EU Devises Alternative 20 Billion Euro Aid Plan for Ukraine Amidst Hungary’s Veto
In response to the inability of European Union (EU) leaders to agree on a previously planned 50 billion euro aid package vetoed by Hungary’s Prime Minister Viktor Orban, the EU is conjuring an alternative financial support plan for Ukraine. This plan could round up to 20 billion euros, aiming to help Ukraine bypass a potential budget crisis and support its economy amidst the current conflict.
EU’s Plan B
The proposed alternative would involve EU member states issuing guarantees to the EU budget, thus allowing the European Commission to raise funds on the capital markets specifically for Ukraine. This mechanism mirrors the one employed during the COVID-19 pandemic for short-term work support schemes. Crucially, it does not require unanimous consent from all EU member states, thereby bypassing Hungary’s veto.
Aid Delivery by March
Despite the necessity for countries like Germany and the Netherlands to obtain parliamentary approval for providing national guarantees, officials remain hopeful that the process can be expedited. The aim is to deliver aid to Ukraine by March. The EU’s collaboration with the International Monetary Fund (IMF) is also noteworthy, as the IMF plans to release its next funding tranche for Ukraine, worth approximately $900 million, contingent upon the EU’s support.
Alternative Plan: Loans over Grants
Contrasting the original proposal, the alternative plan focuses on loans rather than grants. However, member states have the option to offer grants bilaterally. Another option under contemplation is to extend the current year’s funding structure, which furnished Ukraine with 18 billion euros in loans, for a few more months or up to a year. Despite these alternatives, the EU’s preference remains the original aid package, which also includes funding for defense and migration. The EU has reassured Ukraine that it will receive financial assistance by March at the latest.
