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Estonia supporting Ukraine development with €14 million annually

Tarmo Needo, head of ESTDEV's infrastructure construction, inspecting plots of land in Ukraine for a planned project for children orphaned in the war.
Tarmo Needo, head of ESTDEV's infrastructure construction, inspecting plots of land in Ukraine for a planned project for children orphaned in the war. Source: ESTDEV

€14 million per year of state funds have been earmarked for aid to Ukraine. This is in addition to military aid, a separate entity, and to private sector and other organizations whose funding sources do not derive from the state budget.

The funding was approved within the state budget strategy document, known in Estonian as the RES, last autumn.

The bulk of the €14 million is earmarked for development cooperation, while €1 million is allocated to humanitarian aid.

These funds come in addition to the previously decided military aid package, totaling 0.25 percent of Estonia's GDP.

Mariin Ratnik, foreign minister deputy secretary general with the responsibility for foreign affairs and development cooperation, told ERR that: "The RES provides for €14 million [for Ukraine], and these funds will mainly be used by our implementing agency, the Estonian Center for International Development (ESTDEV)."

"In line with the expectations of the founding principle, we provided ESTDEV with €12.8 million for use, plus in addition, we will use one million of this €14 million total on humanitarian aid in Ukraine, and [the remaining] €200,000 in support of Estonian businesses cooperating with Ukraine," Ratnik went on.

In addition to renewing principles of rebuilding Ukraine, also basically agreed on what could be the areas where Estonia could be successful with its actually rather small amount of money and best support Ukraine," Ratnik added.

Overall, ESTDEV CEO Klen Jäärats noted, according to the World Bank, more than €400 billion is required for Ukraine's post-war reconstruction, making Estonia's €14 million donation a valuable, but very small, contribution.

The bulk of the funding must com from the World Bank itself, the International Monetary Fund (IMF), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and other major organizations, Jäärats said.

"These institutions do not carry out projects themselves, but offer project funding, it is possible to apply for them," he added, noting that entrepreneurs can take part in this wider process through these avenues.

Furthermore, this will also provide tax revenue to the Estonian state in the future, she said – as business in Estonia works with business in Ukraine and elsewhere, to keep the Ukrainian economy afloat.

The aid will be granted on the basis of Estonia's long-term development cooperation strategy as approved at a government cabinet meeting at the start of January.

Of concrete sectors which will be in need of redevelopment, Ratnik referred to education reform, healthcare system development and digital, tech and cyber solutions, all areas which Estonia once required redevelopment, too.

Construction is also another area where Estonia and Estonian businesses can help, Ratnik said, citing the example of the Estonian-funded kindergarten in the Zhytomyr oblast.

At the back of all this development aid and the related considerations is the desire that Ukraine start EU accession negotiations which, once again, Estonia – which joined the EU 20 years ago this year – can provide expertise and experience on.

Klen Jäärats at ESTDEV said that the agency has now grown so capable that many international partners consider it a viable, trustworthy and capable partner, which can help to leverage Estonia's relatively small size and consequently funds on the fulcrum of aid provided by other, larger countries and large international organizations.

The €200,000 referenced above is mainly intended to match Estonian entrepreneurs up with possible Ukrainian partners, Mariin Ratnik added.

Last year's ESTDEV budget stood at €21.9 million, but both Ratnik and Jäärats said, the E-State Academy (E-riigi Akadeemia) and the NGOs Mondo and Pagulasabi also provide substantial amounts of development aid to Ukraine.

These organizations receive a large part of their funding from other sources than the Estonian state budget.

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Editor: Andrew Whyte, Mait Ots

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