Reconstruction in Ukraine: how the Netherlands can help

NETHERLANDS, May 23 – News item | 17-05-2022 | 6:40 p.m.

The war in Ukraine continues, but what will be done after the fighting stops? In a letter to the House of Representatives, Ministers Liesje Schreinemacher (Foreign Trade and Development Cooperation), Wopke Hoekstra (Foreign Affairs) and Sigrid Kaag (Finance) gave an overview of the situation in Ukraine and outlined what the countries -Bas can do to support the country.

War in Ukraine

At the moment, it is impossible to predict how long the war in Ukraine will last and what the extent of the damage will be. Or how Ukraine will emerge from the war. Ukraine’s main needs currently remain arms and humanitarian and financial aid. Read more here about the military support (in Dutch only) and the humanitarian aid the Netherlands provides to Ukraine.

At the same time, the government is preparing the reconstruction phase in Ukraine. It is first and foremost for Ukraine and its people to decide how the reconstruction process should take shape. It is also clear that the EU and international institutions such as the UN and the World Bank will play an important role, as these partners have the necessary expertise and contacts.

Requests for assistance from Ukraine

Aid to Ukraine must be organized properly. By working together and reaching agreements at the international level, we can help ensure that aid gets to where it is needed faster. This will also help reduce costs. Such agreements must be concluded at three levels:

  • The Ukrainian government must decide where aid is needed, and it must coordinate its requests to foreign partners.
  • International parties must work together effectively (eg the European Union, the United Nations, the G7 and international financial institutions such as the International Monetary Fund (IMF)).
  • Cooperation between various Dutch government agencies, each focusing on different areas of expertise, must also be properly coordinated. This coordination role belongs to the Minister of Foreign Trade and Development Cooperation. Ultimately, however, individual government agencies remain themselves responsible for the programs they run and fund.

Reconstruction of cities in Ukraine

On March 31, President Volodymyr Zelensky addressed the House of Representatives on the war in Ukraine. In his speech, he called on the Netherlands to “adopt” a war-affected city and help that city in its reconstruction efforts. President Zelensky reiterated this call during Foreign Minister Wopke Hoekstra’s visit to Kyiv on May 10.

At the moment, the government is not preparing any specific plan to help rebuild a particular town or village after the war. Indeed, Ukraine has not yet been able to assess its reconstruction needs, as the war is still ongoing.

The government welcomes cooperation between Dutch and Ukrainian cities (twinning). A number of Dutch municipalities are already twinned or have another type of relationship with a town or village in Ukraine, or are considering such a partnership. Furthermore, the Association of Netherlands Municipalities (VNG) wishes to work with the Association of Ukrainian Cities to support the reconstruction efforts of Ukrainian municipalities.

War in Ukraine: an incredibly high price

Ukraine and its people are paying an incredibly high price as a result of the Russian invasion – especially in terms of human lives. Thousands of people have been killed, injured or traumatized, and millions have had to flee, leaving everything behind. And then there is the destruction of cities, homes, schools, hospitals, infrastructure and factories. The economic damage is also immense: on April 10, 2022, the World Bank estimated that the Ukrainian economy would contract by 45% this year.

Many businesses have had to cease operations, transport routes and supply chains have been destroyed, and some areas are not accessible to food transport, such as Mariupol and much of the Donbass region. A political solution and an end to the destruction do not seem within reach at the moment.

Billions needed for the reconstruction of Ukraine

The Ukrainian economy has been badly affected by the war. According to the World Bank, the Ukrainian government currently has a budget deficit of $5 billion per month. And the reconstruction costs will be immense. It’s almost impossible to predict how much it will cost, but the reconstruction bill will run into the billions. International organizations and financial institutions will have to play a major role in supporting Ukraine.

Organizations such as the European Union, United Nations and international financial institutions are already preparing for reconstruction efforts. Some important changes:

  • On June 4 and 5, Switzerland is hosting an international conference on the reconstruction of Ukraine.
  • Since the start of the war, the EU has provided Ukraine with aid worth more than €4 billion, including funding for military support (€1.5 billion) and humanitarian aid and macro-financial support (€1.2 billion).
  • In addition, the European Commission will shortly publish a proposal for a Solidarity Trust Fund for Ukraine. This fund is intended for the reconstruction of a democratic Ukraine. The government believes that international assistance should be based as much as possible on Ukraine’s needs. He also believes that the Ukrainian government should play a central role in implementing the fund.
  • In early March, the World Bank approved a budget support program for Ukraine of approximately $925 million in the form of loans and grants. The Netherlands has provided a guarantee of 100 million euros to the fund. The World Bank is currently preparing a support package worth $3 billion (which includes the previously mentioned $925 million).
  • On March 4, the European Investment Bank (EIB) approved financial support amounting to €668 million. It also plans to accelerate existing programs worth 1.5 billion euros.
  • On March 9, the European Bank for Reconstruction and Development (EBRD) approved a support plan worth 2 billion euros. This package aims to support Ukraine and the countries in the region directly affected by the conflict.
  • On March 10, the IMF approved financial support for Ukraine in the amount of 1.2 billion euros and has since opened a special account for Ukraine through which donors can support Ukraine financially.
  • The Dutch Stability Fund is exploring options to expand existing programs on women, peace and security, recovery and resilience, and demining. Demining is becoming increasingly important in Ukraine. Capacity building of emergency services is also needed, and there is a growing demand for psychological and psychosocial support for victims of sexual violence.

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