The Ukraine reconstruction – towards the European and Finnish solutions

Baltic Rim Economies

Petri Vuorio
Director | Entrepreneurship, EU and International Trade
Confederation of Finnish Industries EK
Finland

petri.vuorio@ek.fi

Russia’s unjustified war of aggression in Ukraine has caused widespread destruction and humanitarian suffering. Finland and the Finnish businesses condemn Russia’s aggression and strongly support Ukraine and its citizens.

Finnish business sector stands behind the EU sanctions against Russia, as it has done since 2014. Finnish companies are among the most active ones leaving the Russian market. Our trade with Russia has dropped dramatically as companies do not want to do business with Russia.

Russia’s current unhuman airstrikes to Ukrainian energy infrastructure cause human misery for millions of people. There is a drastic need for emergency aid in Ukraine to survive over winter. Finnish companies do their utmost to find for example aggregates to be delivered as emergency help to the Ukraine and Ukrainian people.

Even though the war continues, it is already worth starting to plan the longer-term reconstruction of Ukraine, which is being prepared between the Ukrainian government and its international partners.

According to an estimate published in September 2022 by the World Bank, the European Commission and the Ukrainian government, the need for reconstruction in Ukraine stands at approximately USD 349 billion. As the war continues, the need for reconstruction becomes increasingly pressing.

There is an enormous need to reconstruct the destroyed

  • energy infrastructure, like the power transmission and district heating networks
  • transport infrastructure as for example approx. 17,000 km of road networks and 3.4 million m2 of bridges need to be repaired
  • telecommunications and digital infrastructure
  • waste and water management
  • housing and school reconstruction as at least more than 800,000 residential units are damaged and almost 200 schools have been completely destroyed and 1,700 schools partially.

In addition to these infrastructure investments, there is a tremendous demand of physical and mental health services and educational services to bridge the learning gaps the unjustified attack by Russia has caused.

The European Union is playing a key role in the reconstruction, coordination and financing. It is preparing a reconstruction platform, where financiers and the Ukrainian government would coordinate projects for reconstruction, as well as their prioritization, implementation and monitoring.

The reconstruction of Ukraine goes hand in hand with Ukraine’s closer relations with the EU. Ukraine was granted the status of the EU candidate country in June 2022. Finnish industries support this development.

Finland is preparing to contribute to the reconstruction and offers the expertise of the Finnish companies to support needs of the Ukraine. The scale and complexity of the reconstruction requires close cooperation and the efficient exchange of information between public authorities, businesses and financiers. The Confederation of Finnish Industries EK plays a vital role in coordination at this preparatory stage.

As Ukraine does not only want to reconstruct old, but also to modernize its society, Finnish companies have a lot to offer as they are at the leading edge in green and digital transition and sustainability.

In energy sector we have a strong knowledge for example in power grids and district heating solutions, and in nuclear power consulting. In telecommunications and digital solutions, Finnish companies can provide world-leading solutions to support the reconstruction.

Finnish companies also have a lot to offer when we speak about low-emission machinery and equipment to meet climate targets. We have strong planning, engineering and project management know-how for bridges and roads and water supply and sanitation issues. We are also leading constructors of wooden buildings, school modules and prefabricated solutions.

For agriculture and forest sectors we build tractors, threshing machines and forest machines.

Finally, Finnish companies are important players in healthcare and education. We have solutions for specialised healthcare hospitals and technology solutions for the elderly and rehabilitation. In field of education, we can offer services in teacher training and digital services to fill the competence and talent gap.

Funding of reconstruction will consist of grants and loans. The Commission has proposed a ‘Rebuild Ukraine’ financial instrument, in which non-EU partner countries could also participate. The key objective should be to tie any funding to reforms in Ukrainian society, including anti-corruption measures, good governance, transparent procurement processes and effective control mechanisms.

It is important that tendering in reconstruction projects, using either international or domestic direct financing, is organized in a sustainable and transparent manner. The international development finance institutions which are used to operate in emerging markets and developing countries, play a key role in ensuring supervision and transparency. In the EU and Finland, it is essential to assess the need of new financial instruments that match Ukraine’s reconstruction needs by integrating elements of the export and development financing.

We stand with Ukraine. To make our strong support visible there have been four Ukrainian flags waiving on flagpoles at the headquarter of the Finnish Industries, every day since February.

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