels, the ramp-up in federal investment may just be enough to keep them afloat even as demand shifts to clean energy.Automobile manufacturers are important clients, and Ms. Byars is encouraged as federally funded projects are required to find their parts and raw materials in the United States.Whitten Sabbatini for The New York TimesLaDon Byars runs Colonial Diversified Polymer Products, which employs about 75 people in western Tennessee. The company has survived many cycles of outsourcing and offshoring, making molded rubber products like gaskets and mats for a variety of customers. Automobile manufacturers are important clients, and Ms. Byars knows that demand for parts that go into cars with internal combustion engines will start to wane.She has been encouraged, however, by the number of solicitations she has received as a result of rules that require federally funded projects to find their parts and raw materials in the United States, rather than overseas. It may be difficult and impede progress at first, but she thinks reinforcing domestic supply chains will work out better in the end, just like building new roads.“It takes a while before they get that intersection through — it’s a mess and traffic is backed up,” Ms. Byars said. “And then when they finally open it up, everything works so much smoother and better, and you don’t have the long delays. We might not even see the impact of not being dependent on other countries, and not having the supply chain disruptions, but I do think that’s what the long-term best interest for the American people is.” More

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    Biden Warns That Climate Change Could Upend Federal Spending Programs

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    A chapter in the new Economic Report of the President focuses on the growing risks to people and businesses from rising temperatures, and the government’s role in adapting to them.WASHINGTON — The Biden administration warned on Monday that a warming planet posed severe economic challenges for the United States, which would require the federal government to reassess its spending priorities and how it influenced behavior.Administration economists, in an annual report, said that reassessment should include a new look at the climate-adaptation implications of aid to farmers, wildland firefighting and wide swaths of safety-net programs like Medicaid and Medicare, as the government seeks to shield the poorest Americans from suffering the worst effects of climate change.The White House Council of Economic Advisers also warned that, left unchanged, federal policies like fighting forest fires and subsidizing crop insurance for farmers could continue to encourage Americans to live and work in areas at high risk of damage from warming temperatures and extreme weather — effectively forcing taxpayers across the country to pay for increasingly costly choices by people and businesses.The findings were contained in a chapter of the annual Economic Report of the President, which was released on Monday afternoon and this year focused on long-run challenges to the U.S. economy. They came on a day when the Intergovernmental Panel on Climate Change, a body of experts convened by the United Nations, reported that Earth was barreling quickly toward a level of warming that would make it significantly more difficult for humans to manage drought, heat waves and other climate-related disasters.The White House report details evidence showing the United States is more vulnerable to the costs of extreme weather events than previously thought, while suggesting a series of policy shifts to ensure the poorest Americans do not foot the bill.“Climate change is here,” Cecilia Rouse, the departing chair of the Council of Economic Advisers, said in an interview. “And as we move forward, we’re going to have to be adapting to it and ensuring that we minimize the cost to families and businesses and others.”The report broadly suggests that climate change has upended the concept of risk in all corners of the American economy, distorting markets in ways that companies, people and policymakers have not fully kept up with. It also suggests that the federal government will be left with significantly higher costs in the future if it does not better identify those risks and correct those market distortions — like paying more to provide health care for victims of heat stroke or to rebuild coastal homes flooded in hurricanes.State and local officials, not the federal government, have authority where development happens, so people keep building in high-risk areas, a classic example of what economists call a moral hazard.Johnny Milano for The New York TimesFor example, the report cites evidence that private mortgage lenders are already offloading loans with a high exposure of climate risk to federally backed Fannie Mae and Freddie Mac. It highlights how the federal flood insurance program, which essentially underwrites all home flooding insurance policies in the country, is at risk of insolvency.At a time when administration officials and the Federal Reserve are struggling to stabilize the nation’s financial system, the report warns that home buyers and corporate investors appear to be underestimating climate-related risks in their markets, which could lead to a financial crisis.