Denmark announces 1 billion euro support program for Ukraine and neighboring countries in 2023.
Mykola Siutkin
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The Danish government has announced a new support program for Ukraine, worth 1 billion euros. The program is aimed at promoting economic development and reforms in Ukraine, and is expected to run over the course of several years.
The announcement was made by Denmark's Minister of Foreign Affairs, Jeppe Kofod, during a press conference on Wednesday. Kofod emphasized that the program was a sign of Denmark's commitment to supporting Ukraine's sovereignty and territorial integrity.
"Denmark stands with Ukraine in its efforts to build a democratic and prosperous society," Kofod said. "We believe that this support program will help Ukraine to continue on its path towards greater stability and prosperity."
The support program will focus on a number of priority areas, including energy, infrastructure, and education. It will also provide funding for civil society organizations, to support the development of a more open and transparent society in Ukraine.
The Danish government's announcement was welcomed by Ukrainian officials, who praised the country's continued support for Ukraine's reform efforts and its commitment to European values.
"We are grateful to our Danish partners for their support, and we look forward to working together to build a better future for our citizens," said Ukrainian Foreign Minister Dmytro Kuleba.
Denmark has joined hands with a broad majority of the Danish Parliament to establish a Ukraine Fund with a total framework of approximately DKK 7 billion in 2023. The fund targets Ukraine’s needs and wishes for a concerted Danish effort, with a focus on military, civil and commercial support. The parties to the agreement also agree that Denmark must remain among the countries that support Ukraine most in proportion to country size.
The Ukraine Fund has three components. The first component is military support, which includes weapons, other military equipment, training efforts, etc. A framework of approximately DKK 5.4 billion has been allocated in 2023 for military support. The second component is civil support, which targets urgent humanitarian efforts and long-term reconstruction. A framework of DKK 1.2 billion has been allocated in 2023 for civil support in Ukraine and other Eastern European neighbouring countries. The third component is support for business initiatives that give Danish companies the opportunity to contribute to the reconstruction of Ukraine. A framework of approximately DKK 0.4 billion has been allocated in 2023 for business initiatives.
The Danish Government and the parties to the agreement are taking responsibility and showing that Denmark stands with Ukraine. Denmark is already one of the countries which, in proportion to its size, supports Ukraine the most. The Government and the parties to the agreement have now ensured that this will remain true.
Denmark’s support for Ukraine is not limited to military and civil support, but also includes trade support. Danish companies can supply much of what Ukraine needs, including drinking water, district heating, and food. With the support of the new fund, Denmark will strengthen efforts to help Danish companies enter the Ukrainian market and allocate additional funding to improve the conditions for Danish companies’ risk-intensive investments in Ukraine.
Ukraine urgently needs help to rebuild the critical infrastructure that Putin is purposefully destroying with violent missile attacks. The newly established Ukraine Fund will provide around DKK 1 billion for loans and guarantees for the Danish companies that will contribute to the reconstruction.
The parties to the agreement have agreed to ease fiscal policy by approximately 0.2% of GDP in 2023, which provides DKK 5.6 billion in 2023 that will be used for military and commercial support. The easing of fiscal policy is assessed as feasible within a responsible fiscal policy framework, and a significant tightening of fiscal policy is still planned for 2023 as measured by the one-year fiscal impact.
Denmark will provide DKK 1.2 billion in civil support to Ukraine and other Eastern European neighbouring countries in 2023. The main priorities are early recovery and reconstruction in Ukraine, reform efforts, humanitarian support, peace and stabilisation efforts, and support for democratic institutions and civil society.
Early Recovery and Reconstruction in Ukraine:
The support for reconstruction in Ukraine will focus on Mykolaiv and the national reconstruction. The Danish efforts will prioritize the repair of social infrastructure, renovation of the water system, and support for energy infrastructure to improve the city’s ability to receive returning citizens. Nationally, support will continue to be provided for the national energy infrastructure and a collaboration with the international development banks. The Danish efforts will also focus on creating green and more sustainable infrastructure as part of the reconstruction.
The Danish focus on anti-corruption efforts, the ombudsman, young people, and strengthening resistance to disinformation will be prioritized. Contributions to reform processes in Ukraine to help the country meet EU criteria and take steps towards EU membership will also continue and expand.
Ukraine Facility Under the Investment Fund for Developing Countries (IFU):
The IFU will receive funds for co-financing new private investments in Ukraine, with a focus on green and climate-related investments.
Danida Sustainable Infrastructure Finance (DSIF):
DSIF will contribute to the reconstruction of critical infrastructure in Ukraine, including in DSIF’s core areas of district heating and water supply, where Danish companies can bid in the tender processes.
