The unjust war initiated by Russia in violation of all international legal norms has caused indescribable human suffering in Ukraine, while also devastating its physical infrastructure. With Russia blockading ports, Ukraine's foreign trade and logistic capabilities have shrunk. Targeted attacks on the energy infrastructure, especially since October 2022, aimed to weaken the population's resolve, resulting in around 50% of the country's energy infrastructure being significantly damaged. The Ukrainian economy contracted by 29.5% in 2022, with a 32% decline in foreign trade. The heavy industry shrank by 55%, and the construction sector by 65%, which is even more dramatic.
According to assessments by the Ukrainian government and the World Bank, the material damage caused by the war in Ukraine is at least $411 billion. However, reconstruction and renewal of the country's inadequate and aging infrastructure in today's context require a budget of at least $750 billion, a consensus among several institutions. Organizations like the European Investment Bank estimate that Ukraine's reconstruction and rebuilding costs will exceed $1 trillion.
Despite the devastating impact of the war, with strong support from the West, Ukraine's economy has stabilized. Central Bank of Ukraine's foreign reserves reached $39 billion, the highest in its history. The exchange rate remained unchanged for a year, and the Central Bank recently lowered the policy interest rate to 22% by reducing it by 300 basis points. Inflation also dropped below 20%.
Post-war aid to Ukraine has exceeded $170 billion
Ukraine has received and is receiving the largest support from the advanced industrial democracies, especially the United States of America, the European Union, the IMF, etc. since the beginning of the war, the largest support ever given to a country at war after World War II. The cumulative humanitarian, financial, military, and technical assistance has surpassed $170 billion, with the United States contributing the biggest share of $66 billion, including $23 billion in financial aid. The Biden administration recently sent an additional $24 billion support package to Congress for Ukraine's growing needs. Once approved, the U.S. support will approach $100 billion. The European Union, within its 2023-27 budget approval, committed to providing Ukraine with a minimum of €12 billion annually until the end of 2027. Additionally, EU member states, G7 members, and international financial institutions have pledged significant funds through bilateral agreements for Ukraine's reconstruction. Japan is one of these countries and has committed a minimum of $5 billion in aid.
Türkiye is among the top three countries with $4.5 billion investments in Ukraine
Before the war, over 700 Turkish companies operated in Ukraine, with Turkish investments exceeding $4.5 billion. In the last five years, Türkiye became the largest foreign investor and one of the top three foreign capital investors in the country. Turkish firms excelled not only in construction, textiles, and food but also in at least ten sectors, including machinery, cosmetics, telecommunications, and personal care products. Despite the absence of a Free Trade Agreement, our bilateral trade volume increased by 55% from 2020 to 2021, and by a further 56% in January 2022 compared to January 2021, just before the war began. Moreover, on February 3, 2022, Türkiye and Ukraine signed a Free Trade Agreement, which had been under negotiation for fifteen years.
Turkish construction companies completed over 200 projects in Ukraine, totaling over $8 billion
In 2020, Turkish contractors ranked second, and in 2021, third among the countries receiving the most overseas contracts. In Ukraine, Turkish construction firms undertook significant projects including Kyiv Boryspil International Airport's terminal, one of Europe's most modern stadiums, five-star hotels, thousands of kilometers of roads and highways, transportation bridges, rail systems, hundreds of thousands of square meters of living space, shopping centers, power plants, and industrial facilities, totaling over $8 billion across more than 200 projects. When the war began, the ongoing projects by Turkish construction firms amounted to $2.5 billion. Among foreign construction companies, Turkish contractors stood out as the most active and successful ones
Turkey-Ukraine foreign trade increased in 2022, positioning our country among Ukraine's top three suppliers and export partners
Despite the challenges posed by the war, Turkish enterprises continue to operate significantly in Ukraine. Currently, more than 20,000 Ukrainian employees work in Turkish businesses. In 2022, Turkey's foreign trade with Ukraine increased, surpassing $7.5 billion despite Ukraine's 32% decline in foreign trade due to the war. Türkiye has become one of Ukraine's top three suppliers, setting a historic record for our exports to the country. We are set to break this record before August ends in 2023. Türkiye is one of the top three countries receiving the most Ukrainian exports and the largest market for Ukrainian agricultural products. Turkish construction firms are continuing their activities with uninterrupted stability and confidence in thousands of machines, equipment, and employees.
Ukraine receives substantial support from governments and international organizations, but is this sufficient considering the scale of the needs? Clearly not. The contribution of the private sector to the Ukraine's recovery and reconstruction, employment, and investment is crucial. In light of this awareness, in July 2022, a forum for private sector-led reconstruction and rebuilding, with the participation of over 1,000 business people from 30 countries, was organized, which was the largest of its kind dedicated to Ukraine until that date, in which Turkish Ukrainian Business Association (TUİD) played a significant role. In September 2022, in Lviv, the Union of Chambers and Commodity Exchanges of Türkiye (TOBB), the largest business organization in Türkiye, together with Ukraine Chamber of Commerce and Industry as its counterpart in Ukraine, and TUİD, organized the first post-war business forum in Ukraine, known as the Turkey Ukraine Business Forum.
Kyiv Boryspil Airport, a gateway to Ukraine, was jointly constructed by Turkish and Japanese companies
In Ukraine's reconstruction and rebuilding, cooperation between the public and private sectors is crucial, as well as the collaboration of third-country companies. Countries such as the United States, the United Kingdom, Japan, and South Korea have committed significant resources to this process. In this context, Japan and Japanese companies stand out positively with their experience in providing visible and valuable contributions to the country's infrastructure, also before the war. Kyiv Boryspil Airport, Ukraine's largest airport and one of its most significant post-independence infrastructure projects, was constructed jointly by Turkish and Japanese companies with financing from Japan. While being geographically in the East, Japan, as an essential member of the Western value system, is expected to continue its support to Ukraine, both from the public and private sectors. Therefore, the collaboration between the Turkish construction sector, which accounts for 44 companies among the world's top 250 construction companies, and Japanese companies, along with rapidly developing Turkish technical consultancy firms and Ukrainian companies, is an ideal solution that will undoubtedly boost Ukraine's reconstruction.
To contribute to the increased collaboration between Turkish, Ukrainian, and Japanese companies, to determine the needs of Ukraine's reconstruction from the field, and to ensure the proper utilization of resources, Turkish Ukrainian Business Association (TUİD), representing over 95% of Turkish capital in Ukraine, together with the largest business organization in the country, Ukraine Chamber of Commerce and Industry, supported by the Embassy of Japan in Türkiye, Japan International Cooperation Agency (JICA) and Japan External Trade Organization (JETRO) and sponsored by Yanmar Turkey, is organizing the Turkish-Ukrainian-Japanese Business Forum on September 21, 2023 at Raffles Istanbul. The financial and technological strength of Japan, the experience, knowledge and skills of Turkish construction companies, the collaboration of Turkish equipment manufacturers that already provide the largest supply of machinery and energy equipment to Ukraine from abroad and Ukrainian companies, will undoubtedly accelerate Ukraine's reconstruction efforts.
Japanese Institutions and conglomerates like, Mitsubishi Corp, Marubeni Corp, Sumitomo Corp, Itochu Corp, Sojitz Corp, JBIC, JETRO, JICA, Mitsui have already confirmed their participations to the forum. I wish a successful forum for trilateral cooperation between our business communities.
Chairman of Turkish Ukrainian Business Association (TUID).