Ukraine: how the EU wants to finance reconstruction – Politics

From war in Ukraine but the EU is already planning to rebuild. More specifically, it discusses how compensation for war damage could be financed after the peace treaty. To this end, the EU Commission wants to draw up a so-called Strategic Reconstruction Plan “Rebuilding Ukraine”. An eight-page draft depends on it Süddeutsche Zeitung in front. The plan provides funding for Member States and international partners for projects in Ukraine, subject to strict conditionality such as the fight against corruption and reforms in the Ukrainian government. Such reforms should bring the country closer to the EU – after all, Ukraine wants to become a member.

The agency estimates that the reconstruction could take “more than a decade,” according to the concept paper. The principle of ‘rebuilding better’ must be applied here. This means, for example, that new infrastructure and homes should be designed to be climate-friendly. How much money is needed is still unclear, but the damage of the war is already in the hundreds of billions of euros.

The European Union’s financial contribution to the EU budget will be included in the new program. This should be based on the functioning of the EU Aid Corona Fund. In this case, Member States must submit reform and investment plans to the Commission. The Authority examines them and approves low-interest grants and loans where the individual tranches are linked to certain milestones.

The reforms and investments that Kyiv has to promise for money from the new program are designed to help, among other things, further integrate the Ukrainian economy into the EU internal market, improve the business environment or “gradually align” Ukrainian law with the EU. said the standards need to be lighter. Good governance, the rule of law, sound financial management and protection against corruption and fraud are also important.

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Can Russia be asked to pay?

The money for the reconstruction plan will also come from international partners, but it is in the EU’s “strategic interest” to lead the effort and play a “significant part”, the commission explains. Grants to Ukraine could be covered by additional payments from Member States to the EU budget or by redeployment. As for the low-interest loans to Kiev, the Commission proposes to finance them by taking on new debt itself. The Member States are then jointly and severally liable for such EU debts.

This proposal is explosive: although the Commission is also indebted to the Corona Aid Fund, it was intended as a one-off reaction to exceptional circumstances. Some EU governments, including the traditional German one, are very critical of Europe’s common debt. The Brussels authorities also allude to the possibility of using confiscated Russian assets to finance reconstruction. However, this is considered legally sensitive information. In addition to these long-term considerations, the Commission has announced that it will transfer another $ 1 billion loan to Kiev this year for the day-to-day business of the ailing government.

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