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Commission makes financing push for Ukraine

The EU will play a key role in financing Ukraine’s reconstruction once the war ends, the Commission announced Wednesday as it called on EU countries to provide the cash.

“The Union is ready to provide a major part of the overall efforts from the international community in the rebuilding of Ukraine,” the EU executive wrote.

Through a “Ukraine reconstruction platform,” co-led by the Commission and Kyiv, the EU hopes to bring together other donors, including G7 and G20 countries and international financial institutions, into an “overarching and single-entry point for all actions on the reconstruction of Ukraine.”

“We are proposing this framework simply because we know that entering into the EU family is the postwar horizon for Ukraine,” said Economy Commissioner Paolo Gentiloni. “[For] years, entering in the EU family has been a political goal but also a dream in Ukraine. Now I think that this willingness is stronger than ever, and this is also the basis of this common steering of this platform for reconstruction.”

The EU would support this effort through a new financing instrument, the “RebuildUkraine Facility,” which would distribute a mixture of grants and loans. Lodged under the bloc’s budget, its operation would resemble the EU’s cash-for-reforms coronavirus relief fund “with a clear link to investments and reforms.”

The communication didn’t name a figure for the facility, writing that “overall needs for the reconstruction of Ukraine are not yet known.” But in past remarks, Commission officials put the ballpark figure at between €500 billion and €600 billion. The EU wouldn’t be alone in covering those needs, but “even if combined with contributions from other international partners, the European Union has a strategic interest in leading the reconstruction effort of Ukraine,” the Commission wrote.

As POLITICO reported earlier Wednesday, the Commission listed various proposals to cover those needs, including increased contributions by EU countries and other countries if they want to. “What we can say is that the platform is open, every global player will decide” whether to chip in, Gentiloni said.

Another option is to raise funds on capital markets based on guarantees from EU countries, “given the scale of the loans that are likely to be required.”

The Commission also noted the recourse of using Russian assets confiscated under its sanctions regime, but with caveats on legal ramifications: “It can be considered whether it is possible to use frozen Russian assets as [a] financing source in line with national and EU law, for instance following potential criminal proceedings on criminal activities related to EU-listed Russian or Belarusian individuals and companies,” it said.

The Commission also announced €9 billion in short-term financial assistance for Ukraine along with its plan for financing its reconstruction once the war ends, while calling on EU countries to provide the necessary guarantees. The EU budget would subsidize the interest costs, it said.

EU leaders are due to discuss the issue at their summit at the end of the month.

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