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February 20, 2023
Nearly one year after Russia launched its full-scale invasion on Ukraine, the war shows no signs of ending in the near future. A top priority for many of the largest global development donors over 2022, the conflict has dominated discussions at almost all global fora, such as the 2023 Munich Security Conference, at which Ukrainian President Volodymyr Zelenskyy urged world leaders to provide more assistance.
Since February 2022, donor countries provided an estimated US$72 billion in humanitarian and financial assistance to fund macroeconomic stability, food security, and humanitarian needs for internally displaced persons (among other things). The US and EU accounted for 72% of total nonmilitary humanitarian and economic assistance, spending US$20 billion and US$31.9 billion, respectively. Donors also showed their support by welcoming those fleeing the war into their countries. As of February 2023, donors have spent an estimated US$35.2 billion on in-donor refugee costs, or 33% of the total estimated ODA to Ukraine. Top donors in this category included Germany, Canada, and Poland, which spent US$18.7 billion, US$6.3 billion, and US$2.8 billion, respectively.
A large share of the ODA provided to Ukraine in 2022 was additional to existing ODA budgets. However, the protracted nature of the conflict and the emergence of competing sectoral priorities will strain development spending in 2023. Despite uncertainty regarding the length and outcome of the war in Ukraine, donors and advocates should already be looking ahead. Rebuilding in the wake of the conflict will require significant support from the global development community. Ensuring that the funding provided is sufficient and additional will require bold commitments from donors, and a concerted effort on the part of advocates.
What patterns are emerging in donor countries’ budgeting decisions around ODA for Ukraine? How are donors funding compounded and competing crises? And what happens when the war ends, and Ukraine needs to be rebuilt? One year on from Russia’s invasion of Ukraine, this Donor Tracker Commentary offers global development advocates some answers to these important questions.
There are two main ways donors are approaching the challenge of providing ongoing support to Ukraine. Donors like Sweden and France are rebalancing their ODA budgets to the detriment of existing priorities. Meanwhile, donors like the UK, Germany, and Norway, are allocating additional funds for assistance Ukraine to insulate core ODA priorities to varying degrees of success.
In November 2022, Sweden announced its decision to prioritize assistance to Ukraine over existing bilateral and multilateral spending. The likely result of this decision is drastic cuts in funding to other partner countries. Similarly, France, which previously aimed to increase ODA in 2023, will instead maintain ODA spending at 2022 levels due to additional expenditures on in-donor refugee costs in 2022. As a result, the availability of funding for in-donor refugee costs and other ODA to Ukraine in 2023 is uncertain, and may result in tradeoffs with commitments to multilaterals.
Despite its shrinking ODA and dire economic situation, the UK mobilized additional funding to cover the cost of refugees within its borders. In November 2023, in his Autumn Statement, Chancellor of the Excheqeuer Jeremy Hunt announced the allocation of £1 billion (US$1.2 billion) for FY2022/23 and £1.5 billion (US$1.8 billion) for FY2023/24 on top of existing ODA. However, according to the Center for Global Development, this funding may be inadequate, as housing costs for refugees could rise to £3.1 billion (US$3.7 billion) in 2022, making tradeoffs likely.
Although Germany reinstated spending caps on its ODA budgets, starting in 2023, it also allocated additional funding to cover the costs associated with in-country refugees. This is expected to insulate existing priorities from tradeoffs with ODA to Ukraine. Norway’s ODA budget is similarly insulated, however for different reasons; skyrocketing fossil fuel prices caused by the war in Ukraine has led to unprecedented growth in Norway’s oil and gas wealth. Under pressure from CSOs and political opposition parties, the Norwegian government released a draft plan to use these war-related profits to provide multi-year additional ODA to Ukraine.
Germany and Norway (and to a lesser extent, the UK) provide examples for advocates of how donors can continue to support those impacted by the war in Ukraine, while also funding other priorities and regions. As the war in Ukraine continues and longstanding development partnerships continue to be tested by natural disasters and geopolitical rivalries, how donors choose to prioritize their development spending will have major implications for the future of international cooperation.
As the war in Ukraine hits the one-year mark, decision-makers are signaling increasing awareness of the competing and urgent priorities straining development budgets, as seen by the frequent use of the term ‘polycrisis’ at the WEF meeting in Davos in January 2023.
The ‘polycrisis’ refers to challenges created by multiple compounding crises, including a global pandemic, increasing extreme weather, and economic instability, in addition to heightened global food insecurity due to the Russian war in Ukraine. One of the more obvious examples of these compounding crises in global development is increasing food insecurity. In September 2022, the WFP reported that, driven by the increased costs of food, fuel, and fertilizers due to the war in Ukraine, the number of people experiencing ‘catastrophe’ level food insecurity reached 970,000 (on top the 345 million experiencing acute food insecurity). The WFP estimated that meeting the food-related needs of these growing numbers of hungry people, would cost the global community US$24 billion. This is more than double than the US$10.5 billion donors committed in ODA for food security in 2021 .
