PressSplit
Germany ranks second in the world as a financial supporter of Ukraine. However, German companies are criticizing the lack of market access for significant investments – paradoxically, China seems to be benefiting from this.
33.9 billion euros – this is the sum that the Federal Government has provided to Ukraine as “bilateral support” since the beginning of Russia’s war of aggression, according to its own statements. These include humanitarian aid programs, disaster protection and educational funding. The list is long and is constantly being added to as the war continues. Together with the USA, Germany is the largest supporter of Ukraine worldwide.
Companies want to invest in Ukraine – and complain about the lack of support from the traffic light
But of course this effort alone will not be enough to meet the financing needs for the current support as well as the reconstruction of the infrastructure after War in Ukraine to cover. According to the World Bank, this will require $486 billion over the next ten years – from public and private funds. But it is precisely in the second area, the private sector, that there is currently a problem – at least in Germany. This emerges from a survey by the Eastern Committee of the German Economy among 70 of the 350 member companies.
Around 28 of the companies surveyed stated that their employees had already taken a business trip to Ukraine since the start of the war, despite the existing travel warning from the Foreign Office – and 24 more also want to take this trip in the future. “This is good news for Ukraine and for the German economy,” explained Eastern Committee managing director Michael Harms.
Private financial institutions rarely grant loans – Lindner’s promise is just smoke and mirrors?
But while German companies are willing to cooperate, access to the Ukrainian market is often blocked – especially when it comes to financing such projects: “Because of the negative rating of Ukraine by international rating agencies due to the war situation, private financial institutions continue to do so very difficult with project financing,” says Harms. Despite the war, the traffic light’s original plan was to enable German companies to make new investments in the Ukrainian economy. Particularly in the perspective reconstruction plan for the period after the war, it was also about networking companies in both countries at an early stage. That was one of the results of the major reconstruction conference in Berlin.
Finance Minister Christian Lindner (FDP) explained afterwards: “We want to help now to ensure that Ukraine can set the course for future growth through reconstruction.” It should not be “just about financial resources”. Institutional capacities will also be built to “support private companies in Ukraine and promote investments” – it says.
A destroyed substation near Odessa: Hundreds of billions of US dollars are needed to rebuild Ukraine. © Kay Nietfeld/picture alliance/dpa
Eastern Committee sees standstill in Ukraine aid: “Too little for real economic dynamism”
The so-called Business Development Fund (BDF), which is intended to provide long-term support for Ukrainian medium-sized businesses, will play a leading role. In reality, however, Harms complains that there is a standstill: “We are waiting for impetus here from the announced establishment of a reconstruction bank for Ukraine based on the model of the German KfW and through mixed financing models in which public banks in donor countries give a large part of the funding to the private sector in return for a share in future profits Reduce default risks.”
Since the risks during the war are very high, such as new construction projects in the infrastructure falling victim to the ongoing bombardment of Russian aggression, companies are currently still shying away from investing their own foreign currency.
However, the lack of access to outside capital means that the only companies active in Ukraine are those that finance their projects with their own resources. For Harms, this development is not enough “to trigger real economic dynamics in Ukraine with foreign direct investments.”
“Urgently adjust the funding guidelines” – Are China and Türkiye secretly profiting from German money?
Germany in particular, which is in the EU Ukraine’s largest and second largest donor in the world is already missing out on potential major orders. This is particularly the case in the area of public project tenders. The Ukrainian government often puts price above quality, so that the cheapest bids win. “Companies from Turkey or China, of all companies, benefit from German tax money in Ukraine. The German side urgently needs to review and adapt the funding guidelines,” explains Harms.
The fact that China is developing into a secret beneficiary of these measures is doubly piquant. Since the beginning of the war, there have been increasing reports that China is indirectly supporting the Russian army with military resources and also has great influence on Russia’s president Wladimir Putin asserts.
Huge potential for German companies in Ukraine: qualified workforce and good location
According to Harms, this status quo frustrates both German and Ukrainian companies. Only 15 companies said in the survey that the investment climate in Ukraine had improved in 2024. 42 are experiencing stagnation and eleven are even experiencing significant deterioration.
The potential for German companies is enormous, as a survey by the auditing and consulting firm KPMG and the German-Ukrainian Chamber of Commerce and Industry (AHK Ukraine) among 142 companies in June proved: In this, almost every second company (48 percent) rated , which already maintains business activities or plans to do so in the future, sees the Ukrainian market as a lucrative business area. Around 43 companies are even planning new investments in Ukraine.
Survey as a basis for German-Ukrainian top meeting – with Scholz and Habeck
Reiner Perau, Managing Director of AHK Ukraine, values “qualified workers” with good “technical and scientific training” as well as “fertile soils and a logistically favorable location for Europe”. The study identified energy and public infrastructure as well as pharmaceuticals, IT and outsourcing as key sectors.
Harm’s results lead to a similar conclusion – and this is also what the traffic light will deal with. The survey serves as content preparation for the 7th German-Ukrainian Economic Forum, which will take place in Berlin at the beginning of December.
In addition to Ukrainian companies and politicians, there are also two German government representatives for whom the results should be of interest: Chancellor Olaf Scholz (SPD) and his deputy as well as Economics Minister Robert Habeck (The Greens).
