“I remind some leaders of the European Union that our retirees, our displaced people, our teachers and other people” cannot be “held hostage by their indecision or by their bureaucracy”, this is “a crime”. Ukrainian President Volodymyr Zelensky did not mince words in his last speech to the population to express all his anger at the 8 billion euros of financial aid that the EU promised in May and which has not yet reached the coffers of Kiev. Zelensky did not want to mention names, but everyone in Brussels knows that it is mainly a country that is blocking these funds: Germany. Although in recent days, France and Italy have also gotten in the way of complicating the plans of the European Commission.
It all started in May, when EU leaders pledged to deliver 9 billion euros in loans to Ukraine as a package of macro-financial assistance, a commitment then ratified at the Brussels summit at the end of June. Since then, however, the resources disbursed have been 1 billion, sent in two tranches earlier this week. The problem is that the funds, in the Commission’s original proposal, should come from the Brussels budget, which in turn is replenished through Eurobonds issued on the market. But for the Commission to issue such Eurobonds, guarantees from the Member States are needed. And here Europe has wrapped itself up.
Berlin, in fact, opposed giving its fundamental guarantee, effectively blocking fundraising and consequently the disbursement of aid to Kiev. The motivation of the German government is that Ukraine is already heavily indebted (since the start of the conflict, it is estimated that its budget has lost 5 billion dollars a month) and continuing to lend would worsen the already fragile stability of the accounts. Hence the proposal to provide aid, but in the form of non-repayable subsidies. To demonstrate its good will, Germany has put 1 billion from its coffers on the table to be paid bilaterally (ie without going through Brussels).
The position of Berlin, writes Paola Tamma in Politico, triggered the governments of Italy and France, which, unlike the German one, look favorably on Eurobonds (so much so that our executive made no secret of wanting to reuse the method used to the Recovery fund to address the consequences of the war in Ukraine on the European economy and families). The political situation, therefore, is increasingly tangled. The Commission said it was working on “different options” to unlock the remaining 8 billion.
One of these would include a sort of Recovery fund in a mini version, that is, a mix of loans and subsidies for financial companies in the macro-financial assistance package. “We need to find sufficient guarantees outside the EU budget, with a coverage of 70%” and “this requires an agreement with the countries. We are working on it, it is not an easy package to conclude”, explained a spokesman for the European executive. In essence, about 3 billion should be non-repayable subsidies, and the remaining 5 billion loans. “Technical work is continuing” and “consultations” with the EU capitals “are underway”, assured Brussels.
Whatever the outcome of these consultations, the timeframe promises to be long, at least compared to Kiev’s expectations. The Commission aims to unlock the remaining resources in October, but there are those who think that there is too much optimism in Brussels. “Such an artificial delay in macro-financial assistance to our state is a crime or a mistake, and it’s hard to say which is worse than a full-scale war,” Zelensky thundered.