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EU to allow more aid to companies affected by Ukraine crisis

The European Commission on Tuesday will announce new state aid rules that allow EU countries to support businesses affected by the crisis in Ukraine, an EU official said.

The move follows a March 10 proposal by EU competition chief Margrethe Vestager and a consultation with the capitals. Vestager said she was ready to use “the full flexibility of our state aid toolbox,” while at the same time making sure the aid would not give unfair advantages to certain companies.

Russia’s invasion of Ukraine and the subsequent sanctions and countersanctions are expected to hit the EU hard. Prices of oil and gas already have skyrocketed amid Europe’s reliance on Russian energy. Food commodity prices have also surged as a result of the conflict, and specific dependencies on Russian raw materials could wreak havoc in supply chains.

As part of the RepowerEU plan to diversify the EU’s energy supplies away from Russia, the Commission on March 8 said it was considering loosening subsidy rules.

The new framework will make it possible to grant limited amounts of aid to businesses affected by the crisis or the sanctions and countersanctions, the official said.

EU countries will also be allowed to ensure sufficient liquidity is available to businesses.

The framework will also enable EU member countries to compensate companies for additional costs incurred due to exceptionally high gas and electricity prices, the official added.

A similar temporary state aid framework was adopted soon after the outbreak of the coronavirus in 2020 and allowed for swift EU approval of trillions in aid. Fears that the pandemic-related government rescue packages would widen the divide between the richer North and poorer South of Europe did not materialize, partly because the imbalance was offset by the EU recovery fund.

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