Hundreds of billions at stake: Can Estonia compete with major players in rebuilding Ukraine?
Summary
- Estonia’s strength in rebuilding Ukraine lies in speed and flexibility, not in absolute funding amounts
- The key to success is early presence, trust and government support
- War risk insurance and a long-term plan will determine opportunities for Estonian companies
Article was published in Estonian by Postimees on 11 August 2026.
The English version has been edited for length.
European companies have much to gain from the rebuilding of Ukraine, which is expected to cost hundreds of billions of euros. Still, the small size of Estonian companies and the lack of war risk insurance could become obstacles. The next two or three years will determine who gets a seat at the table when future contracts are allocated, writes Postimees.
The race for a piece of the pie is already underway, even now while the war is still ongoing. Who can make themselves visible in the Ukrainian market first and establish themselves as a reliable partner? Can Estonia keep up with the major players in this competition?
The strength of Estonian companies is not their size
Estonia has earmarked around €75 million total for development cooperation and reconstruction in Ukraine for 2022–2027; countries such as Germany are operating on a scale of billions of euros. This does not mean Estonia's contribution is insignificant, but it does mean acknowledging that Estonia is not competing in the same financial weight class.
According to Mariin Ratnik, the deputy secretary general for Foreign Economic Affairs and Development Cooperation at the Ministry of Foreign Affairs, Estonia does not need to try to compete at the same level. In her view, Estonia's advantage lies in flexibility and specialisation.
"Estonian companies are small and flexible. By working together with others, we can handle the areas where we have strengths and a competitive advantage," Ratnik said, citing Eurocon's concrete work and Harmet's modular buildings as examples.
Alo Tamm, CEO of Harmet, considers innovative modular construction solutions to be the company's competitive advantage. "Our technology makes it possible to significantly shorten construction times without compromising on quality, which is particularly important in the context of rebuilding Ukraine," he said.
According to Tamm, Harmet's large production capacity means it has the potential to make a significant contribution to Ukraine's reconstruction. Thanks to an efficient production process, a customer can receive a turnkey solution in approximately three months. With support from its partners, Harmet has a production capacity of 600–800 modular homes per month.
Companies can already demonstrate their capabilities in Ukraine, which may later give them an advantage in winning larger tenders. "Our job is to offer them opportunities to cooperate," Ratnik said, "not to lead the major projects ourselves."
Estonia’s focus in Ukraine has been on the defence industry, construction, energy, the IT sector and educational technologies.
The key to success is being present before the major reconstruction begins
According to Margus Gering, Chief Operating Officer at the Estonian Centre for International Development (ESTDEV), preparatory work is already underway in Ukraine: "To a very large extent, what is happening now is the building of trust. Through all the projects we carry out, we show that we have the skills and people capable of doing the work."
In his assessment, the most important thing is for companies is to be present in Ukraine before large-scale reconstruction begins. "If you are there today, then tomorrow, when the major reconstruction starts, you will already have something to show for yourself," Gering said.
Successfully completed projects in Ukraine can also be used as references that companies can use in other foreign markets. For example, through ESTDEV, the Estonian company Digital Nation developed an artificial intelligence strategy for the Ukrainian government. The project was not large in financial terms for ESTDEV, but it became an important international calling card for the company.
"When a company enters a new country and can point to a project in which it developed a strategy for a country that is both at war and highly IT-literate, that says something about its credibility," Gering said.
War risk insurance has become a competitive issue
Companies wanting to participate in Ukraine’s reconstruction also have to assess the risks that come with moving part of their production to Ukraine. "If we genuinely want to take part in the major reconstruction process, then in construction it is not sustainable for us to manufacture modules in Estonia and transport them to Ukraine by truck," Gering said.
This is where war risk insurance comes into play. Lack of coverage is one of the biggest obstacles for Estonian businesses.
In the United States, Germany, France and Poland, government or government-backed systems provide companies with guarantees that help mitigate the risks associated with entering the Ukrainian market. Poland's state-backed KUKE programme, among other things, covers war risks.
At present, it is difficult to find Estonian-based solutions to cover risks associated with investments in Ukraine. For now, Estonian companies can apply for guarantees from MIGA, the Multilateral Investment Guarantee Agency established by the World Bank, to cover political and military risks.
According to Ratnik, war risk insurance is one of the main issues raised by businesses both in Estonia and elsewhere in Europe. Solving the problem is also important for Ukrainians because, according to Ratnik, they urgently need investment.
"In the case of ESTDEV contracts, the client assumes the war risk, so there is no need for additional insurance. In other cases, we certainly need to further mitigate risks related to war, credit and other similar risks," said Tamm, noting that easier access to insurance products would presumably make companies more willing to expand their activities.
