The European Comission has proposed this Wednesday an unprecedented assistance package for Ukraine of 18,000 million euros by 2023. The objective is to help the Government of kyiv to pay salaries, pensions and the repair of energy infrastructure or social in the midst of Russia’s war of aggression. And guarantee a “stable” and “predictable” flow of financing, unlike what happened during this first year of conflict.
However, the Community Executive’s plan collides with the threat of a veto by Hungary. Your foreign minister, Peter Szijjarto said Monday that his country will continue to provide bilateral aid to Ukraine, but will not authorize no new common borrowing initiative by the EU. The Government of Viktor Orbán is thus pressing for the unblocking of its recovery plan, which remains unapproved due to Brussels’ doubts about respect for the rule of law in Hungary.
The Commissioner responsible for Budgets, Johannes Hahnhas said that he still hopes to find a “positive solution”. The Community Executive intends that this assistance package be approved in the December Ecofin and that the first tranche of the aid is already disbursed in January 2024.
[Bruselas propone congelar 7.500 millones de fondos europeos a Hungría por fraude y corrupción]
To capture the 18,000 million euros in the markets, Brussels intends use the EU budget as collateral, which requires the unanimous agreement of the Twenty-seven. Hahn explained that this solution is easier and more robust than requesting guarantees from the Member States, and furthermore does not increase public debt.
The money will be disbursed to kyiv in the form of soft loans to be paid in several tranches. The credits will have a grace period of 10 years and a maturity of 35 years. The Member States will be the ones to pay the interest rates.
In exchange for the money, the EU will demand from Ukraine a series of sectoral and institutional reforms, especially in the field of fighting fraud and corruption and strengthening the rule of law. However, the Community Executive assures that it will be “realistic and flexible” because “Ukraine is a country at war.
Since the start of the war, the EU has mobilized a total of 19.7 billion euros in aid to Ukraine, according to data from Brussels. But most of the money has been provided through decisions ad hoc. The Ukrainian president, Volodímir Zelenski, had asked the president of the Commission, Ursula von der Leyen, more stability in payments.
