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Remarks by Executive Vice-President Dombrovskis and Commissioner Gentiloni on the EU's immediate response to address Ukraine's financing gap, as well as the longer-term reconstruction framework

Remarks by Executive Vice-President Dombrovskis

Good afternoon ladies and gentlemen.

Europe has not flinched from supporting Ukraine in the face of Russia's relentless military aggression.

Our support for Ukraine – our friend and neighbour - is unwavering.

Since the beginning of Russia's aggression on February 24, the EU has provided €4.1 billion to help Ukraine and its people cope with this illegal invasion, and to fight back against Russian brutality.

In fact, even before this war, the EU has been the largest donor to Ukraine by far.

This comes in the form of macro-financial assistance, budget support, crisis response and humanitarian aid.

Later this week, we will release the second €600 million tranche of emergency Macro-Financial Assistance to Ukraine.

For the first time in the EU's history, we have granted military assistance – €1.5 billion, with another €500 million underway, so that Ukraine can defend itself.

There are two clear needs to address.

Each one has a different timeline and a different scale.

The most immediate is to keep Ukraine running on a daily basis, prop up the state and repair its damaged infrastructure.

That means:

  • paying wages and pensions
  • keeping hospitals and schools open
  • ensuring basic public services for its suffering people

As a result of the war, these costs are now far beyond what Ukraine can afford. The IMF estimates Ukraine's balance of payments gap until June at roughly 15 billion USD or €14.3 billion. This is a very large amount.

We envisage proposing a new exceptional macro-financial assistance programme of up to €9 billion in the form of loans to Ukraine. There will also be a grants component, subsidising interest payments.

However, we would need EU countries to provide additional guarantees to support this programme.

And clearly there will be further support needed from other international partners, including the G7 and international financial institutions.

The other priority is to think longer term and rebuild a country that is devastated by war.

It will be a mammoth task. And not just financially.

We want it to be a truly international effort, tailored to Ukraine's long-term reconstruction needs.

We have to start this work now.

There may not be one given moment when the Russian invaders allow Ukraine to have a ‘clean peace'. 

Our idea is to help Ukraine create the foundations of a free, democratic and prosperous country. Anchored in the European values that it has chosen, supporting it on its European path.

Since the war is raging on Europe's borders, the EU is ready to lead this international effort alongside Ukraine itself, and to provide a major share of financing.

In this context, of course we welcome every effort of EU Member States and our partners to support Ukraine at this difficult time for all of us.

For Ukraine's longer-term reconstruction, the Ukrainian authorities would work in close partnership with the EU and other key partners - such as the G7, G20 and other countries - along with the international financial institutions and organisations.

We propose establishing an international ‘Ukraine reconstruction platform', which will be co-led by the Commission and the Ukrainian government.

It would bring together under one roof the EU support as well as other initiatives set up by other partners.

This will ensure a smooth division of labour between different partners and avoid duplication.

Then, we propose creating a ‘RebuildUkraine' Facility within the EU budget.

This new instrument would be dedicated to financing the reconstruction effort and aligning Ukraine's economy to the EU.

It would provide a mix of loans and grants, with a strong link to a reform agenda.

Investments would be aligned with EU green and digital policies to help Ukraine to become stronger and build resilience after the devastation of the Russian invasion.

We will have to decide on the main financing sources, such as the EU budget, EU Member States' and other countries' contributions, and also private investment.

But we should also consider how to use frozen and seized Russian assets for Ukraine's reconstruction.

The EU is not alone in this.

We know that other partners like the United States and Canada are also thinking in the same direction.

We need to make Russia pay for its military aggression against Ukraine and its people, and the damage it has caused.

This will not be easy, of course. But in a situation of war, there is never a simple way to deal with an aggressor.

To rebuild Ukraine, we need strong political support globally as well as financial contributions. The EU is ready to coordinate this work, in close partnership with Ukraine itself.

Thank you.


Remarks by Commissioner Gentiloni

The destruction Russia has unleashed on Ukraine has no precedent in postwar Europe. And equally unprecedented is its disregard for the international order that was built in the last decades.

But Putin did not bank on the strength of Ukrainians' determination to defend their nation. Or on our determination to stand by Ukraine and to uphold international law.

So Russia's aggression has had consequences that Putin certainly did not anticipate: just a few hours ago, Sweden and Finland formally submitted their applications to join NATO. A direct consequence of this invasion.

Today we are setting out a path to help a new Ukraine rise from the ashes of war, just as Europe emerged from the rubble of the Second World War. And we are doing this together with the Ukrainian authorities and in cooperation with our international partners, mobilising funding to help Ukraine ride out this storm – and to ‘build back better' its economic and social infrastructure.

When it comes to the short-term financing needs for Ukraine, we are today proposing a significant new commitment in macro-financial assistance, of up to 9 billion euros, which is necessary to help the Ukraine state cover its immediate financing needs – estimated by the IMF, validating the Ukrainian estimate, at around 15 billion USD this quarter. This is solidarity with Ukraine for today.

But it is of course clear that we also need solidarity with Ukraine for tomorrow. The reconstruction of Ukraine will be a long, hard task and an immense challenge. It will also be a defining mission for the European Union over the coming decade and beyond.

We can already envisage four main pillars for this effort:

First, rebuilding the country's infrastructure, its health services, housing and schools, as well as boosting its digital and energy resilience;

Second, continuing to modernise the state and its institutions, ensuring good governance and respect for the rule of law;

Third, implementing a structural and regulatory agenda to help align Ukraine ever more closely with the EU;

And fourth, supporting the recovery of Ukraine's economy and society. This strand will be crucial to avoiding a massive brain drain that would permanently damage Ukraine's future prospects. The situation we are in is with 12 million displaced people, internally displaced and having left Ukraine.

The structure we are proposing is built upon the principles of ownership and flexibility.

In terms of ownership, the reconstruction effort must be led by the Ukrainians, by their democratic institutions. At the same time, in line with the intentions of the Ukrainian Government, the ‘RebuildUkraine' reconstruction plan needs to be embedded in a strategic partnership with the European Union, also because it will be an anchor for Ukraine's European future.

This partnership between Ukraine and the EU will in turn be built on very close cooperation with the G7, the broader international community of democracies, the international financial institutions and international organisations. I will be travelling later today to Bonn for the G7 finance ministers meeting where these issues will be central to our discussions.

These are dark and uncertain times for Ukraine and for Europe.

So I hope that this initiative will help to bring some light to that darkness. And give the Ukrainian people confidence that we will continue to stand by them and together, build a future as part of our family of free European democracies.

Thank you.