European finance officials in Brussels are offering a surprising defense of Ukraine amid corruption allegations. EU Commissioner Valdis Dombrovskis said the scandal surrounding President Zelensky’s government was actually proof that Kyiv’s anti-corruption system is delivering results. The comments come as EU ministers discuss future funding for Ukraine.
00:00First of all, we continued our discussion on new EU support to Ukraine and exchanged views on options for support, including the Commission's proposal on the reparations loan based on the immobilized Russian assets.
00:13My takeaway is that the Commission's proposal is the best and most realistic option and should be treated as a matter of highest priority and will continue working closely with all the member states to explore the best way forward from here.
00:30It remains clear that continued EU leadership and unity is essential in supporting Ukraine's fight against Russian aggression and will remain fully engaged to facilitate a decision at this European Council meeting in December.
00:46Today, the EU is disbursing additional 4.1 billion euros in financial support to Ukraine under the G7-led Extraordinary Revenue Acceleration Loans Initiative.
00:58This marks the final installment of the EU's 18.1 billion euros contribution to this initiative.
01:07The success of ERA Loans Initiative shows that Europe can act swiftly, decisively and effectively when necessary.
01:16And this is in this spirit as we must also approach the question related to further funding needs for Ukraine.
01:23And actually, we began today's meeting with a productive discussion on options for providing additional financial support for Ukraine as requested by European Council.
01:35And as Minister already mentioned, the meeting saw broad support from Member States for the Commission to continue its work on the reparation loan.
01:45There was wide recognition that this option is a most feasible means of quickly bridging Ukraine's funding gap without placing additional substantial fiscal burden on Member States.
02:00The continuation of this work, obviously, includes engaging with Member States to address remaining concerns.
02:08We also discussed possible alternative options.
02:13It has to be noted that given the sustainability concerns and challenges Ukraine is facing, the support has to have strong grant-like features.
02:28So, alternative option would be for the EU to fund the reparation loan to Ukraine through borrowing instead of using the cash balances associated with immobilized Russian assets.
02:42However, Member States would help to cover the interest cost of the loan until it's repaid to maintain a grant-like support for Ukraine.
02:58And there are different modifications how exactly this borrowing can be structured.
03:06Yet another option would be to provide a similar level of support to Ukraine, but in the form of grants, which would entail a large direct cost to Member States over the short period of time.
03:20So, as regards the options paper, we should be able to present the options paper shortly, and today's discussion will help inform Commission's thinking in this regard.
03:38So, it's important to engage with our allies and partners to provide Ukraine with liquidity already in the first quarter of next year, as Ukraine's financing needs are not only large, but also urgent.
04:00We are under time pressure and must move forward in a constructive, pragmatical, and cooperative way.
04:06Belgium has criticized the Commission for insisting so much on the reparations loan and presenting it as the only viable option, which you just did.
04:16It has also criticized you for lacking a legal basis and for focusing your proposal exclusively on the assets held at Euroclear.
04:23How exactly do you reply to this criticism, and what can you offer that it's new and different to Belgium in order to change the dynamics?
04:32Because we've been running around this same circle since Copenhagen.
04:35And for the Minister, we know that Belgium is very much concerned about the potential of litigation from Russia, and one's guarantee is to cover not only the $140 billion in the loan, but also these potential costs from arbitrations and litigations.
04:51Do you think Member States should go beyond $140 billion and cover costs that are essentially hypothetical?
04:57Thank you both.
04:58Yes, so first of all, all Member States agreed in today's meeting on the clear commitment to provide all necessary support to Ukraine and on urgency of doing so.
05:17And today's meeting has been indeed focusing not only on reparation loan, but on also other possible options.
05:29As I was outlining before, given the good debt sustainability challenges of Ukraine, we do not have an option just to provide another loan, as we have been doing before.
05:42So, this support to Ukraine needs to have strong grant-like features.
05:51And reparation loan provides this option of doing so without placing substantial additional burden on, fiscal burden on Member States.
06:03Yes, there are other options, there are other options, we discussed them, but obviously they come with higher fiscal costs for Member States, so that's just the fact.
06:14And we need to be clear about this.
06:17Well, as regards, well, legal aspects of the proposal, of course, the Commission has been assessing it very carefully from the very beginning.
06:27That's why our proposal also stops short of confiscating the Russian assets, and actually it does not go beyond what has been already agreed that Russian assets should stay immobilized as long as Russia has not paid reparations.
06:45It's something which has been agreed at the European Council level and also at the G7 level.
06:50So, what we are, in a sense, elaborating here, what to do with those cash balances which have been accumulated in this context, in this period, until Russia would pay reparations.
07:06Obviously, there are risks to be addressed, and specifically in case of Belgium, and that is clearly something which the European Commission is working on very seriously,
07:23and it's acknowledged also by other Member States that obviously there needs to be solidarity on those risks needs to be shared,
07:30and this engagement and work also with Belgian authorities in this regard is ongoing.
