Policy paper

UK–Ukraine development partnership summary, July 2023

Published 17 July 2023

Introduction

The Strategy for International Development (IDS) places development at the heart of the UK’s foreign policy. It sets out a new approach to development, anchored in patient, long-term partnerships tailored to the needs of the countries we work with, built on mutual accountability and transparency. This approach goes beyond aid and brings the combined power of the UK’s global economic, scientific, security and diplomatic strengths to our development partnerships. Our 4 priorities are to deliver honest, reliable investment, provide women and girls with the freedom they need to succeed, step up our life-saving humanitarian work, and take forward our work on climate change, nature, and global health. The Integrated Review Refresh (IR23) reiterates that sustainable development is central to UK foreign policy and sets out how the UK will go further and faster on development to reduce poverty and reinvigorate progress towards the Sustainable Development Goals (SDGs). This Country Development Partnership Summary details how the IDS and IR23 will be put into practice with Ukraine.

Ukraine country context

The UK government’s top foreign policy priority for 2023 is to support Ukraine to win the war. The UK has been in the vanguard of Ukraine’s international partners across the piece. Our political and military support is reinforced by efforts on strategic communications and counter-disinformation as well as substantial emergency responses on humanitarian, fiscal, and energy needs. These urgent needs have been compounded by a sharp decline in the Ukrainian economy and huge damage to infrastructure. The International Monetary Fund (IMF) estimates that the economy contracted by 30% in 2022, with poverty rising from 5% to 24% over the year. Direct damage has reached over $135 billion (concentrated in housing, transport, energy, and commercial and industrial sectors as well as in frontline oblasts) while the overall reconstruction and recovery needs are estimated at $411 billion.^{[footnote 1]} The World Bank (WB) estimates that Russian attacks on energy infrastructure have resulted in over $10 billion of damage, with around 60% of power capacity destroyed, damaged or occupied. As of February 2023, 17.6 million people in need of humanitarian support have been identified, including 8.2 million refugees and 5.4 million internally displaced persons (IDPs).

The Government of Ukraine’s (GoU) National Recovery Plan has begun the task of defining key recovery and reconstruction priorities but need far outweighs available resources, making prioritisation and coordination very challenging. Early recovery will depend heavily on donor funds but we are working to create the conditions for private sector investment. Ukraine’s recovery response needs to be sensitive and nuanced in acknowledgement that the war has impacted its regions and groups differently. The recovery response must manage public expectations on speed and scale, transparency, and inclusion. It must also acknowledge the remaining challenges related to reintegration of territories temporarily occupied by Russia. This is critical to ensure that recovery can sustain the impact of early stabilisation efforts and guarantee a smooth post-war transition.

The UK has a good track record of support for governance, economic, and social reform in Ukraine, particularly on anti-corruption, judicial reform, and elections. The war has changed political and economic dynamics significantly. This includes stronger national consensus on Euro-Atlantic integration, greater international support for Ukraine, strong desire for reforms to build a more resilient Ukraine, and strong civil society and civic activism. Public support for reform and strengthening of governance has grown as Ukraine has successfully resisted Russian aggression, and decentralisation has shown its effectiveness. However, Ukraine’s recovery plan and assessments by the European Union (EU) and IMF emphasise the need for continued progress on tackling corruption, strengthening the rule of law, building administration capacity and improving the investment climate.

Significant progress on gender-based violence and related women’s rights issues over the past decade has been put at risk by war and exacerbated by instances of Conflict-Related Sexual Violence. Women and children make up most of the refugee and internally displaced populations. Our work helps to ensure that women, systematically excluded groups (such as the LGBT+ community), and the most vulnerable (including older people, people in care, and people with disabilities) will have their rights protected, be able to voice and participate in decision-making, and have urgent needs met.

Why and how: the UK’s development offer with Ukraine

The UK’s support to Ukraine is structured to respond to 6 key objectives, each of which has development components.

