The EU endorses substantial euro-denominated financial aid for Ukraine.
Since Russia's invasion of Ukraine, the economic situation of the country has worsened significantly. To provide relief, the European Union has proposed a new aid package worth up to 35 billion euros. The EU leaders, during a meeting in Brussels, approved loans for this and the upcoming year. EU Commission President Ursula von der Leyen had previously promised such aid during a visit to Kyiv in September.
The EU's aid package is part of a larger $50 billion (approximately €46 billion) aid pledge made by the G7 countries at their summit in Italy in June. German Chancellor Olaf Scholz described this as a "historic decision." However, Hungary has been impeding the details of this initiative at the EU level.
The $50 billion aid is proposed to be funded by the interest earned on frozen Russian assets in Europe. Hungary, at present, is hindering a decision regarding the long-term use of these interest earnings under EU's sanctions on Russia. The sanctions currently have to be renewed unanimously every six months. The EU Commission has suggested extending the collection of interest earnings for three years, but the Hungarian government, led by Viktor Orban, opposes this.
EU member states still need to ratify the aid
To make use of the EU's loans worth up to 35 billion euros, a majority of 15 EU member states, representing 65% of the EU population, is required. The EU member states still need to approve the aid, and the approval of the European Parliament is also required. Both are expected to happen by the end of October as Ukraine is facing a severe financial crisis.
According to the Commission's proposal, the EU expects its G7 partners - the USA, Japan, and Canada - to "cover the remaining credit amount" to reach the $50 billion target. However, due to Hungary's obstruction, the USA has recently expressed reservations about participating, raising concerns about liability, as per diplomats. If Donald Trump wins the presidential election on November 5, US participation may be withdrawn, as suggested by Brussels sources.
The EU Commission is overseeing the process of obtaining approvals from a majority of 15 EU member states and the European Parliament to access the proposed aid package of up to 35 billion euros. The Commission is also relying on the G7 partners to contribute towards the $50 billion aid target, as per their proposal.
