* Boost to economy likely after turbulence - envoy
* FDI more than halved last year - UNCTAD
* Some companies seeing opportunities despite crisis
By William Schomberg
LONDON, Sept 3 The Russians are raising the
spectre of a split in the country, the gas supply from across
the border has been shut off and corruption remains a problem.
But it is Andrii Kuzmenko's job to persuade British
investors that now is the best time to invest in Ukraine.
"We should think about the future," said Kuzmenko, the
charge d'affaires at Ukraine's embassy in London.
"History shows that after turbulence, even after military
conflict, the boost to the economy always happens," he said,
speaking at a Ukrainian investment conference attended by around
Kuzmenko and other officials hope investors will take
comfort from the signing in June of an agreement between Ukraine
and the European Union that will bind the country more closely
to the bloc as it turns away from Russia.
A more urgent concern is the situation in the east of
Ukraine where conflict with Russian-backed separatists has
escalated and threatens to tear the country apart. Russia denies
its forces are helping the rebels.
Ukraine received a pre-crisis annual average foreign direct
investment of almost $8 billion a year, according to United
Nations body UNCTAD. But this more than halved last year to $3.7
billion and has almost certainly evaporated further in 2014 as
the standoff with Russia has intensified.
Indeed, as officials spoke at Wednesday's conference, others
in the room checked their smartphones to read conflicting
headlines about a possible ceasefire, adding to the growing
sense of uncertainty.
"It is virtually impossible to convince foreign investors to
come into a country that is being invaded by its largest
neighbour," said Andre Kuusvek, an official with the European
Bank for Reconstruction and Development.
But the combination of financial support from international
lenders such as the International Monetary Fund and the EBRD and
long-awaited reforms to improve the business climate should help
attract private investment in the long term, he said.
Further "Invest in Ukraine" conferences are due to be held
in New York in November, and in Dubai and Hong Kong next year.
One private equity executive attending the conference in
London said he feared the uncertainty over the country might not
be resolved any time soon.
"There is an 800-pound gorilla at the border and it's not
going to go away," said the executive, who asked not to be
identified because his company has a policy of not appearing in
the media. "It would be great to see a change in Russian policy
but (President Vladimir) Putin seems to be very ensconced."
Timothy Ash, head of emerging market research at Standard
Bank, said he expected Ukraine to remain in a deep recession
next year, dismissing official forecasts that the economy will
stabilise and start to grow in 2015.
However, for some foreign companies in the country, business
GESS Consulting Ukraine has seen demand surge for its
expertise in how companies can reduce energy consumption,
something that strikes a particular chord in Ukraine which is
highly reliant on the now suspended gas supplies from Russia.
"They are moving to reduce their gas usage to the least
amount possible," said Shaun Lee, GESS's director of field
operations. "I've been doing energy efficiency for 18 years and
I've never seen a bigger financial upside."
(Additional reporting by Sujata Rao; Writing by William
Schomberg; Editing by Alison Williams)