EU, three options for financing Kiev. 71 billion needed by 2026
Brussels proposes subsidies from the member states, an EU-funded credit line through loans on the markets, or a loan linked to frozen Russian assets. But the three options are not mutually exclusive
from our correspondent Beda Romano
BRUSSELS - The European Commission confirmed yesterday that Ukraine urgently needs fresh money to finance the war against Russia. "The amount of financing needed is significant," the EU executive warned. Three options identified by Brussels are now known. In a 10-page missive sent to the Twenty-Seven, President Ursula von der Leyen notes that the three possibilities are not mutually exclusive, and can be used together.
"We have identified three options: support financed by member states through grants; a credit line financed by the Union through loans on the financial markets; and a loan linked to the cash balances of Russian assets frozen" at the time of the invasion of Ukraine, Ms von der Leyen wrote. In a document attached to the letter, she added that "the three options are not mutually exclusive. They can be combined or sequenced."
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Brussels refers to the estimates of the International Monetary Fund, which forecasts Ukrainian needs of EUR 135.7 billion in 2026-2027 (of which EUR 71.7 billion next year alone). The document sent to the governments analyses the three options factually, financially and then legally. It was requested by the heads of state and government with the aim of understanding which instrument to use to support Ukraine financially, three and a half years after the Russian invasion of the country.
For some time, the European Commission has considered the use of Russian assets to be the easiest solution to implement, especially as it is less costly for national coffers at a time when European debt is high. Just yesterday, Economy Commissioner Valdis Dombrovskis warned that the debt of member countries at an aggregate level is set to rise from 82% in 2024 to 85% of gross domestic product in 2027.
The solution - which would set a historical precedent - does not please Belgium, the country that hosts many of Russia's currency reserves. The Belgian government has expressed doubts and demanded that the member states bear the risks jointly and severally. In this respect, the document prepared yesterday by the European Commission is reassuring. It speaks of the need to adopt 'appropriate safeguards' to ensure the stability of the euro and the financial institutions with which money is deposited.
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