On Tuesday 20 June, as part of the mid-term review of the 2021-2027 Multiannual Financial Framework (MFF), the European Commission proposed a new financial architecture that will stabilise the European Union's macro-financial assistance to Ukraine to the tune of €50 billion until 2027 (see other news).
This new ‘Ukraine Facility’ will provide “predictability” for EU support for Ukraine's operation and reconstruction, and will be “an incentive” for other potential donors to get involved in the medium term, said Commission President Ursula von der Leyen. She pointed out that aid to this war-torn neighbouring country, taken directly from the EU budget, amounts to “€30 billion” and had never been provided for during the negotiations on the MFF in 2020.
Until now, the EU's macro-financial assistance to Ukraine has been more ad hoc, with the current ‘MFA+’ covering the country's financial needs for 2023, estimated at €18 billion. This time, the aim is to avoid recurring difficult negotiations between Member States, with certain countries such as Hungary using this issue as leverage to defend their particular interests (see EUROPE 13082/2).
The European Commissioner for the Budget, Johannes Hahn, described the operation of the ‘Ukraine Facility’. This, he said, would provide loans of “€33 billion” which, like the macrofinancial assistance for 2023, would be guaranteed using the margin between commitment and payment appropriations in the EU budget, as well as grants of “€17 billion” which, for their part, would be guaranteed by a new MFF financial instrument, the “Ukraine Reserve”.
The payment of the aid, which would be made on a quarterly basis, will be subject to stricter budgetary conditions and monitoring than at present, the Commission stresses. In particular, Ukraine will have to reform its internal audit and control systems. The Commission will be empowered to carry out checks on the progress of projects financed by European funds at any time, and a special audit committee will report regularly on the implementation of the Ukraine Facility. The aim is also to periodically inform the Council of the EU and the European Parliament about the conduct of the Facility.
The Ukrainian authorities will have to present a specific action plan indicating the macro-budgetary conditions inherent in the proper management of European funds. The novelty of the Facility this time lies in the identification of investments and structural reforms aimed at defining a concrete medium-term trajectory for the reconstruction of Ukraine and its rapprochement with the EU. In addition, data on Ukrainian recipients of European aid will be compiled and the identity of natural and legal persons receiving more than €500,000 will be made public.
Against this backdrop of uncertainty caused by Ukraine's military aggression, Ukraine will be able to request changes to its action plan if certain conditions or commitments can no longer objectively be met. Exceptional financial support is also available if the situation so requires.
It should be noted that other donors, such as Member States or multilateral financial organisations, will be able to contribute financially to the Ukraine Facility. The mobilisation of certain frozen Russian assets is also envisaged, provided that the legal work authorising such a practice is completed.
The presentation of this proposal comes on the eve of the London summit on the reconstruction of Ukraine, which Ms von der Leyen will be attending.
See the proposal for macro-financial aid to Ukraine: https://aeur.eu/f/7lt (Original version in French by Mathieu Bion)