13:41 27.02.2024

European Parliament backs creation of EUR 50 bln Ukraine Facility for 2024-2027

4 min read
European Parliament backs creation of EUR 50 bln Ukraine Facility for 2024-2027

The European Parliament supported the creation of Ukraine Facility worth EUR 50 billion for the period of 2024-2027, the funds of which will be used to support life and restore the Ukrainian state, as well as to perform reforms on the path to membership in the European Union.

The corresponding resolution was voted during the plenary meeting of the European Parliament in Strasbourg on Tuesday.

The resolution was sponsored by Speakers from the Committee on Foreign Affairs, Michael Gahler (Germany, group of European populists) and the Budget Committee Eider Gardiazabal Rubial (Spain, group of socialists and democrats).

Some 536 MPs voted in favour of the resolution, 40 against and 39 abstained. A total of 615 MPs took part in the voting.

Previously, the corresponding proposal of the European Commission was approved by the European Council at an extraordinary meeting on February 1, 2024 convened by the Belgian presidency, since at a scheduled meeting held in December 2023, Hungarian Prime Minister Viktor Obran blocked this decision.

According to the document, the Facility should closely link recovery, reconstruction and modernization to the requirements and process of accession to the Union, linking financial support to reforms and investments for accession to the EU.

The resolution notes that EU support should be directed in three areas. The first is financial support for Ukraine to implement reforms and investments, as well as to maintain the macro-financial stability of the country, as provided for in the Ukraine Plan, which should be developed by the Ukrainian government. The second is Ukraine's investment structure to mobilize investment and expand access to financing. Third, assistance towards European integration in order to mobilize technical expertise and build capacity.

The resolution also outlines the framework of the Plan that Kyiv must prepare. “Ukraine should prepare the Ukraine Plan as a coherent, comprehensive and adequately balanced response to rebuilding and modernising Ukraine, supporting its economic, social and environmental recovery, sustainable development and its progress towards accession to the Union. As such, the Ukraine Plan would also provide a basis for other donors to identify the priority funding areas for the reconstruction of Ukraine and foster ownership, coherence and additional contributions to that end. For that purpose, Ukraine should ensure that the Ukraine Plan as prepared covers its recovery, reconstruction and modernisation needs in an integrated manner, identifying to what extent the measures of the Ukraine Plan are expected to be financed by the Union through the Facility. In preparing the Ukraine Plan, Ukraine should take into account support provided under other Union programmes as well as support from other donors. Ukraine should develop the Ukraine Plan, ensuring that other donors are able to contribute to supporting the measures of the Ukraine Plan, including by increasing the funding available under the Facility," according to the document.

The resolution notes that the Plan's medium-term vision should also encourage Ukraine to make investments and reforms towards a transition to a green, sustainable, digital and inclusive economy.

The European Parliament also supports the Council's decision on the possible use of income from the immobilized finances of Russia. According to the resolution, Russia and its allies have to pay for the damage caused to Ukraine. The Union and its member states, in close cooperation with other institutions and countries, must create a legal framework for the confiscation of Russian state assets in order to finance the reconstruction of Ukraine and provide compensation to victims of Russian aggression, which is permitted in accordance with normal international norms, the resolution states.

The document stipulates that the Commission must annually evaluate the implementation of the Fund. According to the resolution, in order to effectively monitor implementation, Ukraine has to report on implementation progress once a year in an annual report. Such reports prepared by the government should be reflected accordingly in the Ukraine Plan. Proportionate reporting requirements must be applied to recipients of Union funding, the resolution says.

The voted document also directly spells out the Resolution that will establish the Ukrainian Facility.

The document still needs to be approved by the EU Council and will come into force after publication in the Official Journal.