Ukrainians themselves are also actively working to ensure that companies wishing to enter and invest in Ukraine can mitigate risks through various mechanisms. The Ministry of Foreign Affairs has discussed possible solutions, but there is currently no functioning system in place.
At the same time, the war could also become an advantage for Estonian companies. Many countries discourage or even prohibit their experts from travelling to Ukraine.
"One very significant thing that sets us apart, and for which we are often recognised, is that we have no restrictions and people are not afraid to travel to Ukraine," Chief Operating officer said.
Gering also noted that over last five years there has not been a single incident in their projects or their partners' work that was even remotely connected to corruption, and that this is not an issue ESTDEV should have to deal with.
"We have been very categorical about this issue from the beginning. We state our principles and standards clearly, and I think this has actually helped set expectations with our local partners that when working with Estonians, this is how things are done, period," Gering explained, while acknowledging that the regulatory environments are still different.
Supporting Ukraine’s recovery is a top priority of Estonian development cooperation
Ukraine is Estonia's most important partner country for development cooperation, and 72% of ESTDEV's total funding goes toward supporting Ukraine.
However, there was a significant change in ESTDEV’s funding this year. For the first time, foreign donors contributed more money to Estonian projects than the Estonian state itself - €23 million compared with €16 million.
"We want to bring more donor funding into our projects and, through that, give Estonian companies greater financial opportunities to implement larger projects," Gering said.
Nevertheless, Gering emphasised that the impact of the Ukraine projects cannot be measured solely in financial terms: "The value chain here includes change management as well as experience gained abroad that we bring back to Estonia."
This year, ESTDEV’s Ukraine portfolio is worth €28.4 million. The largest share, €14.2 million, has been allocated to support Ukraine’s cybersecurity and e-governance capabilities; €6.2 million to rebuild civilian infrastructure; €2.6 million to improve education systems and digital skills; €2.2 million to strengthen the rule of law; and €0.9 million to improve healthcare.
Among other initiatives, more than €250 million has been mobilised from other member states through the Tallinn Mechanism to address Ukraine's cyber needs. The Tallinn Mechanism is an Estonian initiative uniting 15 countries to improve Ukraine's cyber capabilities, particularly in the civilian sector.
Development cooperation agencies from Sweden, Norway, Ireland and the United Kingdom, among others, have channelled their own funding into Ukrainian projects through Estonia. According to Gering, this is a sign of the international community’s respect for Estonian experience: "Estonia has a reputation, particularly in Ukraine, for being able to get things done and to do them to a high standard."
He says Estonia's similar historical background to Ukraine also helps. "We understand their cultural context and mentality, and we know how to read the room," Gering explained. Furthermore, Estonia has gained experience over the years that many larger donors in Ukraine do not yet have.
Helping Ukraine is also a badge of honour, so to speak. For example, Estonia built a kindergarten in the city of Ovruch, and the Estonian flag now flies there alongside the Ukrainian flag. "Ultimately, other countries also want to put up their own little flag," said Gering. "The people who build that reputation for us are Estonian companies, which actually implement these projects. Estonia's good reputation is thanks to our companies.”
"ESTDEV helps Estonian companies enter new markets with less risk, gain vital experience, and build the foundation to grow independently."
Alo Tamm, CEO of Harmet
The state opens the door; companies have to walk through
According to Ratnik, the state's role is not to do business on behalf of companies but to create opportunities by organising business delegations, establishing contacts with Ukrainian partners and helping companies reach decision-makers at government level.
ESTDEV also plays an important role by involving companies in its projects through procurement processes and helping companies understand Ukrainian bureaucracy and its regulatory environment. Gering compared the situation to a child starting school.
"An Estonian company is like a child starting first grade who wants to feel safe entering an assembly hall full of noise and confusion. ESTDEV holds one hand, and the embassy holds the other. We support and assist Estonian companies at every step when problems or misunderstandings arise involving bureaucracy, communication or local government," he said, adding that it would be considerably more difficult for an Estonian company to enter Ukraine on its own.
Harmet considers ESTDEV's work important. "ESTDEV is doing valuable work for the internationalisation of Estonian companies, as it allows them to enter a new country with less risk and thereby gain references and the necessary experience to establish a so-called bridgehead from which the company can then move forward independently," said the company's CEO. Tamm also added that the business diplomacy provided by the Ministry of Foreign Affairs and embassies has improved in recent years.
After this year's Ukraine Reconstruction Conference in Gdańsk, Estonia was handed the baton to host the next conference. The 2027 Ukraine Recovery Conference will take place in Tallinn.
This will give Estonia greater visibility than before. But ultimately, success will not be determined by conferences or political declarations. It will depend on whether Estonian companies can carry out real work in Ukraine before others do and secure their place in the future market.
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