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Little of the E.U. money will be spent on long-term reconstruction; more will go to pay salaries for teachers and soldiers, manufacture arms munitions, and patch up missile-blasted port and electrical facilities.
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And this winter, it’s a safe bet that Putin, who has shifted the Russian economy to a war footing, devoting a third of government spending to the military, will continue to blow up Ukraine’s critical facilities as fast as Kyiv can repair them.
What’s more, most of the E.U. funds will be dispensed as loans, not grants, meaning Kyiv will be expected to repay them at some point. That’s hardly realistic for the foreseeable future, but it’s what the politicians and bureaucrats in Brussels could manage.
That goes to the underlying problem: Europe, like the United States, pays constant lip service to the fact that Ukraine is fighting not just for its own survival but also to defend the rules-based international order. Yet measured against those very high stakes, and against its own enormous resources, the E.U.’s financial commitment is meager.
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Granted, Europe is a model of prudence compared with the United States. In Washington, funding for Ukraine has dried up completely, owing to a handful of right-wing Republican lawmakers in thrall to Donald Trump, who is no friend of Ukraine’s. The dysfunction on Capitol Hill is an appalling blow to American prestige and self-interest.
Yet by various measures, the E.U.’s commitment is inadequate to the challenge, and paltry when measured against the continent’s resources.
Europe is rich. The bloc’s 27 nations collectively represent one-sixth of the world’s economy; collectively, the E.U.’s economic output is nearly the size of China’s. During the pandemic, it approved $800 billion in relief funds for member states. About a quarter of that was earmarked to Italy, which is the world’s eighth-largest economy.
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If the E.U. can mete out more than $200 billion for Italy, which, despite chronic growth problems, is prosperous and at peace, it is fair to ask why it can muster just $54 billion for Ukraine, which is locked in an existential struggle.
That question is likely to become more pressing as the West confronts the challenge of rebuilding, given the staggering scale of destruction in Ukraine. Already, that task has shifted the debate over seizing Russian assets frozen in the West and Japan, including more than $200 billion in European banks.
So far, an outright seizure remains widely seen as legally and economically risky. But lately E.U. officials have warmed to the idea of using the interest generated by Moscow’s frozen assets as a down payment on the cost of repairing what Russia has broken in Ukraine.
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That would be a smart opening move, generating nearly $5 billion annually for Kyiv. Eventually, though, if Western leaders shy away from seizing the Russian assets themselves, the remaining alternatives are few and unappealing. Without using Moscow’s funds, “it’s Western taxpayers and governments — there’s nobody else,” economist Sergei Guriev, provost of the university Sciences Po in Paris, told me.
Orban is surely a thorn in the E.U.’s side, but European leaders showed this week that he can be managed — and tamed. Now it’s time for the same leaders to take a hard look at what more they can do.
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PARIS — Ukraine and its allies heaved a sigh of relief Thursday when European leaders approved a $54 billion economic aid package, skirting a threatened veto by Hungarian Prime Minister Viktor Orban. But the move, while providing Kyiv with some breathing room, was a reminder that alarm bells should still be ringing — and not mainly because of Orban.
Think of Ukraine as a family inhabiting a house. In effect, the European Union’s assistance will help the family feed and clothe itself for the next four years — even as an earthquake cracks the foundation under their feet and razes the walls around them.
The earthquake, of course, is Russia, which has systematically laid waste to Ukraine’s cities, towns and infrastructure. The World Bank pegged the reconstruction bill at $411 billion. That was nearly a year ago, and it was on the low end of estimates that ranged to $1 trillion.
Let’s not forget recent history. When the European Union’s $54 billion assistance proposal was unveiled in June in conjunction with an international donors’ conference in London, it was the lowest of various sums under consideration and framed as part of a reconstruction program.
The reality is that from now until 2027, the E.U. funds will mainly go to cover part of Kyiv’s bulging budget shortfall, about $3 billion monthly, which accounts for roughly half of the government’s overall annual spending. Almost 50 percent of Ukrainian public funds are spent on defense, simply to boost its odds of survival against Russian President Vladimir Putin’s onslaught.
Little of the E.U. money will be spent on long-term reconstruction; more will go to pay salaries for teachers and soldiers, manufacture arms munitions, and patch up missile-blasted port and electrical facilities.
And this winter, it’s a safe bet that Putin, who has shifted the Russian economy to a war footing, devoting a third of government spending to the military, will continue to blow up Ukraine’s critical facilities as fast as Kyiv can repair them.
What’s more, most of the E.U. funds will be dispensed as loans, not grants, meaning Kyiv will be expected to repay them at some point. That’s hardly realistic for the foreseeable future, but it’s what the politicians and bureaucrats in Brussels could manage.
That goes to the underlying problem: Europe, like the United States, pays constant lip service to the fact that Ukraine is fighting not just for its own survival but also to defend the rules-based international order. Yet measured against those very high stakes, and against its own enormous resources, the E.U.’s financial commitment is meager.
Granted, Europe is a model of prudence compared with the United States. In Washington, funding for Ukraine has dried up completely, owing to a handful of right-wing Republican lawmakers in thrall to Donald Trump, who is no friend of Ukraine’s. The dysfunction on Capitol Hill is an appalling blow to American prestige and self-interest.
Yet by various measures, the E.U.’s commitment is inadequate to the challenge, and paltry when measured against the continent’s resources.
Europe is rich. The bloc’s 27 nations collectively represent one-sixth of the world’s economy; collectively, the E.U.’s economic output is nearly the size of China’s. During the pandemic, it approved $800 billion in relief funds for member states. About a quarter of that was earmarked to Italy, which is the world’s eighth-largest economy.
If the E.U. can mete out more than $200 billion for Italy, which, despite chronic growth problems, is prosperous and at peace, it is fair to ask why it can muster just $54 billion for Ukraine, which is locked in an existential struggle.
That question is likely to become more pressing as the West confronts the challenge of rebuilding, given the staggering scale of destruction in Ukraine. Already, that task has shifted the debate over seizing Russian assets frozen in the West and Japan, including more than $200 billion in European banks.
So far, an outright seizure remains widely seen as legally and economically risky. But lately E.U. officials have warmed to the idea of using the interest generated by Moscow’s frozen assets as a down payment on the cost of repairing what Russia has broken in Ukraine.
That would be a smart opening move, generating nearly $5 billion annually for Kyiv. Eventually, though, if Western leaders shy away from seizing the Russian assets themselves, the remaining alternatives are few and unappealing. Without using Moscow’s funds, “it’s Western taxpayers and governments — there’s nobody else,” economist Sergei Guriev, provost of the university Sciences Po in Paris, told me.
Orban is surely a thorn in the E.U.’s side, but European leaders showed this week that he can be managed — and tamed. Now it’s time for the same leaders to take a hard look at what more they can do.
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