While noteworthy, donor pledges for food security in 2022 only contributed to a small portion of the mammoth financing gap:
Although food security comprised one of the more dramatic pressures on ODA budgets in 2022, strains were apparent across sectors and in donors’ responses to other unrelated crises. The Center for Disaster Philanthropy estimated the cost of after the summer floods in Pakistan at US$16.8 billion. Of the US$816 million in assistance requested by the UN and Pakistan, as of late January 2023, donor countries mobilized just US$269 million.
Given competing development priorities, domestic political and economic factors play a critical role in ensuring whether quality assistance is provided in a timely manner. In the UK, where economic pressures from the COVID-19 pandemic and Brexit were met with a series of unstable governments, the negative impact on ODA was apparent in a US$2 million recovery pledge for flooding in Pakistan, compared to US$134 million in 2010, and in a US$1.1 billion pledge to the Global Fund that came half a month after the deadline for pledges and fell short of the US$2.1 billion requested by the organization.
As the war in Ukraine continues, climate, global health, food security, and economic crises will test donors’ support, while political factors, such as the increased potential for partisan deadlock in the US Congress, could seriously hinder the timeliness and quality of assistance.
Estimates of the total cost for reconstruction in Ukraine have ranged from hundreds of billions to over a trillion dollars. As Russia continues to launch offensives and destroy critical infrastructure in Ukraine, it stands to reason that the costs of reconstruction will only continue to grow. It is difficult to predict the future of ODA to Ukraine but donors’ spending as of February 2023 suggests that reconstruction will take on a distinctly European flavor as the block coordinates the rehabilitation of Ukraine’s economy and governance, while advancing its own geopolitical interests in the face of Russian interference.
As the three largest donors of humanitarian assistance to Ukraine so far, the US, EU, and Germany will likely play a leading role in the reconstruction of Ukraine in the aftermath of the war. In January 2023, the EU launched the Multi-agency Donor Coordination Platform, a forum to align and prioritize donors’ support to Ukraine, which includes several DFIs and the G7. In taking ownership of the platform, the EU secured a central role in coordinating reconstruction in the short- and long-term. This hands-on approach from the EU suggests a vested interest in ensuring Ukraine progresses toward full EU membership after receiving candidate status in June 2022.
Additionally, while not the largest ODA donor to Ukraine, Sweden’s vocal prioritization of Ukraine and reconstruction in its domestic policy and its 2023 EU Presidency agenda, suggests Sweden will be influential in mobilizing European political and financial support.
Given the significant global impact of this war, donors will want to ensure that reconstruction is undertaken with an eye toward Ukraine’s future in Europe and globally. Restoring Ukraine’s agricultural capacity will be critical to alleviating the global food crisis. European social and economic stability, which have been under pressure as a result of this war, will also need to be considered. The EU is already signalling this priority in its €37.8 billion (US$41.1 billion) allocation to reconstruction in Ukraine for 2022-2023, which includes €114 million (US$123 million) for basic education infrastructure. Similarly, Germany’s positioning of reconstruction indicates prioritization of sustainable development and recovery while developing Ukraine in accord with EU social and economic priorities.
One year on, and Ukraine needs the support of the global development community more than ever. However, in addition to the war, the interconnected food, climate, health and economic crises continue to put the world’s most vulnerable at risk. This poses a challenge for donors unwilling or unable to increase their ODA budgets to meet growing global needs. As the financing gap for these priorities expand, domestic political and structural factors are becoming increasingly important in determining the quality and timeliness of ODA. Understanding these factors and how donors are managing these competing priorities can inform more effective advocacy strategies aimed at ensuring that there is enough to go around. And, while we all hope for this war to come to an end, donors must also prepare for the enormous reconstruction effort that will follow. By keeping on top of the trends in funding for reconstruction, advocates can be ready to push donors in the right direction when the end of the war finally comes.
Tracking the true impact of the Russian war on Ukraine on development is complex; in addition to in-donor refugee costs rising dramatically, especially in neighboring European countries, in-kind and additional ODA contributions to Ukraine are scattered and difficult to systematically track. The Donor Tracker and ONE have collaborated to provide estimates of in-donor refugee costs in 2022 and 2023 directly caused by the war, as well as a collection of development pledges to Ukraine from major donors.
Since official ODA data for 2022 and 2023 from the OECD will not be available until 2024 and 2025, respectively, for 2022 and 2023 estimates of in-donor refugee costs, we multiply per-refugee costs for donor countries by the number of recorded refugees in each country each month. We estimate per-refugee costs for each donor using official asylum applications and total reported in-donor refugee costs averaged for the 2018-2021 period. Since donor countries can claim in-donor refugee costs for the first 12 months a refugee resides in-country, the year in which in-donor refugee costs will count as ODA differs. We account for arrival dates by comparing UNHCR records of refugees in-country each month and assume any increase represents new arrivals. We estimate 2022 in-donor refugee costs related to the Russian invasion of Ukraine at US$35.2 billion and 2023 in-donor refugee costs at US$35.1 billion.
More information on the methodology, including all caveats and assumptions, for this analysis can be found here.
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