07:36But it has to be said that there are always risks associated with action and with containing the aggressor,
07:45but the risks of inaction and not containing aggressor are even greater.
07:51Yeah, and on the question on Belgium, let me just start by stressing,
07:57there are still things in the euro loans that need clarification, that needs to be addressed, dialogue that needs to be made,
08:05and this is something that we need to do together, so of course all Member States should be on board and the necessary things should be clarified.
08:19Is it correct that the Commission has found it legally impossible to include third countries like Norway or the UK for that matter in a model of the reparation loans?
08:30And does that mean that the Commission do not operate with any models that include a cooperation with Norway on securing funding for Ukraine?
08:39Thanks.
08:40Well, obviously it's important that we also work with our international partners, including G7 partners, including other partners like Norway,
08:53and that they also meaningfully contribute to covering Ukraine's funding needs.
09:02And we continue this engagement in my introductory remarks I was mentioning,
09:07that we are specifically raising the point with the partners on possibilities to front load their financial support
09:14in the first quarter of next year to address Ukraine's urgent funding needs,
09:21because in our case it takes some time, as we see, to develop options and then actually to implement what eventually will be decided.
09:32So, from that point of view, for example, UK and Canada have indicated that they are interested and ready to replicate reparation loan-style approach
09:47linked with Russian immobilized foreign assets they have in their territories,
09:54So, and we are also in touch with, for example, Japanese authorities on the same issue.
10:02Then, specifically on Norway, I had a meeting with Finance Minister Stoltenberg yesterday,
10:09and we discussed also the Ukraine support, where Norway outlined very sizable support they are providing to Ukraine so far,
10:20and this year it amounts to something between 7.2 and 7.3 billion euros,
10:27and they intend to provide the support of the same order of magnitude also next year.
10:33So, Norway is certainly a partner which is cooperating and providing very substantial financial support to Ukraine.
10:42So, my understanding is that if you do that, you're going to require unanimity in the Council,
10:46whereas if you had an off-budget instrument, you'd only require qualified majority.
10:50So, the question is, why did you opt for this option, given that it would ultimately...
10:57It seems that it would be more politically difficult to do this, rather than to have an off-budget instrument. Thanks.
11:03Well, actually, both options are possible.
11:08I also outlined that, obviously, one alternative option is to do a common borrowing,
11:16then only lend it to Ukraine with the same reparation loan logic,
11:24and then it's important that, well, member states or EU budget is covering the interest costs.
11:35For example, when we were detailing the original reparation loan option,
11:44we are looking at all those different elements and different member states actually are expressing different preferences
11:51concerning the headroom or this borrowing against member states guarantees.
11:58So, as more practical solutions are going forward, we were foreseeing member state guarantees in a short term during this MFF,
12:09whereas foreseeing also a possibility to move, again, so to say, use of EU budget headroom in the next MFF.
12:21But, so, from that point of view, if we are considering this option of common borrowing,
12:31there are different modalities possible, and indeed, depending on modalities you choose,
12:39it may imply also different decision-making structures, including, in the case of MFF, obviously, unanimity.
12:48But, since we are tasked to look at the different options, we are looking at those different options,
12:55and it has to be noted that they are not very easy options available.
13:00All options come with certain financial or legal or political challenges.
13:12Yeah, and if I may add, then, of course, when you list different options, say, if this is difficult,
13:19why do you present that option, then, basically, it's also important to say that when we point to the reparations loans
13:27as being the best way forward, then it's also, because there are no easy solutions here,
13:35we don't grow money trees, and we don't have magic hats with rabbits in any silver bullets.
13:41So, basically, it's also a reflection of how difficult it is to find a number of viable options.
13:49I would like to come back to the Ukrainian question.
13:52Did you discuss the ongoing corruption scandal in Ukraine?
13:56Was it raised during the ministers' talks?
13:59What were the reactions of the ministers?
14:02Were some ministers expressing the concerns about maybe trustability of Ukrainian government in dealing with EU funds?
14:10And do you predict any difficulties with future financing of Ukraine due to these corruption questions?
14:19It's a question for both speakers. Thank you.
14:22Do you want to start?
14:23Yeah.
14:24Yeah, well, obviously, we take the issue of fight against corruption in Ukraine very seriously,
14:32and also our financial support we are providing to Ukraine already for many years is always linked also with conditionality concerning anti-corruption
14:46and pretty much all the, so to say, anti-corruption institutional system in Ukraine has been developed, linked with those financial support from EU, but also from IMF.
15:01And this is also an issue which is very high on our agenda in the context of Ukraine's path towards European Union.
15:13So, we are not discussing the specific issue today.
15:17That's for general background.
15:22But then, obviously, on one hand, you can look at this as a major corruption scandal.
15:30But on the other hand, you can also look at this as a proof that this anti-corruption system in Ukraine is actually delivering results,
15:39and that it's Ukrainian anti-corruption authorities which are able to go against corruption cases, including to the highest level.
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