EU Must Act Now on Ukraine Reparations Loan, Says Dombrovskis

European Commissioner for Economy and Productivity, Valdis Dombrovskis, has urged the European Union (EU) to expedite discussions regarding financing for Ukraine and to utilize frozen Russian assets for reparations. In an interview with Euronews on March 6, 2024, Dombrovskis emphasized the urgency of the situation, stating, “It is time that we stop discussing different options and move forward.”

Ukraine is grappling with a significant financial challenge, facing a budget shortfall of approximately €135 billion as it endures ongoing conflict with Russia. Dombrovskis advocates for a reparations loan backed by Russian assets that have been immobilized in Europe, asserting that this approach would provide substantial support to Ukraine without imposing a heavy fiscal burden on EU member states.

Earlier this month, the European Commission presented an options paper detailing various funding mechanisms to assist Ukraine in its fight against Russian aggression. These options include voluntary bilateral contributions from member states, the issuance of joint EU-level debt, and the proposed reparations loan. Ursula von der Leyen, President of the European Commission, has put these proposals before EU leaders for consideration.

Dombrovskis highlighted the potential downsides of alternative funding methods, noting that they could lead to increased costs for member states. He remarked, “It’s clear that Ukraine is facing debt sustainability issues, so we cannot just go on providing another loan to Ukraine.”

In his role overseeing the EU’s economic policies, Dombrovskis called for heightened support for Ukraine, particularly addressing concerns from the Belgian government, which holds a significant portion of the frozen assets. He cautioned against yielding to pressure, stating, “If you give in to bullying, you will face more bullying. We need to stand up against that pressure.”

The discussion surrounding frozen assets is closely linked to the broader dialogue about the EU’s potential role in a peace resolution for Ukraine. Recently, a 28-point peace plan proposed by the United States and Russia raised eyebrows within Europe due to provisions perceived as overly favorable to Moscow. In response, several EU nations have drafted a counterproposal advocating for a ceasefire along current front lines and security assurances for Ukraine, although the Kremlin has dismissed these suggestions.

As negotiations continue, Dombrovskis made it clear that the EU’s position must maintain specific parameters. He stated, “We have set important parameters from the European Union side: respect for territorial integrity; the fact that Ukraine’s military capacity is not restrained in a way that makes it vulnerable to further attacks; and also that Ukraine’s EU integration is at the center of the post-war settlement.”

When asked about the possibility of Russia extending its aggression to EU countries, Dombrovskis asserted that history has shown that appeasement fosters further aggression. He remarked, “Russia is openly talking about invading other countries, including EU and NATO countries. If Russia feels vindicated by the results of this war, it will only create more aggression, and this war will spread.”

As the European Parliament convenes in Strasbourg to discuss these pressing issues, Dombrovskis’ statements underscore the urgency for the EU to take decisive action in support of Ukraine.