SOFIA— European Economy Commissioner Valdis Dombrovskis has issued a cautionary message regarding the EU’s potential need for interim funding for Ukraine if member states do not swiftly endorse the plan for utilizing frozen assets. Dombrovskis emphasized that procrastination could complicate the situation further. “The longer we now run delays, the more challenging it will become. It may open questions on some possible bridging solutions,” he remarked during a high-profile conference addressing Ukraine’s upcoming euro adoption.
Urgent funding solutions under consideration
The EU’s executive branch has proposed a strategy that would merge EU guarantees with the cash reserves of Russian assets managed by Euroclear in Belgium. This approach aims to facilitate a loan to cover Ukraine’s significant budget shortfall, estimated at $60 billion. However, the plan has faced opposition from Belgium, which has expressed reservations about the legal and financial risks associated with it.
In response to the challenges, EU capitals have directed the Commission to compile a list of alternative options to bolster financial support for Kyiv. Dombrovskis cautioned, “If we run further delays without deciding on a reparation loan or other feasible option for Ukraine … the question is, how will you provide financial support to Ukraine in early next year? So that’s the question we need to answer in this case,” highlighting the urgency of finding a bridging solution.
Legal concerns and alternative funding options
Dombrovskis also addressed Belgium’s apprehensions about potential retaliatory legal actions from Russia. He assured that the European Commission’s legal team has meticulously evaluated all related risks and believes they are manageable. “The European Commission’s legal service has very thoroughly assessed all the legal risks or possible litigation risks and sees them as contained and, in any case, guarantees to be provided to Belgium is to cover potential financial risks Belgium may face,” he stated.
In addition to the loan proposal, the commissioner mentioned that grants could also be a path forward for Ukraine, although he acknowledged that this option presents its own complexities for EU nations.