Belgium, (Brussels Morning Newspaper) The European Commission today proposed an unprecedented support package for Ukraine of up to €18 billion for 2023. These funds will be provided in the form of highly concessional loans to be repaid in regular installments starting in 2023.
The aid would be granted in exchange for Ukraine committing to “strong rule of law, anti-fraud and anti-corruption measures.” Thanks to this package, Ukraine will be able to keep on paying wages and pensions and keep essential public services running, such as hospitals, schools, and housing for relocated people. It will also allow Ukraine to ensure macroeconomic stability, and restore critical infrastructure destroyed by Russia in its war of aggression, such as energy infrastructure, water systems, transport networks, roads, and bridges.
The funds will be provided through highly concessional loans, to be repaid in the course of a maximum of 35 years, starting in 2033. The EU also proposes to cover Ukraine’s interest rate costs, through additional targeted payments by Member States into the EU budget.
Back on 18 May, Ursula von der Leyen, president of the European Commission, appeared before journalists in Brussels and announced, among other things, a new plan to provide Ukraine with €9 billion in financial assistance to cover the war-torn country’s budget deficit and keep its economy running.
“This is for the short term, for the relief right now, to support the government, this is a budget support,” von der Leyen said then.
Almost half a year later, just €3 billion is sent to the Kyiv authorities. Meanwhile, Russian forces continue their assault on Ukraine, destroying essential infrastructure and leaving cities without power and running water.
‘Critically needed’
The extraordinary financial assistance doesn’t come from the budget but is being raised on the markets by the commission on behalf of EU countries.
The aid is then transferred to Ukraine in favorable loans, and linked to achieving policy goals.
Some EU countries have been arguing to add bilateral aid to the EU’s total calculation, and others have argued for transforming loans to grants, fearing Ukraine will not be able to repay.
Ukraine’s president Volodymyr Zelensky told EU leaders last month that the remaining €6bn is “critically needed” this year.
Over the weekend, von der Leyen sought to assure Zelensky that help is on its way.
“Both leaders recognized the importance of ensuring predictable and regular funding of essential state functions,” a commission statement said after their phone call.
The support will come in the form of “highly concessional long-term loans” that would also work to support Ukraine’s reforms and its path toward EU membership, a statement added.
Helping Ukraine means helping Europe
In light of the recent developments of the events, Brussels Morning has talked to MEPs about the ongoing situation.
The Romanian economist and politician, vice-president of the European People’s Party Siegfried Mureşan stated that helping Ukraine means helping ourselves.
“.Additional help is deserved by the people of Ukraine and it is in the fundamental security interest of the European Union. We look forward to assessing the Commission’s proposal for the strategic multi-billion euro Ukraine recovery fund. We want to help Ukraine rebuild from the damage caused by Russia’s illegal invasion. We will also want to make sure that the existing EU priorities are still sufficiently funded. The European Parliament stands ready to analyze these new proposals, to work fast to reach an agreement that ensures much-needed grants, and to make sure financing opportunities are made available to Ukraine as soon as possible. The EPP Group stands with Ukraine. We strongly condemn the barbaric violence and cruelty inflicted on the people of Ukraine by the Russian Federation. Ukraine has our unwavering support towards its liberation and on its journey to EU membership”, said Mureşan.
On the other hand, Rasa Juknevičienė EPP Group Vice-Chair for Foreign Affairs said that a strong Ukraine will be the EU’s greatest pillar, both economically and in terms of security.
“That is why the Marshall Plan for Ukraine is also a roadmap for a stronger, more secure Europe. When Europe says it stands with Ukraine, this promise includes helping Ukraine to recover fully. However, it is crucial that Europe is on the same page on the Marshall Plan for Ukraine – it must include Ukraine’s accession to the European Union” said Juknevičienė for Brussels Morning.
