In an interview with Friederike Bauer, Lorenz Gessner, head of the KfW office in Ukraine, talks about the situation three years after the start of the Russian war of aggression: Despite adverse circumstances and numerous obstacles, KfW is continuing its work consistently - and the support is well received.
Practically not a day goes by without attacks somewhere. They are by no means limited to the east of the country, where Russia is still trying to gain territory. There are almost daily alerts in the capital Kyiv and even Lviv, which is located to the west, is not spared. Only in a few corners of the country can people feel safe.
The situation is stressful for everyone, even if life continues as ‘normally’ as possible. But the insecurity is wearing on the population, plus the constant interruptions because people have to go to a shelter - this is not without consequences.
The German government has very clearly backed Ukraine over the past three years. This applies to financial resources, but also in general. Through KfW alone, funds have been made available for civilian support totalling around two billion euros since the start of the war - from a number of different ministries. In addition to the Ministry of Economic Cooperation and Development, these include the Ministry of Economics and the Ministry of Finance. The amount also includes commitments on behalf of the EU, which KfW is implementing as part of the Ukraine Investment Facility (UIF). This dedicated support is extremely important for the resilience of the Ukrainians.
We are one of the largest bilateral donors in the civilian sector.
We don't know how the situation will develop, but many things are likely to change fundamentally. USAID has made a very important civilian contribution since the beginning of the war, be it in supporting democratic reforms, strengthening local businesses, in the energy sector or in humanitarian aid. A permanent discontinuation of USAID support would leave a huge gap - this is already noticeable.
It has not become any easier. I myself work from Frankfurt for security reasons. We have four local employees in Ukraine. Of course, it would be better if we could work on our projects together as a team from Kyiv. We do have an office there, but our local colleagues are currently all working from home. We are in daily contact and network virtually, including with our Ukrainian partners. That works very well. However, there are times when Ukrainian employees have to seek shelter during virtual meetings because there is an alarm - so the war is also very tangible for us. During my travels, I have personally experienced having to go to the basement in the middle of the night to get to safety. Despite this way of working, we are sending out a strong signal on behalf of Germany: we're here to stay.
Despite the war, all projects are being implemented and work is going ahead. Of course, because of the war, we keep coming up against difficulties, for example when we have to reschedule project locations due to fighting or there are delays in implementation. This requires flexibility and pragmatism - both of which our partners and clients fortunately possess.
We are supporting the country in the social sector, financing new or rehabilitated housing, for example, which has become very scarce because many people had to leave their homes and have been internally displaced by the attacks. In addition, we provide funds for basic municipal infrastructure, including water supply as well as health centres, kindergartens and vocational schools. A second focus is on the sustainable promotion of the private sector. Keeping the economy running despite the war is extremely important. Here we are working primarily with the state Business Development Fund (BDF), which grants subsidised loans primarily to small and medium-sized enterprises. And finally, we finance the energy sector - energy remains a top issue. We have achieved a great deal in all three areas and have thus been able to contribute to a normal everyday life under these adverse circumstances. Added to this is the support of DEG, which is making an important contribution to the private sector in Ukraine on behalf of the German government within the framework of develoPPP and ImpactConnect.
The attacks on the energy infrastructure are indeed one of the major challenges for Ukraine. Restoring it is an ongoing challenge for Ukrenergo, the state energy supplier we are working with here. Teams are constantly on the road carrying out repairs; the Ukrainians are really good at this. However, some things cannot be repaired and have to be rebuilt. Unfortunately, that is a reality. Ukrenergo has therefore started to equip important infrastructure with protective systems to make it more resilient. They are also trying to further decentralise the energy supply. We are promoting this as well as transmission lines to the EU so that Ukraine can purchase electricity from there on the one hand and export electricity to the EU on the other.
No, because the future is always taken into account here.
That is for others to decide, but should a decision be made in this direction, we are ready to help Ukraine. We are currently supporting a reform process of the BDF, which will strengthen it institutionally and thus make it attractive for refinancing by other international donors in the short term and possibly also enable it to refinance itself via the international capital market. We are helping to create the necessary foundations for this.
The situation remains volatile - and we remain flexible. Even if we do not have a concrete plan in the drawer, because everything depends very much on the development of the overall situation and on the wishes of Ukraine, we assume that much of what we are currently financing will remain relevant after the end of hostilities, e.g. housing construction or the reconstruction of infrastructure. Nevertheless, the need will be huge; in its Rapid Damage and Needs Assessment (RDNA3) for 2024, the World Bank assumes costs of around USD 486 billion over ten years. As KfW, we can definitely make a significant contribution to reconstruction. We have long-standing and reliable partners, committed teams in Frankfurt and on the ground, and good projects. We can build on that!
As of: 24/02/2025
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