Given the protracted war in Ukraine, the United States and the European Union are trying to continue to provide financial support to Ukraine. But the Americans, like the Europeans, are having difficulties approving new aid. Brussels has reportedly found a Plan B, while Washington is these days delivering the final tranche of aid already approved.
Published on: December 28, 2023 – 11:45 p.m
5 minutes
Europe would have found a way to continue to help Ukraine financially even in the event of a veto from Hungary, According to our colleagues at the Financial Times. In mid-December, 26 member states agreed and accepted in principle aid of 50 billion euros for Ukraine over four years, but the Hungarian Prime Minister Viktor Orban vetoed itcausing the relief plan to block itself.
Discussions must resume at a European summit scheduled for February 1, 2024. According to information from the Financial Times, the Union has already found an emergency solution – a Plan B – to forego the green light from Hungary, reports our correspondent in Brussels. Jean-Jacques Hery.
Officially, the Commission's goal is still the same. A spokesman for the institution confirms to us: “There is only one plan: that of achieving unanimity among the Member States in February for a review of the budgetary framework.” We are therefore sticking with the original proposal: a plan of 50 billion euros, of which 33 billion are in loans and 17 billion in donations, spread over four years, with the injection of new funds into the EU's seven-year budget. A plan that, like all budgetary issues, requires the unanimity of the Member States.
A less ambitious Plan B
However, according to the Financial Times, we are working behind the scenes to fend off a possible new veto from Budapest. The English newspaper mentions an alternative with loans guaranteed by certain Member States, namely those rated best by credit rating agencies. The prerequisite for this would be the approval of certain national parliaments, such as the Dutch or German parliaments. This solution would allow the European Commission to borrow 20 billion euros on the markets and thus be able to support Kiev without needing the support of all 27.
This Plan B relies heavily on the measures implemented during the Covid-19 epidemic, which allowed the Commission to provide up to 100 billion euros in aid to Member States. This Plan B would still prove to be less ambitious – only 20 billion – without a timetable as precise as the original project and it would be limited to loans without the involvement of subsidies.
American ultra-conservatives want to stop the fees
And if the European Union is divided on this issue, things are not much different in the United States, points out our correspondent in New York. Loubna Anaki. Negotiations on a new aid package are on hold in Congress. While Washington has just issued the last tranche already approved: $250 million. These include, among other things, ammunition and anti-tank weapons. Help that could well be the last for the moment.
Since the start of the war, Washington has approved $110 billion to support the Ukrainians against Russia. A sum considered too high by some ultra-conservative Republican elected officials, who have been blocking negotiations in Congress for several weeks and refusing to sign the new $61 billion check demanded by Joe Biden.
In return, they are particularly demanding that American migration policy be tightened. As the presidential election approaches, the issue of aid to Ukraine is becoming highly political. Some Republican candidates, led by Donald Trump, have called for an end to this American financial aid. In the meantime, it's up to Congress to decide things. Elected officials return to school on Jan. 8 after the school year break.
Volodymyr Zelenskyy came to Washington in mid-December in person – his third trip to the American capital in a year – to try to turn up the pressure. Vain. Since the start of the conflict, the Kremlin has been betting on a decline in Western aid, and any hesitation by Kiev's allies reinforces Russia's belief that its bet will work.
An increasingly complicated equation in Kyiv
The situation is becoming increasingly tense for the Ukrainian government, explains our correspondent in Kiev. Stephane Siohan. This week, Economy Minister Yulia Svyrdenko said in an interview with the Financial Times that without financial support from Western partners, his government could be forced to defer the salaries of 500,000 civil servants, 1.4 million teachers and 10 million pensioners in early 2024.
However, economic growth in Ukraine picked up again in 2023, but according to several political sources, at least 60% of the state budget depends on international aid, mainly from the European Union, the United States and the IMF.
In addition, the state budget has suffered greatly from the road blockade imposed by Polish drivers on the border between Ukraine and Poland, fewer exports and so many taxes that do not fit into the budget.
Brussels is preparing an emergency plan to transfer 20 billion euros to Ukraine without requiring the consent of recalcitrant Hungary.
The Kiev government has introduced a special tax on the banking sector, but if international aid does not arrive before February or March, the situation could become critical for much of the population.
Also read: Russian assets blocked in the West will soon be confiscated for the benefit of Ukraine?