Fincantieri—Europe’s largest shipbuilder, based in Italy’s Trieste—is quietly working to transform defunct Ukraine government-owned shipyards in the Black Sea port of Odesa into a state-of-the-art manufacturing hub that will seek to build some of the world’s most advanced commercial vessels.

Expansion into Odesa seems like a logical next step for the Italian company following its success in building next-generation commercial ships for its Norwegian subsidiary VARD in Tulcea, Romania. Fincantieri employs some 4,500 workers in Tulcea and Braila, near the Moldovan border.

Once a sleepy tourist destination, Tulcea on the Danube Delta has turned into a center of geopolitical interest after becoming the main transport hub for Ukrainian agriculture exports after Russia seized the Sea of Azov following its invasion of Ukraine on February 24, 2022.

Tulcea has also been in the news as Russia continues to send killer drones to the area to disrupt shipping. Drones have crossed and crashed into Romanian territory – a serious military and diplomatic escalation considering Romania is both a NATO and European Union member.

“The Danube here is in a curvy S shape, so the Russian drones cross in and out of Romanian territory,” said Ciprian Safca, a river ferry captain and Tulcea regional councilor. “Russian drones now come in groups of five or so,”  he said. The Romanian military “decided it was better to let them pass than try to shoot them down and potentially miss one or two.”

However, the Russian drones have failed to dampen Fincantieri’s commitment to northeast Romania and its plans for Odesa. If it goes ahead with a plan to build a next-generation shipyard in Odesa, Fincantieri could well become the largest foreign investor in Ukraine’s history.

The Fincantieri project would even exceed, in terms of total investment and employees, the Neptune deep-sea grain cargo port built and operated by Minneapolis, Minnesota-based US food giant Cargill at the TIS Seaport outside of Odesa.

The Neptune port was completed in 2018, with an investment of US$150 million from the World Bank’s International Finance Corporation and the European Bank for Reconstruction and Development.

The IFC and the World Bank’s insurance group, MIGA, have already informed Fincantieri that they are eager to provide project finance and political risk insurance for the project, while the United States International Development Finance Corporation (US DFC) is willing to provide war risk insurance.

Putin’s bombs avoid damage to US interests

Diplomatic sources claim Vladimir Putin’s regime has avoided bombing the Neptune port as it would be a direct attack on US interests.

Workers at Neptune said the cargo port has been operating at full capacity (Neptune handles around 10% of Ukraine’s grain production) since October last year and has never yet been a target of Russian attacks.

While Putin may be reluctant to hit Cargill, he has targeted Neptune’s Odesa-based developer, Andrey Stavnitser, by obliterating its 19-story hotel on the Odesa harbor in a September 25, 2023, missile attack.

As emerging market specialists love to note, no one guards an empty bank; security resources are deployed to protect valuable assets and not vice versa. Despite being best known for building gargantuan cruise ships for the likes of Carnival, Fincantieri is also a major naval defense contractor.

Apart from building naval frigates for the US Navy, Fincantieri recently acquired from Italian defense company Leonardo an “underwater armaments systems” company, Whitehead Alenia Sistemi Subacquei S.p.A., which is reportedly capable of protecting the port of Odesa from Russian submarines, naval drones and torpedoes.

Speaking to this reporter at the AFCEA and INSA Intelligence & National Security Summit, US Army Major General Timothy Brown of the Army Intelligence and Security Command and US Navy Vice Admiral Karl Thomas, the deputy chief of naval operations for information warfare, agreed that Fincantieri’s civilian and military capabilities for Odesa are extremely important for Ukraine and the region.

There is a heated debate in Washington about the seeming inability of major US defense contractors to provide war material on a “just in time” rather than a “just not in time basis”, as witnessed in the ongoing conflict in Ukraine.

However, US Secretary of the Navy Carlos del Toro, among the most committed US civilian-military leaders to Ukraine’s military victory over Russia, understands the importance of private sector investment to the country.

Odesa, it seems, is destined to play an even more critical role in the future as the US plans to move a large portion of its armed forces in Germany to a military base under construction in Constanta, the Romanian Black Sea port situated some 124 kilometers south of Tulcea.

Fincantieri’s plans are certainly music to the ears of Ukraine Finance Minister Sergii Marchenko, who is currently pushing an aggressive program of privatizing Ukraine state-owned assets to liberalize the Ukrainian economy and lower its foreign debt obligations, especially those owed by state-owned enterprises.

Fincantieri, coupled with the foreign investments made in Odesa by Cargill and Dubai’s DP Port, raises hopes of an economic renaissance in Odesa not seen since it was a free port between 1819 and 1859, when wealthy merchants and exporters made the city one of the most cosmopolitan in Europe.

Playing the role of distant wealthy merchants today are the likes of Stephen Schwarzman, the co-chairman and co-founder of US private equity giant Blackstone Inc and Carlyle Group co-founder and co-chairman David Rubenstein. Both were among the foreign business leaders who met Ukrainian President Volodymyr Zelensky last January in Davos.

Schwarzman is tipped to be appointed as US commerce secretary in a second Trump presidency while Rubenstein could be named US treasury secretary or secretary of state if Kamala Harris wins the election.

Schwarzman has already directed his staff to target investment into Ukraine’s private sector companies, such as video cloud gaming giant Boosteroid. Rubenstein, meanwhile, has leveraged his considerable political and economic influence to rally support for Ukraine among US and world leaders.

There are currently rumors on Wall Street that KKR and Co co-founder Henry Kravis may be preparing a takeover offer for VEON, the $2 billion NASDAQ-listed company that owns Ukraine’s largest mobile phone operator, Kyivstar.

The potential KKR move, welcomed by Ukraine and G7 members, would effectively remove a VEON minority investor – sanctioned Russian oligarch Mikhail Fridman – from the company and Ukraine.

Paul Singer, the principal of activist hedge fund Elliott Management, is also reportedly looking to invest in VEON. (VEON Chairman Augie K Fabela and VEON independent board member and former US Secretary of State Mike Pompeo had not replied to the request for comment at the time of publication.)

While Ukraine has effectively pushed the Russian fleet from the Black Sea – reminiscent of 1920 when the Bolsheviks expelled the Tsarist fleet to Bizerte, Tunisia – new foreign investment by the likes of Fincantieri, Blackstone, Carlyle and KKR could help make the war-torn nation a new European hub in the decades to come.