Partial agreement among EU states on financial support for Ukraine. Leaders to decide on figures and modalities

Brussels – There’s agreement on targets, but figures and modalities will be determined by the heads of state and government. Ambassadors from the 27 EU member states meeting this morning at COREPER (Committee of Permanent Representatives to the EU) have reached an agreement in principle on the negotiating mandate on the instrument for financial support to Ukraine from now until 2027.

The agreement at the moment is only partial, European sources explain, since representatives of the member states have agreed only on the general architecture of the financial instrument. Funding figures and modalities (e.g., the split between loans and grants) are to be determined by EU leaders at the EU extraordinary budget summit to be held on February 1.

In the European Commission’s proposal, support for Kyiv will be worth 50 billion euros, including 17 billion euros in grants and 33 billion euros in loans. The political knot will be convincing the Hungarian premier Viktor Orban, who held the entire resource package hostage during the last summit in December, saying he was against the new 50 billion euro financial instrument for Kyiv. One possible solution—which already emerged during the December negotiations—could be to secure the 50 billion support for Ukraine extra-budget, and leave only the coverage of EU priorities to the budget review. This could also overcome the obstacle of the unanimity required for the green light on financial matters, paving the way for a 26-way agreement on the new instrument for Kyiv.

The Ukraine Facility, the council explained in a note, would thus bring together EU budget support to Ukraine into a single instrument, providing Ukraine with “coherent, predictable, and flexible support for the period 2024-2027,” tailored to the unprecedented challenge of supporting a country at war. “The council’s partial negotiating mandate,” the note reads, “does not include budgetary issues, in particular the overall size of the instrument and the share of grants and loans, which will depend on the outcome of the horizontal negotiations on the Mid-term review of the Multiannual Financial Framework for 2021-2027.

In the agreement, member states confirmed the three pillars of the European Commission’s proposal. The Ukrainian government will prepare a “Plan for Ukraine”, setting out its intentions for the country’s recovery, reconstruction, and modernization and the reforms it intends to undertake as part of the EU accession process. Financial support in the form of grants and loans to the Ukrainian state will be provided based on the implementation of the Plan for Ukraine, which will be supported by a set of conditions and a timetable for disbursements. Through the Ukraine Investment Framework, the EU will provide support in the form of budget guarantees and a combination of grants and loans from public and private institutions. A guarantee for Ukraine would cover the risks of loans, guarantees, capital market instruments, and other forms of financing to support the Facility’s objectives. The third pillar would provide technical assistance and other support measures to help Ukraine align with EU laws and implement structural reforms on its path to future EU membership.