“Rapid changes in asset prices or reassessments of the risks in response to a shifting climate could produce volatility and cascading instability in financial markets if not anticipated by regulators,” the report says..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.To address those dangers, the report offers components for a federal climate adaptation strategy. Its recommendations — some of them already in early stages through existing administration actions — include producing better information about climate risk, helping financial markets accurately price that risk and better protecting the most vulnerable from the effects of climate change.Perhaps the most significant proposal, and probably the most politically sensitive, is a call for Washington to exert more pressure on state and local officials, pushing them to be careful about where and how they let people build homes, businesses and infrastructure projects.That proposal would address a core problem that has hindered America’s efforts to adapt to climate change. When people build in places that are most exposed to the effects of climate change — along coastlines, near riverbanks, at the edge of forests prone to wildfires — state and local governments get most of the benefits, in the form of higher tax revenues and economic growth. But when flooding, fires or other major disasters happen, the federal government typically pays the bulk of the cost for responding and rebuilding.Yet for the most part, state and local officials, not the federal government, have authority over where and how development happens — so people keep building in high-risk areas, a classic example of what economists, including the authors of the report, call a moral hazard.In response, the document proposes using federal funds to change the behavior of state and local officials, by tying that money to state and local decisions. That approach has been tried before, with little success. In 2016, the Obama administration suggested adjusting the level of disaster aid provided to states, based on what steps they took to reduce their exposure to disasters. States objected, and the change never happened.Subsidizing crop insurance for farmers could continue to encourage Americans to work in areas at high risk of damage from warming temperatures and extreme weather, the Biden administration will warn.Mark Abramson for The New York TimesAdministration officials said they were already trying to leverage some spending from the infrastructure law President Biden signed in 2021 to influence state and local behavior. The report suggests much more aggressive action could be necessary.It also proposes a rethinking of the nation’s system of insuring against disasters — moving away from separate localized policies that cover fire, flooding and other events, and more toward a nationally mandated “multiperil catastrophe insurance” system that is backstopped by the federal government.Perhaps most sobering for Washington’s current fiscal moment — when Mr. Biden is battling with House Republicans who are seeking sharp cuts to federal spending and raising anew concerns over the growing national debt — is the report’s suggestion that climate effects could subject growing numbers of Americans to heat stroke, respiratory illnesses and other ailments in the years to come. That could further drive up government costs for health programs like Medicare and Medicaid.The Council of Economic Advisers has begun a yearslong effort to project those climate-related effects on future federal budgets, which it detailed in a highly technical paper released this month.The report released on Monday also included chapters on the economics of child care, higher education, digital assets and more.In reviewing Mr. Biden’s economic record, White House economists dived deep into the issue that has bedeviled the recovery on his watch: persistently high inflation. The report lists several explanations for why price growth has surprised administration and outside economists over the last two years but never settles on a primary driver. It does concede that pandemic relief spending under Mr. Biden and President Donald J. Trump may have played a role, by helping Americans save more than usual — and then begin to spend that extra savings.“If the drawdown of excess savings, with current income, boosted aggregate demand, it could have contributed to high inflation in 2021 and 2022,” the report says. More

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    ‘The World’s Largest Construction Site’: The Race Is On to Rebuild Ukraine

