Turkish firms to drive Ukraine’s post-war recovery—What to expect

Amid U.S. pressure for a cease-fire with Russia, Türkiye and Ukraine are advancing a new phase of economic collaboration, focusing on joint initiatives for post-war recovery and development. Meetings held in Kyiv on March 13 concluded with a free trade agreement (FTA) and an expanded role for Turkish companies in Ukraine’s reconstruction efforts.

In a statement on Thursday after the meetings with Turkish Agriculture and Forestry Minister Ibrahim Yumakli and Trade Minister Omer Bolat, Ukrainian President Volodymyr Zelenskyy expressed support for Turkish companies in Ukraine’s reconstruction, indicating readiness to approve the FTA ahead of President Recep Tayyip Erdogan’s next visit to Kyiv.

Zelenskyy highlighted that Türkiye is a key partner in Ukraine’s security framework and reiterated Kyiv’s willingness to ratify the trade deal with Türkiye, underlining the strategic importance of their cooperation.

“We discussed the development of bilateral relations, opportunities for cooperation in drone production, and the participation of Turkish companies in Ukraine’s reconstruction,” Zelenskyy said, emphasizing Türkiye’s expanding importance in Ukraine’s rebuilding efforts.

Expanding bilateral trade relations toward $10B target

Trade Minister Bolat also expressed his satisfaction in a post on X on Friday, stating that Zelenskyy expects the agreement to boost bilateral trade volumes beyond the $10 billion target. Bolat emphasized that the agreement is expected to create a favorable trade environment, facilitating increased investments and business operations in both markets.

Bola, emphasized the commitment to further strengthening Türkiye-Ukraine relations as strategic partners. He noted that both governments are working to enhance trade policies, eliminate barriers, and facilitate investment opportunities to stimulate economic growth.

Bolat highlighted that during his meeting with Zelenskyy, they discussed the significant contributions of Turkish contracting firms to Ukraine’s infrastructure before and during the war. He stated that they explored steps to achieve the $10 billion trade volume target set by the leaders of both countries.

As of 2024, Türkiye’s trade volume with Ukraine has reached $6.2 billion. Including investments made through third countries, Türkiye’s total investments in Ukraine stand at approximately $3.5 billion, showcasing Türkiye’s active involvement in Ukraine’s economic stability.

Key trade sectors between Türkiye and Ukraine

According to the Turkish Statistical Institute (TurkStat), Türkiye’s primary exports to Ukraine include iron and steel, mineral fuels, mineral oils and their distillation products, and vehicles other than railway or tramway rolling stock, along with their parts in 2024. As Ukraine works to restore its cities and industrial zones, a steady supply of these materials is necessary for large-scale construction projects.

Meanwhile, Türkiye’s key imports from Ukraine consist of cereals, animal and vegetable fats and oils, prepared edible fats, animal or vegetable waxes, and oilseeds and oleaginous fruits, along with industrial plants, straw, and fodder. These imports are essential for Türkiye’s agricultural and food production sectors, ensuring the continued supply of key raw materials, especially to reduce food inflation.

The FTA gained momentum in August 2024 when Türkiye ratified the deal with Ukraine. According to initial details, once implemented, Ukraine will eliminate import duties on 56% of industrial goods and 11.5% of agricultural goods. Türkiye, in turn, will abolish import duties on 93.4% of industrial goods and 7.6% of agricultural goods.

These tariff reductions are expected to lower costs for businesses and consumers in both countries, fostering a more competitive trade environment. Additional reductions will be gradually phased in over a period of up to five years for industrial goods and up to 10 years for agricultural goods, allowing industries to adapt to the new trade conditions.

“We underscored the importance of finalizing Ukraine’s approval process for the Türkiye-Ukraine Free Trade Agreement, which has already been ratified in Türkiye. Additionally, we focused on mutual investments in agriculture and Ukraine’s vast reconstruction potential,” Bolat said.

The trade deal is aimed to facilitate business expansion, enhance market accessibility, and boost overall economic resilience in both countries.

Turkish firms to play key role in Ukraine’s reconstruction

During talks with Ukrainian Prime Minister Denys Shmyhal, Bolat reaffirmed Türkiye’s belief that Turkish firms could play a crucial role in Ukraine’s post-war rebuilding. He emphasized that Turkish companies possess the necessary expertise and resources to assist in restoring critical infrastructure, such as transportation networks, residential areas, and industrial zones, adding that Türkiye’s vast experience in international construction projects positions its firms as ideal partners for Ukraine’s reconstruction efforts.

