Brussels proposes that the EU states provide Ukraine with 9 billion euros in financial aid. However, completely different sums are needed for the construction, and some would like to take on common EU debts for this.
Cargo ships in the Black Sea – the blockade of the port of Odessa causes great economic damage.
Russia obviously does not want to defeat Ukraine only militarily. President Vladimir Putin fundamentally denies the country’s right to exist and is in the process of ruining it economically as well.
The port blockade is causing enormous damage to Ukraine
Not only rocket attacks on factory buildings speak for this, but in particular the blockade of the Ukrainian ports on the Black Sea. This means that a lot of grain is stuck in the port of Odessa, for example. According to the EU Commission, before the war, 90 percent of grain and oilseed exports left Ukraine by sea.
Now the companies are trying to bring the goods overland to the EU. But that is not easy, since the railways in the EU often use a different gauge. Accordingly, the grain has to be reloaded or transported by truck. This is expensive and time consuming.
A few days ago, the EU Commission therefore asked companies and neighboring countries to make a special effort. “20 million tons of grain must leave Ukraine within less than three months using the EU infrastructure,” said EU Commissioner Adina Valean in a statement.
Accordingly, importers should send additional trucks and use a logistics platform of the Commission for coordination. Furthermore, these exports should be given priority and customs authorities should turn a blind eye.
In addition, the Russian troops are apparently stealing wheat and selling it to Syria, for example. All this contributes to a slump in state revenues.
Five billion dollars a month
The Executive Director of the International Monetary Fund (IMF), Kristalina Georgieva, said recently, Ukraine needs $5 billion a month to make ends meet. The EU Commission therefore now wants to make EUR 9 billion available to Ukraine to maintain basic services, cover humanitarian needs and repair the most important infrastructure that was destroyed. The sum is to be transferred as a loan under macro-financial assistance. Further contributions, for example from the G-7 countries, are planned.
The loans are granted with long terms and preferential interest rates. The Commission invites Member States to agree on the provision of additional guarantees. According to reports, it is also conceivable that the Commission will take on debt on behalf of the EU in order to finance this aid. That could once again fuel a discussion about the controversial euro bonds and the debt union.
Money from Russia for the Ukraine development fund?
The proposal to the heads of state and government already includes the procedure for the reconstruction of Ukraine. The EU’s recovery fund, which was accumulated after the pandemic, is partly used as a model. However, it was still too early to say what amount would be needed, according to commission circles on Wednesday.
There are voices that speak out in favor of resorting to confiscated funds, for example from Russian oligarchs, for the construction and thus involving Russia. However, critics point out that this would jeopardize legal certainty and use frowned upon methods. Behind the scenes, however, there are apparently efforts to create a legal basis for this.
The EU would like to organize the financing of the construction via a platform open to partners. Ukraine would present a recovery plan called Rebuild Ukraine, which would also include reforms to better fight corruption and take into account digital transformation and climate protection.