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    Latvian roofing companies and South Korean trade specialists. Fuel cell manufacturers from Denmark and timber producers from Austria. Private equity titans from New York and concrete plant operators from Germany. Thousands of businesses around the globe are positioning themselves for a possible multibillion-dollar gold rush: the reconstruction of Ukraine once the war is over.Russia is stepping up its offensive heading into the second year of the war, but already the staggering rebuilding task is evident. Hundreds of thousands of homes, schools, hospitals and factories have been obliterated along with critical energy facilities and miles of roads, rail tracks and seaports.The profound human tragedy is unavoidably also a huge economic opportunity that Ukraine’s president, Volodymyr Zelensky, has likened to the Marshall Plan, the U.S. program that provided aid to Western Europe after World War II. Early cost estimates of rebuilding the physical infrastructure range from $138 billion to $750 billion.The prospect of that trove is inspiring altruistic impulses and entrepreneurial vision, savvy business strategizing and rank opportunism for what the Ukrainian chamber of commerce is trumpeting as “the world’s largest construction site!”Mr. Zelensky and his allies want to use the rebuilding to stitch Ukraine’s infrastructure seamlessly into the rest of Europe.Yet whether all the gold in the much-anticipated gold rush will materialize is far from certain. Ukraine, whose economy shrank 30 percent last year, desperately needs funds just to keep going and to make emergency repairs. Long-term reconstruction aid will depend not only on the outcome of the war, but on how much money the European Union, the United States and other allies put up.And though private investors are being courted, few are willing to risk committing money now, as the conflict is entrenched.Ukraine and several European nations are pushing hard to confiscate frozen Russian assets held abroad, but several skeptics, including officials in the Biden administration, have questioned the legality of such a move.Ukraine desperately needs funds just to keep going and to make emergency repairs.Maciek Nabrdalik for The New York TimesThe war, a profound human tragedy, is unavoidably also a big economic opportunity that Ukraine’s president, Volodymyr Zelensky, has likened to the Marshall Plan.Maciek Nabrdalik for The New York TimesNonetheless, “a lot of companies are starting to position themselves to be ready and have some track record for this time when the reconstruction funding will be coming in,” said Tymofiy Mylovanov, a former economy minister who is president of the Kyiv School of Economics. “There will be a lot of funding from all over the world,” he said, and business are saying that “we want to be a part of it.”The State of the WarVuhledar: A disastrous Russian assault on the Ukrainian city, viewed as an opening move in an expected spring offensive, has renewed doubts about Moscow’s ability to sustain a large-scale ground assault.Bakhmut: With Russian forces closing in, Ukraine is barring aid workers and civilians from entering the besieged city, in what could be a prelude to a Ukrainian withdrawal.Arms Supply: Ukraine and its Western allies are trying to solve a fundamental weakness in its war effort: Kyiv’s forces are firing artillery shells much faster than they are being produced.Prisoners of War: Poorly trained Russian soldiers captured by Ukraine describe being used as cannon fodder by commanders throwing waves of bodies into an assault.More than 300 companies from 22 countries signed up for a Rebuild Ukraine trade exhibition and conference this week in Warsaw. The gathering is just the latest in a dizzying series of in-person and virtual meetings. Last month, at the World Economic Forum in Davos, Switzerland, a standing-room-only crowd packed Ukraine House to discuss investment opportunities.More than 700 French companies swarmed to a conference organized in December by President Emmanuel Macron. And on Wednesday, the Finnish Confederation of Industries sponsored an all-day webinar with Ukrainian officials so companies could show off their wastewater treatment plants, transformers, threshers and prefabricated housing.“There’s so many initiatives, it’s hard to know who’s doing what,” said Sergiy Tsivkach, the executive director of UkraineInvest, the government office dedicated to attracting foreign investment.Mr. Tsivkach sipped a beer a couple of blocks from Lviv’s central square. He is glad for the interest but emphasized a crucial point.“They all say, ‘We want to help in rebuilding Ukraine,’” he said. “But do you want to invest your own money, or do you want to sell services or goods? These are two different things.”Most are interested in selling something, he said.Long-term reconstruction aid will depend on how much money the European Union, the United States and other allies put up.Maciek Nabrdalik for The New York Times“There’s so many initiatives, it’s hard to know who’s doing what,” said Sergiy Tsivkach, the executive director of UkraineInvest, the government office dedicated to attracting foreign investment. Maciek Nabrdalik for The New York TimesFor businesses, a crucial issue is who will control the money. This is a question that Europe, the United States and global institutions like the World Bank — the biggest donors and lenders — are vigorously debating.