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Reconstruction in Ukraine: how the Netherlands can help

NETHERLANDS, May 23 - News item | 17-05-2022 | 18:40

The war in Ukraine is still going on, but what will need to 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) have given an overview of the situation in Ukraine and set out what the Netherlands can do to support the country.

War in Ukraine

At the moment it’s 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 are currently still weapons and humanitarian and financial aid. Find out more here about the military support (in Dutch only) and humanitarian aid the Netherlands is providing to Ukraine.

At the same time, the government is making preparations for the reconstruction phase in Ukraine. How the reconstruction process should take shape is first and foremost up to Ukraine and its people to decide. It’s 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

Assistance to Ukraine must be organised properly. By working together and making agreements at international level, we can help ensure that aid arrives where it’s needed more quickly. This will also help reduce the costs. Such agreements have to be made at three levels:

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

Reconstruction of cities in Ukraine

On 31 March President Volodymyr Zelenskyy addressed the House of Representatives on the war in Ukraine. In his speech he called on the Netherlands to ‘adopt’ a city affected by the war, and to help that city with its reconstruction efforts. President Zelenskyy repeated this call during the visit by foreign minister Wopke Hoekstra to Kyiv on 10 May.

At the moment the government is not preparing any specific plans to help with the reconstruction of a particular city or village after the war. This is because Ukraine has not been able to assess its reconstruction needs yet, as the war is still ongoing.

The government takes a favourable view of cooperation between Dutch and Ukrainian cities (twinning arrangements). A number of Dutch municipalities are already twinned, or have another kind of relationship, with a city, town or village in Ukraine, or are considering such a partnership. In addition, the Association of Netherlands Municipalities (VNG) wants 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 – above all, in terms of human life. Thousands of people have been killed, suffered injuries or been traumatised, and millions have had to flee, leaving everything behind. And then there is the destruction of cities, houses, schools, hospitals, infrastructure and factories. The economic damage is also immense: on 10 April 2022 the World Bank estimated that the Ukrainian economy will shrink by 45% this year.

Many businesses have had to cease operations, transport routes and supply chains have been destroyed, and some areas cannot be reached by food transports, such as Mariupol and a large part of the Donbas region. A political solution and an end to the destruction do not seem close at hand at the moment.

Billions needed for Ukraine’s reconstruction

Ukraine’s economy has been hit hard 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 is almost impossible to predict how much it will cost, but the reconstruction bill will run in the billions. International organisations and financial institutions will have to play a major role in supporting Ukraine.

Organisations such as the European Union, the United Nations and the international financial institutions are already making preparations for reconstruction efforts. Some important developments:

  • On 4 and 5 June, Switzerland is hosting an international conference on the reconstruction of Ukraine.
  • Since the start of the war, the EU has provided Ukraine with support worth more than €4 billion, including the funding of military support (€1.5 billion) and humanitarian aid and macro-financial support (€1.2 billion).
  • In addition, the European Commission will shortly be publishing a proposal for a Ukraine Solidarity Trust Fund. This fund is intended for the reconstruction of a democratic Ukraine. The government believes that international support should be based as much as possible on Ukraine’s needs. It also thinks the Ukrainian government should have a central role in the implementation of the fund.
  • In early March the World Bank approved a budget support package for Ukraine of around $925 million in the form of loans and grants. The Netherlands has contributed a guarantee of €100 million to the fund. The World Bank is now preparing a support package worth $3 billion (which includes the $925 million mentioned earlier).
  • On 4 March the European Investment Bank (EIB) approved financial support amounting to €668 million. It is also looking at accelerating existing programmes worth €1.5 billion.
  • On 9 March the European Bank for Reconstruction and Development (EBRD) approved a support package worth €2 billion. This package is aimed at supporting Ukraine and countries in the region directly affected by the conflict.
  • On 10 March the IMF approved financial support for Ukraine worth €1.2 billion and it has since opened a special account for Ukraine through which donors can support Ukraine financially.
  • The Dutch Stability Fund is exploring options for expanding existing programmes on Women, Peace and Security, recovery and resilience, and demining. Demining is becoming increasingly important in Ukraine. Capacity building for the emergency services is also needed, and there is growing demand for mental-health and psychosocial support for victims of sexual violence.