Ukraine risks losing 110 billion (and war)

There is over 110 billion euros in military and economic aid that Ukraine has been waiting for months from its main partners, the United States and the European Union. However, there is a risk that a political front extending from US Republicans to Hungarian Prime Minister Viktor Orban will explode. EU countries, on the other hand, cannot even find a solution for using the 17 billion euros frozen to Russia to cover Kiev’s budget deficit.

Deadlock in US aid

Shalanda Young, director of Washington’s budget office, warned in a letter to leaders of the U.S. House of Representatives and Senate that U.S. funds previously allocated to Ukraine have been exhausted and new resources are needed to support Kiev. Army in the war against Russia. President Joe Biden has presented a new aid package of around 60 billion euros in recent months, but his proposal has been blocked by Republicans, who are in the majority in the House of Representatives, and want any allocations to be linked to a series of measures against immigrants. The Mexican border that Democrats reject.

Around this time, Ukrainian President Volodymyr Zelenzky was supposed to send a video call to US senators to persuade them to continue funding Kiev, but the message was cancelled. On the other hand, he sent a delegation to Washington consisting of Defense Minister Rustem Umjerov, Parliament Speaker Ruslan Stefanchuk and his right-hand man Andrei Yermak. The trio is meeting with lawmakers and senators to unblock aid and also speed up Kiev’s arms and ammunition production capacity. Negotiations do not appear to be progressing well, as evidenced by the lack of a video message from Zelensky.

Orban’s blog

The EU’s impasse has been added to the US’s impasse. The European Commission has offered to allocate 50 billion euros in economic aid to Kiev. However, the package must be approved unanimously by all 27 member states, and Hungarian Prime Minister Orban vetoed it. The official motivation of the Budapest leader is that such aid will only prolong the conflict with Russia, rather than forcing Kiev to come to the peace table with Moscow and stop the war, which, in his opinion, creates serious problems for Europe. It will end in complete failure for Brussels. Orban adds another veto to this veto: No to Ukraine’s accession to the EU. He said membership “does not coincide with Hungary’s national interests”.

Both files will be discussed at the EU summit in Brussels next week. Both EU Council President Charles Michel and French leader Emmanuel Macron are pressuring Orban to at least not screw up funding for Ukraine. The bargaining chip to convince the Hungarian prime minister could be EU funds for Budapest, which the Commission has blocked due to risks to the rule of law in the Hungarian country. But many European officials fear that even this olive branch may not dissuade Orban from vetoing. The election of Robert Fico as Prime Minister in Slovakia and the success of right-wing leader Geert Wilders in the Netherlands, who is in line with Orban on Ukraine, do not bode well for Zelensky.

Moscow’s frozen funds

But Orban isn’t the only one causing trouble in the EU when it comes to supporting Kiev. An example of this is what happened with the funds frozen for Russia by European governments. According to various estimates, this amount will reach 300 billion dollars (180 of which will be deposited in the coffers of the Belgian financial services company Euroclear). For Spain, which currently holds the presidency of the EU Council, this mountain of money will generate interest of between 15 and 17 billion euros between now and 2027. Therefore, Madrid proposes to allocate at least the interest without touching Ukraine. Assets whose use could lead to issues of legitimacy and monetary instability.

But Spain’s idea was rejected in its infancy by most member states and should not even be discussed at the next summit in Brussels. In the background, there are conflicting interests of EU governments in how to manage the additional budget requested by the Commission (not only for Kiev but also for migration and increased interest in Pnrr). The frugal ones (Germany and the Netherlands) oppose an overall increase and demand cuts in cohesion policy and funding for farmers; Italy, Spain and France do not view this situation positively.

There is also the EPF division, the EU common defense fund, which is supposed to serve as a procurement hub for arms shipments to Ukraine. Berlin has raised a number of doubts here too, raising the possibility of reducing its contribution to the fund (which is by far the highest of the 27 funds). Germany disputes that joint purchases are mostly made to non-EU companies. However, many experts underlined that without the contribution of external manufacturers, the European defense industry would not be able to provide military aid when and in the way Kiev needs.

Divisions in the US, as in the EU, do not bode well for Zelensky. Washington’s national security adviser, Jake Sullivan, said Monday that without the help promised by his partners, the war risks getting worse and “Putin will prevail.”

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Source: Today IT