“Who will pay for what?” Domenico Campogrande, director general of the European Construction Industry Federation, said while moderating a panel at the Warsaw conference.Representatives from both Ukrainian and foreign companies were more pointed: Who will decide on the contracts, and how do they apply?“Hundreds of companies have been asking me this,” said Tomas Kopecny, the Czech government’s envoy for Ukraine.Ukraine has made clear there will be rewards for early investors when it comes to postwar reconstruction. But that opportunity carries risk.Danfoss, a Danish industrial company that sells heat-efficiency devices and hydraulic power units for apartment and other buildings, has been doing business in Ukraine since 1997. When the war started last February, Russian shelling destroyed its Kyiv warehouse.Danfoss has since focused on helping with immediate needs in war-torn regions and in western Ukraine, where millions of people displaced from their homes have been forced to settle in temporary shelters.“For now, all efforts are going toward maintaining a survival mode,” said Andriy Berestyan, the company’s managing director in Ukraine. “Right now, nobody is really looking for major reconstruction.”Things had been going better for the company since last summer as Ukraine pushed back Russian advances. By October, new orders for Danfoss’s products were rolling in, and Mr. Berestyan restored Danfoss’s distribution center in Kyiv. Then Russia started dropping bombs en masse. Power and water were widely cut off, forcing Ukraine — and businesses — to swing back to dealing with emergencies.Even so, he said, Danfoss is keeping its eye on the long term. “Definitely there will be rebuilding opportunities,” he said, “and we see a huge, huge opportunity for ourselves and for similar companies.”Andriy Berestyan, the managing director of Danfoss in Ukraine. The Danish company sells heat-efficiency devices and hydraulic power units for buildings. Its Kyiv warehouse was destroyed last year.Diego Ibarra Sanchez for The New York TimesThe question of who will control the money invested in Ukraine is one that Europe, the United States and global institutions like the World Bank are debating.Maciek Nabrdalik for The New York TimesThat groundwork is being laid in places like Mykolaiv, one of the hardest-hit regions, where numerous Danish companies have been working. Drones operated by Danish companies have mapped every bombed-out structure, with an eye toward using the data to help decide what reconstruction contracts should be issued.The information would help companies like Danfoss evaluate the potential for business, and eventually bid on contracts.Other governments that are expected to contribute to Ukraine’s reconstruction are also offering financial support for domestic firms.Germany announced the creation of a fund to guarantee investments. The plan will be overseen by the global auditing giant PwC and would compensate investors for potential financial losses if businesses were expropriated or projects were disrupted.France will also offer state guarantees to companies doing future work in Ukraine. Bruno Le Maire, the finance minister, said contracts worth a total of 100 million euros, or $107 million, had been awarded to three French companies for projects in Ukraine: Matière will build 30 floating bridges, and Mas Seeds and Lidea are providing seeds for farmers.Private equity firms, too, have an eye on business opportunities. President Zelensky sealed a deal late last year with Laurence D. Fink, the chief executive of BlackRock, to “coordinate investment efforts to rebuild the war-torn nation.” BlackRock, the world’s largest asset manager, will advise Kyiv on “how to structure the country’s reconstruction funds.” The work will be done on a pro bono basis, but promises to give BlackRock insights into investors’ interests.Mr. Fink was brought into the effort by Andrew Forrest, a gregarious Australian mining magnate who is the chief executive of Fortescue Metals Group. Mr. Forrest announced a $500 million initial investment in November, from his own private equity fund, into a new pot of money created for rebuilding projects in Ukraine. The fund would be run with BlackRock and aims to raise at least $25 billion from sovereign wealth funds controlled by national governments and private investors from around the world for clean energy investments in war-torn areas.Andrew Forrest, the chief executive of Fortescue Metals Group, in 2021. Mr. Forrest announced a $500 million initial investment in a pot of money for rebuilding projects in Ukraine. David Dare Parker for The New York TimesMr. Zelensky and his allies want to use the rebuilding to stitch Ukraine’s infrastructure seamlessly into the rest of Europe.Maciek Nabrdalik for The New York TimesMr. Forrest has courted Mr. Zelensky, wearing a Ukrainian flag pin in his lapel and presenting the Ukraine president with an Australian bullwhip during a visit to Kyiv last year. But in a sign of how cautious investors remain, Mr. Forrest said capital would be made available “the instant that the Russian forces have been removed from the homelands of Ukraine” — but not before.Eshe Nelson More