1. Emergency response

In line with IDS priorities, the UK’s programming and advocacy on humanitarian responses and emergency repairs (including energy) focuses on maximising the impact of our support in reducing human suffering, particularly for the most vulnerable. Since the full-scale Russian invasion of Ukraine in 2022, we have provided £220 million to the Ukraine and Regional Humanitarian response through the United Nations (UN), Red Cross and Non-Governmental Organisations (NGOs). UK support has helped the response to reach over 15 million people. In 2022, to build energy resilience, the UK delivered nearly 1,000 diesel/petrol and solar generators. We also contributed £10 million towards emergency grid repairs that helped keep the lights on and the economy running through the winter.

2. Conflict and stabilisation

We are supporting GoU in preparing for – and creating the conditions for – an enduring peace and inclusive sustainable recovery. This includes:

• maintaining and reinforcing institutional and community resilience and national unity
• supporting Ukrainian preparations for the reintegration of territories temporarily occupied by Russia
• enhancing GoU capacity to design and deliver effective strategic communications campaigns
• providing a safe and secure environment for citizens, especially women and marginalised groups
• enhancing Ukraine’s capacity to prosecute war crimes

3. Economic stability and recovery

We are helping Ukraine improve its macro-economic stability, providing a stable foundation for economic activity and growth and post-war recovery. In addition to central fiscal support (see below for details), we support economic stability and recovery, providing economic advice and expertise to the Ministry of Finance, National Bank of Ukraine, and Ministry of Economy. We are also helping small to medium-sized enterprises to relocate, re-establish themselves, and find new markets for their products including exporting to the EU.

4. Democracy and governance

UK efforts strengthen accountability and inclusivity reforms, in line with the aspirations of Ukraine’s people and Government, bolstering resilience during the war and laying the groundwork for effective post-war recovery, reconstruction, and Euro-Atlantic integration. Priority reforms include judicial reform and anti-corruption and transparency as well as corporate governance and privatisation, including reform of state-owned-enterprises. Our focus on decentralisation and democracy, where we are preparing for inclusive post-war elections and promoting the voice and rights of women and girls and LGBT+ people in recovery and reconstruction, supports the second pillar of the UK’s IDS by empowering women and girls.

5. Early recovery and reconstruction

We are working to support Ukraine’s early recovery and lay the foundations for inclusive, longer-term reconstruction through our programming and the effective delivery of the Ukraine Recovery Conference in June 2023. Our work will enable robust and open planning and procurement at national and regional levels and help to create the conditions for the UK private sector and financial institutions to invest (including through British Investment Partnerships). We will channel the expertise of UK government and institutions, and support GoU to build back better and greener (eg funding projects to underpin sustainable energy transition).

6. Defence and security

In addition to our support to the defence and security forces of Ukraine to increase their ability to counter Russian aggression in the short term and deter it in the longer term, we have been able to embed UK defence reform expertise through our Official Development Assistance (ODA). This is helping the Ukrainian Ministry of Defence adopt good-governance processes related to anti-corruption, capability and business planning, NATO systems, standards and values alignment, and international law compliance.

Who we work with

The UK is well positioned in Ukraine through our long-term partnership before the full-scale invasion, our early and significant military support, strong personal leadership-level relationships, our position in the G7 – which is well organised and active in Ukraine – as well as our substantial ODA and wider fiscal support. In an increasingly crowded international arena, we have carved out a key role in timely provision of resources and in galvanising others to deliver more on Ukraine. We have become the ‘go-to partner’ for GoU rapid asks in key areas including economic policy and energy strategy. We play a leading role on the humanitarian Core Donor Group, helping to shape approaches in priority areas including the cash-social protection nexus. Furthermore, we have strong working relationships with other major donors including the EU, US, Germany, Canada, Sweden, Switzerland, and Finland, including co-financing the multi-donor Partnership Fund for a Resilient Ukraine.

