Ukraine’s need for more financial backing from its allies has become “urgent” and the European Union cannot afford to hesitate in helping Kyiv shore up its position on the battlefield, Ursula von der Leyen has said.
In a letter to the leaders of the EU’s 27 states, Ms von der Leyen said a decision would need to be taken before the end of the year about how to fill a looming shortfall in Ukraine’s wartime budget.
The president of the European Commission, the union’s executive branch, said several “stark” options were on the table, none of which were easy or without drawbacks.
The letter, sent to national capitals on Monday and seen by The Irish Times, said Ukraine was estimated to need more than €130 billion in financial support over the next two years.
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US president Donald Trump’s administration has pulled financial support and military aid coming from Washington, but continues to send weapons to Kyiv on the condition they are paid for by other Nato allies.
In her letter to national governments, Ms von der Leyen said Russian leader Vladimir Putin clearly believed he could “outlast” Ukraine and Europe, in the war that was started four years ago by Russia’s full-scale invasion of Ukraine.
A big injection of finance was urgently required to strengthen Ukraine’s position “on the battlefield and at the negotiating table”, Ms von der Leyen said.
That could come from direct contributions from governments’ national budgets, common borrowing jointly repaid by EU states over time, or a loan funded by Russian central bank cash frozen by economic sanctions.
“Europe cannot afford paralysis, either by hesitation or by the search for perfect or simple solutions which do not exist,” the German politician told EU leaders.
The paper of options put forward by the European Commission will renew the debate about a proposal to use Russian state assets frozen in Europe to finance a €140 billion loan to Ukraine. The legally creative loan would only be repaid if Moscow provided compensation for the destruction caused by the war.
Belgium has withheld its support for the so-called “reparations loan”, because it fears it will be exposed to costly legal challenges, given the Russian central bank assets in question are frozen in Euroclear, a securities depository based in Belgium.
Ms von der Leyen said the loan would be designed to comply with international law, meaning the EU would not technically be confiscating the Russian state cash.
The commission president’s letter said financial markets could be spooked if the loan “was incorrectly perceived by others as a confiscation”.
“A concerted effort by the union, and possibly international partners, to counteract such perception would need to be made. The risk can also be further reduced if international partners take similar measures,” she wrote.
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A summit of EU leaders next month in Brussels will be dominated by negotiations to back the loan proposal.
Ms von der Leyen’s letter said financial guarantees provided by EU states, to cover the cost of the loan should repayment be triggered early, would be weighted in proportion to each member state’s gross national income (GNI).
Ukraine needs funds to source more missile defence systems and drone interceptors, to guard against Russia’s escalating aerial bombardments targeting cities and energy infrastructure, the letter said.
Meanwhile, Ukraine will obtain up to 100 French-made Rafale warplanes over the next 10 years under a deal signed on Monday, both countries said.
Air defence systems, munitions and drones were also included in the letter of intent signed by Ukrainian president Volodymyr Zelenskiy and his French counterpart, Emmanuel Macron.
The letter of intent was a political commitment, rather than a purchase deal, which would come later, the Elysée said. The aim was to finance it with EU programmes and the planned use of frozen Russian assets.- Additional reporting: Reuters
