The European finance ministers voted overwhelmingly, on Friday 14 July, in favour of continuing the European Union’s macro-financial assistance to Ukraine to enable it to honour its financial commitments and begin reconstruction despite the Russian military invasion.
The current President of the Ecofin Council, Spain’s Nadia Calviño, noted the “unanimous support” of the Member States. The Spanish Presidency of the Council of the EU intends to move forward quickly so that a new framework is in place “by January 2024”, she told the press.
During the public debate, the vast majority of ministers welcomed the European Commission’s proposal, included in the mid-term review of the Multiannual Financial Framework (MFF) 2021-2027 (see other news), to set up a specific Financial Facility for Ukraine in order to stabilise EU aid of up to €50 billion until 2027 (see EUROPE 13205/9). In their view, such a proposal would make EU action more predictable than the ad hoc aid measures adopted to date.
However, Latvia and Lithuania pointed out that, in terms of annual allocations, the aid proposed would be less than the €18 billion in assistance provided for 2023.
Hungary has not opposed the continuation of macro-financial aid to Ukraine, whereas earlier this week it had opposed the review of the MFF as long as the European funds allocated to Hungary’s post-Covid-19 recovery plan have not been released (see EUROPE 13219/2). The Hungarian Secretary of State, Tibor Tóth, nevertheless set two conditions for the Budapest agreement: - the Commission should provide an assessment of how Kyiv has used the current macro-financial support; - the rights of Hungarian minorities in Ukraine must be respected.
Decoupling? Bulgaria and the Netherlands have indicated their preference for prioritising discussions on aid to Ukraine by decoupling them from negotiations on the other, more contentious, aspects of the review of the MFF. Poland stated that aid to Ukraine should be provided “as quickly as possible”, while Germany claimed that, “politically”, aid to Ukraine was different from the review of the MFF.
However, the Spanish Presidency, supporting the position of the European Commission, considers that all the components of the mid-term review of the EU budget, including aid to Ukraine, are a package. “The Ukraine Facility will be mainly financed through the EU budget, so from the Commission’s point of view, it is linked to the revision of the MFF”, said the Commission’s Executive Vice-President, Valdis Dombrovskis.
With regard to the financing of the aid, Denmark and Sweden opposed the idea of new loans to finance macro-financial assistance to Ukraine. “Until now, we have helped Ukraine without reopening the EU budget. We should do the same”, said the Danish representative.
Several countries, such as the Netherlands and Belgium, have taken a positive view of the conditions in terms of governance, control of spending and respect for democratic standards that have been set as a condition for receiving EU aid. However, some have argued that the uncertainty of war requires flexibility.
Other Member States, such as France, Denmark and Latvia, have advocated facilitating private sector investment as much as possible, in particular by granting public guarantees to cover any losses arising from the situation in Ukraine.
By Thursday evening, sixteen Member States had formalised their participation in a specific fund within the EIB earmarked for the reconstruction of Ukraine. With more than 400 million euros at its disposal, this fund will mainly contribute to the construction of local infrastructure (hospitals, schools, water distribution and purification, transport networks, etc.).
For more information on the EIB's Ukraine Fund: https://aeur.eu/f/83c (Original version in French by Mathieu Bion)