Humanitarian and development multilateral and international organisations have been present in Ukraine for some time. The United Nations (UN) leads on humanitarian response and, in 2023, more UN Agencies have begun to shift their focus onto early recovery. The Organization for Security and Co-operation in Europe (OSCE) and North Atlantic Treaty Organization (NATO) still have offices in Ukraine. The Organisation for Economic Co-operation and Development (OECD) is also establishing a Country Programme. We have delivered through several multilateral and international organisations including the UN Children’s Fund, World Food Programme, International Organisation for Migration, UN Office for the Coordination of Humanitarian Affairs, UN Population Fund (formerly UNFPA), UN Development Programme, UN Office of the High Commissioner for Human Rights and the Red Cross. We have also delivered grants and loan guarantees through the WB and the European Bank for Reconstruction and Development (EBRD) as well as working closely with the IMF and European Investment Bank (EIB). We contribute to the International Finance Corporation (IFC) led financial inclusion programme as well as the EBRD led multi-donor account, which funds a portfolio of good governance and economic technical assistance programmes. This includes a civil service reform programme and support to the business ombudsman. Our energy programme also works with the Energy Community Secretariat based in Vienna, and with IFC and InnovateUK.

Key programmes

Due to the highly uncertain context, our programme teams work with highly flexible planning models that allow for rapid adjustment and response. Mechanisms include regular break clauses, selection of partners with versatile skill sets, and close work with partners to update plans regularly.

Over 2022, we significantly expanded our ODA programming in Ukraine – bolstering existing economic and governance reform programming with new humanitarian and energy security programmes. We also uplifted several Conflict Security and Stability Fund (CSSF) projects, including on stabilisation, war crimes accountability, and strategic communications. These programmes will continue into financial year 2023 to 2024 and we are also adding a new recovery and reconstruction programme. As of May 2023, the top 3 FCDO-baseline programmes by value are:

Humanitarian Response Programme

Up to £347 million over 3 years, of which around 75% spent in Ukraine, the remainder spent across Moldova and the wider region.

This ensures protection and prioritisation of the most vulnerable, promotes access, inclusion and respect for International Humanitarian Law and promotes a sustainable approach to recovery. Focus also on developing more localised responses and adapting to evolving priorities and risks as they emerge.

Ukraine Resilience & Energy Security

Up to £80 million over 3 years.

This captures our emergency support to the energy sector since April 2022 and is designed to build Ukrainian resilience to external threats to its energy security as well as laying the groundwork for a cleaner, more independent energy sector.

Good Governance Fund Ukraine

Up to £38 million over 3 years.

This supports GoU good governance (judicial reform, anti-corruption, elections reform), economic resilience (state-owned enterprise reform, business revitalisation, macro-financial advice), and regional recovery planning.

Additional relevant programmes include:

Early Recovery and Reconstruction programming

As part of the support for early recovery, British International Investment (BII) will begin in financial year 2023 to 2024. We are also designing a dedicated recovery and reconstruction programme, likely to include support for private-sector investment, targeted work on relevant reforms, building inclusion into recovery and reconstruction, and future support to sectoral reconstruction.

Conflict Security and Stability Fund (CSSF)

Ukraine benefits from substantial CSSF programming covering War Crimes and Accountability, Women, Peace, and Security, Security and Defence Reform, Stabilisation (including the multi-donor Partnership Fund for a Resilient Ukraine), and Strategic Communications support to GoU.