Humanitarian Support:
Support for humanitarian interventions including among others shelter, food security, displacement, humanitarian mine action, and protection of women and children will be provided through established partnerships with UN, International Red Cross, and civil society actors.
The military support provided by Denmark to Ukraine is a vital component of Ukraine’s ability to defend itself against Russian aggression. Denmark has been one of the largest military contributors to Ukraine relative to its size, and both parties to the agreement want to ensure that Denmark maintains this position.
Since the Russian invasion in February 2022, Denmark has made decisions to provide military support amounting to approximately DKK 4.9 billion. For 2023, the parties to the agreement have agreed to allocate approximately DKK 5.4 billion for military support, and a provisional framework has been proposed for 2024 and beyond. However, due to challenges with production lines, some equipment will not be available to reacquire or replace until after 2023, and this will have a financial impact after 2023.
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The Danish support is generally provided via donations from the stocks of the Danish Armed Forces, purchases via the Danish and international defence industry, financial support for relevant funds and organizations, and training efforts.
The donations that Denmark will initiate as quickly as possible in connection with the establishment of the Ukraine Fund are based on military recommendations from the Danish Armed Forces. It will also be possible to purchase equipment via the Danish and international defence industry with a view to donating to Ukraine. Additionally, Denmark is contributing financially to the British-led International Fund for Ukraine (IFU), which was established in August 2022 to create a basis for long-term support for Ukraine through investments in production lines in the defence industry.
Financial support for Ukraine can also be provided through various support funds, including NATO’s Comprehensive Assistance Package (CAP) Trust Fund, which finances various support projects.
Training of Ukrainian soldiers outside of Ukraine is also part of the military support provided by Denmark. This training can be conducted under the direction of the EU training mission EUMAM, the British training mission INTERFLEX, and the Danish state. Training activities will include basic military training, as well as specialized training in weapons systems such as CAESAR artillery systems.
Business initiatives to support the reconstruction of Ukraine
To support investments in critical infrastructure and Danish exports, Denmark will establish a state loan and guarantee scheme in Denmark's Export and Investment Fund. The scheme is expected to operate at a loss and will comprise mixed credits targeting critical infrastructure in Ukraine and export loans and guarantees for private companies. The scheme will involve additional expenses to cover anticipated losses and export loans, with a donation component of DKK 400 million in 2023.
Establishment of Ukraine Investment Forum:
The Ministry of Industry, Business and Financial Affairs, and the Ministry of Foreign Affairs of Denmark will establish a Ukraine Investment Forum. The forum will serve as an operative hub for Danish companies, the Ministry of Foreign Affairs of Denmark, the Ministry of Industry, Business and Financial Affairs, the Danish embassy in Kyiv, EIFO, IFU, DSIF, and others to identify potential reconstruction projects in Ukraine. The forum will share information about concrete projects and market opportunities in Ukraine and facilitate contact with Ukrainian partners.
Involvement of private funds:
The Ministry of Foreign Affairs of Denmark and the Ministry of Industry, Business and Financial Affairs will engage in dialogue with private funds about whether Ukraine can be a focus area for further public-private collaboration. This includes potential donations to finance additional projects and equipment in Ukraine.
Investigation of potential new government collaboration initiatives:
Potential collaborations between Danish and Ukrainian government authorities will be explored in the sectors of health, food, environment, energy, and water. This initiative will be carried out through the Ministry of Foreign Affairs of Denmark's existing framework for government collaboration initiatives under development assistance.
Advisory services for Danish companies:
The Ministry of Foreign Affairs of Denmark's advisory services based locally at the Danish Embassy in Kyiv will provide help to Danish companies with activities in and relating to Ukraine. The embassy's local presence is especially important due to the challenging local context. As a result of the other business initiatives under the Ukraine Fund, the ministry anticipates an increase in demand from companies for advisory services.
Establishment of a unit for geopolitical business advisory services:
To provide geopolitical advisory services for Danish companies, including in relation to the reconstruction of Ukraine, the Ministry of Foreign Affairs of Denmark will establish a unit within the ministry. This unit will work in cooperation with the Ukraine Investment Forum, the Ministry of Industry, Business and Financial Affairs, and the Danish Embassy in Kyiv.
Export promotion:
The Ministry of Foreign Affairs of Denmark's existing scheme for Collective Export Promotion Campaigns will grant funding to support the participation of Danish companies in collective export promotion campaigns abroad or delegation visits in Denmark. A special dispensation will be established to allow applications outside the normal application rounds for funding of export promotion campaigns focusing on Ukraine or surrounding countries, such as Poland.