As the war in Ukraine continues, Ukrainian President Volodymyr Zelensky is set to embark on a quick tour of the United Kingdom, France and Italy on Thursday, October 10 in search of support. In light of this, on Wednesday, the 27 member states’ ambassadors to the European Union (EU) agreed to increase their financial aid to Kyiv. They have decided to lend Ukraine up to €35 billion by 2025.
This was not exactly the original plan. In June, at the urging of Washington, the G7 nations – the United States, the UK, Germany, France, Italy, Canada and Japan – promised to grant Kyiv a $50 billion (€45.7 billion) loan. The goal was to establish a secure aid package for Kyiv that could not be jeopardized by the potential return of Donald Trump to the White House or the rise of the far-right in Europe.
The plan was for the Europeans to contribute $20 billion to the effort, the US as much, while London, Ottawa and Tokyo would contribute the other $10 billion. Since there was no expectation of Kyiv repaying this loan, it was envisioned that the interest on the Russian Central Bank’s assets, which had been invested outside Russia and frozen following Western sanctions against Moscow, would be used for this purpose.
Before making a decision on a divisive issue during his election campaign, US President Joe Biden wanted to minimize the cost to American taxpayers. He asked European leaders to ensure that the frozen Russian assets on their territory, which make up more than two-thirds of the total Russian assets frozen worldwide, would remain frozen until Moscow paid war reparations to Kyiv.
Orban obstacle to unanimity required
The US wants the sanctions against Moscow, which are currently renewed every six months, to have a lifespan of 36 months. This, like all sanctions, would require a unanimous decision by the 27 member states. In Budapest, Viktor Orban was eagerly waiting for this opportunity to derail the EU’s plans. The Hungarian prime minister, who is openly close to Vladimir Putin and often seeks to capitalize on his relationship with European partners, is a regular opponent in this regard.
He blocked negotiations for weeks before the 27 member states reached an agreement on February 1 to provide €50 billion in financial aid to Ukraine until 2027. For over a year, Budapest has prevented the Europeans from delivering the promised €6.6 billion in military aid to Kyiv.
Hungary is opposing the extension of sanctions and suggesting that it is more appropriate to wait for the outcome of the US elections before making any decisions. “We’ll have to see which way the future US administration goes on this issue. The election campaign will show that. There are two ways of solving this problem: one for peace, the other for war,” reiterated Hungarian Finance Minister Mihaly Varga on Tuesday at a meeting with his European counterparts in Luxembourg. In other words, the opposite of the G7’s objective.
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The European Union (EU) has recently agreed on a new financial aid package for Ukraine, demonstrating a continuous commitment to the country’s economic stability and reform. This move aims to help Ukraine tackle its economic challenges, implement much-needed reforms, and mitigate the repercussions from the ongoing conflict and humanitarian crisis in Eastern Ukraine.
The decision to allocate further financial assistance was approved by the EU’s economic and financial affairs ministers at a meeting in Brussels. The aid package, termed as macro-financial assistance (MFA), is worth up to €1.2 billion ($1.4 billion). This arises as the largest financial aid ever offered by the union to a non-EU member, underscoring Ukraine’s strategic importance to the bloc.
The EU is a vital supporter of Ukraine, and this financial aid package is one aspect of a broader strategic approach. Since 2014, the bloc has provided a total of €3.8 billion ($4.5 billion) to Ukraine through previous MFA programs.
The new funding is intended to support the Ukrainian authorities’ efforts towards macroeconomic stability, tackle structural issues, enhance social fairness, and foster green and digital transitions. These reforms are expected to cover a wide range of areas, including strengthening the rule of law, eliminating corruption, overhauling public administration, enhancing social protection, and promoting sustainability.
The disbursement of funds will be contingent on the successful implementation of these reform commitments by the Ukrainian government. The European Commission, in close cooperation with other international financial organizations such as the World Bank and the International Monetary Fund, will monitor the implementation of these measures.
This assistance comes at an important time as Ukraine faces intense challenges. Since 2014, the country has been grappling with a conflict-induced humanitarian crisis in the eastern part of the country, complications from the COVID-19 pandemic, and ongoing economic difficulties.
Despite these struggles, Ukraine has shown considerable resilience and commitment to implementing comprehensive reforms. This latest round of financial aid is a testament to the EU’s sustained support of these measures and demonstrates the union’s belief in Ukraine’s potential for political, social, and economic progress.
The EU’s commitment to Ukraine also reflects the strategic importance of the country to the bloc. As a neighbor and essential partner, Ukraine plays a crucial role in the EU’s eastern policy. Strengthening Ukraine’s economic stability and resilience not only benefits the country itself but also enhances security and stability in Eastern Europe and beyond.
In conclusion, the new financial aid package is a strong sign of the EU’s enduring support for Ukraine. It underlines the EU’s commitment to assisting Ukraine in the implementation of robust and comprehensive reforms and dealing with its economic and social challenges. It serves not only as a necessary lifeline for the country in its current difficult situation but also as a catalyst for long-lasting improvement and stability. It’s a substantial step by the EU to continue fostering a close partnership with Ukraine and support its journey towards a more prosperous and secure future.
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EU agrees on new financial aid package for Ukraine
