On the evening of Monday 5 February in Strasbourg, negotiators from the European Parliament and the Belgian Presidency of the Council of the European Union reached a provisional political agreement on the ‘Ukraine Facility’, the instrument that will be used to deliver €50 billion in macro-financial aid from the EU to Ukraine (€33 billion in loans at preferential rates and €17 billion in grants) until 2027 (see EUROPE 13325/1).
“The EU is prepared to support Ukraine as long as needed”, said Belgian Finance Minister Vincent Van Peteghem in a statement. In his words, “EU aid will enable Ukraine to carry out the necessary reforms and modernisation efforts to enable it to move forward on the road to EU membership”.
The aim of Parliament and the Council of the EU is to finalise the legislative procedure as quickly as possible, in particular through a vote at Parliament’s plenary session at the end of February. Once the legislative text has been adopted, the European Commission will be able to activate ‘bridge ‘financing from March onwards, consisting of periodic payments of €1.5 billion over a limited period.
According to the Parliament/Council agreement, the breakdown of total aid will be as follows: - €38 billion (€33 billion in loans + €5 billion in grants) would be allocated to the Ukrainian action plan for reform and investment; - €7.5 billion (€6 billion in guarantees + €1.5 billion in mixed financing) for the investment framework; - €4.4 billion for costs associated with the gradual alignment with the acquis communautaire (including interest on loans and interest-related arrears).
The Ukrainian authorities will have to draw up a programme detailing investments and reforms, based on consultations with the Rada - the Ukrainian Parliament - and civil society. This programme will also enable mechanisms to be put in place to monitor and control the use of EU aid. In particular, following the example of the Next Generation EU Recovery Plan in the EU, a complete scoreboard of funded projects will be set up and the identities of beneficiaries receiving more than €100,000 will be made public (the threshold was €500,000 in the initial proposal).
Damian Boeselager (Greens/EFA, German), one of Parliament’s negotiators, welcomed the fact that Parliament had been able to guarantee that 20% of the investments made via the Facility would be used for the climate transition, that 15% of the envelope reserved for investments would benefit Ukrainian SMEs, and that 20% of the same envelope would be managed by the public authorities.
Governance. The MEP referred to an “arduous discussion” between Parliament and the Council on the governance of the Facility. In the end, it will be up to the Council to formally approve the Ukrainian investment and reform plan by a qualified majority of Member States, whereas Parliament was in favour of a delegated act. The Member States will also adopt a decision to release each financial tranche.
In addition, in order to give national treasuries predictability, annual subsidy payments may not exceed €5 billion. For loans, the maximum amount is indicative only. It will be up to Parliament and the Council to set the exact annual amounts as part of the standard budgetary procedure.
The European Commission will raise the €33 billion in loans on the capital markets. These will be guaranteed from the EU budget using the same technique as for macro-financial assistance to Ukraine for 2023, despite the fact that the European Court of Auditors had pointed out “the considerable risks” of such a financial arrangement. (Original version in French by Mathieu Bion)