Bolat stated that discussions involving Turkish business representatives resulted in meaningful steps toward deepening cooperation in post-war recovery of Ukraine. “In this context, we agreed to establish a Task Force Memorandum to coordinate Ukraine’s reconstruction efforts,” he said. The memorandum is expected to streamline project planning, financing, and execution while ensuring efficiency in the rebuilding process.

Türkiye also agreed to share its knowledge and expertise in construction with Ukraine within the memorandum, making valuable assessments regarding potential projects, Bolat added.

Despite global economic and geopolitical challenges, Turkish contractors undertook $28.6 billion worth of projects in 2024. To date, Turkish companies have participated in 12,461 construction projects across 137 countries, exceeding a total value of $533.8 billion, demonstrating the Turkish construction firms’ extensive capacity in delivering large-scale construction and infrastructure projects.

Bolat added that the Task Force will continue its work in line with the “Türkiye-Ukraine Reconstruction Task Force Implementation Principles,” signed in 2024.

This document outlines the guidelines, objectives, and operational mechanisms for the Task Force, ensuring a structured approach to cooperation in Ukraine’s post-war rebuilding efforts.

Under this framework, Türkiye and Ukraine will coordinate on reconstruction projects, focusing on infrastructure, housing, transportation, and key industries affected by the war. The Task Force will likely facilitate Turkish companies’ participation in rebuilding efforts, streamlining investment processes, regulatory compliance, and financing.

The agreement serves as a roadmap for collaboration, defining each party’s responsibilities, timelines, and project priorities while reinforcing Türkiye’s role as a key partner in Ukraine’s recovery.

Bolat described the visit as a testament to the strong commercial ties between Türkiye and Ukraine, emphasizing the shared belief that their cooperation will overcome regional challenges.

“We believe this visit reflects our mutual confidence in strengthening economic relations despite significant regional challenges, as well as the historical ties that unite our nations,” he said.

Meanwhile, Agriculture and Forestry Minister Yumakli stated in a post on X on Friday that his ministry had also assessed opportunities for cooperation in rehabilitating agricultural irrigation infrastructure in war-affected areas during the meetings. He emphasized the critical importance of global food security, citing the grain corridor as a key example.

He further announced that committees have been established to facilitate the reopening of Türkiye’s dairy exports to Ukraine.

Commenting on the matter, Harun Calli, head of the Turkish Packaged Dairy Products and Dairy Industry Association (ASUD), emphasized the Ukrainian market’s strong potential for the sector. “Our industry has sufficient production capacity to meet export demands in Ukraine,” he said.

“Our value-added dairy products remain an untapped export opportunity. The Ukrainian market presents significant prospects for the Turkish dairy industry.”

Türkiye’s balancing act in Russia-Ukraine conflict

Since Russia’s full-scale invasion of Ukraine in 2022, NATO member Türkiye has maintained a balanced relationship with both Kyiv and Moscow—supporting Ukraine militarily and advocating for its territorial integrity while refraining from joining Western sanctions on Russia.

A recent analysis by the French newspaper Le Monde described Türkiye as “one of the rare regional powers capable of both cooperating with Russia and limiting its influence.” This dual engagement allows Türkiye to maintain its regional influence while protecting its own economic and security interests.

According to Reuters, Türkiye has become a “key potential security partner” as Europe seeks to bolster its own defense capabilities and negotiate security guarantees for Ukraine within a possible cease-fire agreement.

Due to the ongoing war and associated risks, Ukraine is seeking to secure its processed petroleum and gas supplies from Türkiye. Under this arrangement, fuel shipments—including gasoline and diesel—will be transported to Ukraine via tankers, ensuring a stable energy supply despite logistical challenges.

In addition to the FTA, Türkiye and Ukraine are working to deepen cooperation in the banking sector, which could facilitate smoother financial transactions, investment flows, and trade between the two countries.

As the war has severely disrupted Ukraine’s civil aviation sector, limiting international flights, Turkish Airlines is expected to expand its operations to offer more connections from Ukraine to other countries, helping to address mobility constraints for travelers and businesses.

The war, which began in February 2022, reduced Ukraine’s gross domestic product (GDP) by approximately 20%, bringing it to around $200 billion in 2023. By 2025, the United Nations predicts that the country’s reconstruction may cost $486 billion—roughly two and a half times Ukraine’s GDP.