Fiscal support

The vast majority of UK non-military support to Ukraine has been through meeting the Government of Ukraine’s financing needs in order to deliver services. These have supported vital public services, by helping to cover costs such as public sector wages, running schools and hospitals, pensions, and supporting the most vulnerable Ukrainians. As announced by the Prime Minister at the Ukraine Recovery Conference, the UK will continue to provide fiscal support of up to $3 billion of guarantees through the WB between 2024 and 2027, taking UK assistance to $5 billion since the start of the Russian invasion. This hails a shift in how the UK will provide medium-term support to supporting Ukraine’s fiscal situation in support of Ukraine’s IMF programme agreed in March 2023

Centrally Managed Programmes (CMPs)

Key CMPs with presence in Ukraine include the Global Mine Action Programme, CSSF EECAD Resilience Programme (ERP) and CSSF Cyber programming, and Fiscal Transparency and Accountability Integrity programme Open Procurement support – which is now transitioning to country with central team support

Technical assistance

The Bank of England’s Centre for Central Banking Studies provides mentoring, training, and capacity-building to the National Bank of Ukraine, while the FCDO’s BASIC programme for social-protection and HEROS contract for humanitarian expertise both support our humanitarian efforts.

Monitoring, evaluation and learning (MEL)

The British Embassy (BE) Kyiv places a strong emphasis on monitoring of programme and project level results. In nearly all cases, the full-scale invasion required a re-set of results frameworks agreed with implementing partners and teams have introduced more frequent check-in points to remain up to date. Programmes are reviewed annually and scored for performance against results frameworks. Independent third-party monitoring is undertaken in hard-to-reach areas of Ukraine, particularly for the humanitarian programme. While independent evaluations would be inappropriate for the current unstable context, plans are underway to commission a range of independent MEL products to fill critical evidence gaps via the Eastern European and Central Asia Directorate draw-down MEL contract.

Financial information

Initial allocations have been set internally to deliver the priorities set out in the International Development Strategy (May 2022) and the Integrated Review Refresh 2023, based on the FCDO’s Spending Review 2021 settlement.

The department’s spending plans for the period 2022 to 2023 to 2024 to 2025 have been revisited to ensure His Majesty’s Government continues to spend around 0.5% of Gross National Income (GNI) on ODA. This was in the context of the significant and unexpected costs incurred to support the people of Ukraine and Afghanistan escape oppression and conflict and find refuge in the UK, and others seeking asylum. The Government provided additional resources of £1 billion in 2022 to 2023 and £1.5 billion in 2023 to 2024 to help meet these unanticipated costs. The Government remains committed to returning ODA spending to 0.7% of GNI when the fiscal situation allows, in line with the approach confirmed by the House of Commons in July 2021.

The Country Development Partnership Summaries include the breakdown of programme budgets allocated to individual countries for 2023 to 2024 and 2024 to 2025. These allocations are indicative and subject to revision as, by its nature, the department’s work is dynamic. Programme allocations are continually reviewed to respond to changing global needs, including humanitarian crises, fluctuations in GNI and other ODA allocation decisions.

It should be noted that these figures do not reflect the full range of UK ODA spending in these individual countries as they do not include spend delivered via core contributions to multilateral organisations, or regional programmes delivered by the FCDO’s central departments. Other UK Government departments also spend a large amount of ODA overseas. Details of ODA spent by other UK government departments can be found in their annual report and accounts and the Statistics for International Development.

FCDO Official Development Assistance allocation

Figure 1. Breakdown by International Development Strategy (%): humanitarian, 63%; British International Investment, 18%; climate change, nature and global health, 11%; women and girls, 8%

Of ODA spend in this country/region in financial year 2022 to 2023, 4.4% is marked as being principally or significantly focused on promoting gender equality. Humanitarian programming on gender equality was significantly underrepresented during financial year 2022 to 2023, linked to challenges with capturing Gender Equality and Social Inclusion (GESI) markers across humanitarian pooled funds. The GESI percentage for all other bilateral programming in Ukraine was 10%. Markers for disability inclusion will be available from financial year 2023 to 2024 onwards.

Allocated ODA budget financial year 2023 to 2024	Indicative ODA budget financial year 2024 to 2025
£210 million	£155 million

Supporting information sources

• British Embassy Kyiv
• DevTracker
• D-portal

1. Rapid Damage Needs Assessment 2 – March 2023. ↩