Think of Ukraine as a family living in your home. In effect, the European Union’s aid will help families feed and clothe themselves for the next four years, even if an earthquake cracks the foundations beneath them and destroys the surrounding walls.
Of course, Russia caused the earthquake, and Russia has systematically destroyed Ukrainian cities, towns, and infrastructure. The World Bank pegged the reconstruction bill at $411 billion. This was almost a year ago and was on the lower end of the $1 trillion estimate.
Let’s not forget recent history. When the European Union’s $54 billion aid proposal was announced in June on the sidelines of an international donor conference in London, it was the lowest of the various amounts under consideration, and was framed as part of a recovery program. It was done.
In reality, from now until 2027, EU funds will primarily cover part of Kiev’s growing budget shortfall (about $3 billion per month), which accounts for about half of the government’s total annual spending. It turns out. Almost 50 percent of Ukraine’s public funds are spent on defense simply to improve its chances of survival against Russian President Vladimir Putin’s onslaught.
Very little EU funding will be spent on long-term recovery. More money will go toward paying the salaries of teachers and soldiers, producing weapons and ammunition, and repairing ports and electrical facilities hit by missiles.
And this winter, President Putin, who has put a third of government spending on the military and put Russia’s economy on a war footing, will continue to blow up vital facilities in Ukraine as quickly as Kiev can be repaired. There is no doubt about it.
Moreover, most of the EU funds will be disbursed as loans rather than grants, meaning Kiev will have to pay them back at some point. That is hardly realistic for the foreseeable future, but Brussels’ politicians and bureaucrats can manage it.
That applies to fundamental issues. Europe, like the United States, has always paid lip service to the fact that Ukraine is fighting not just for its own survival, but to protect the rules-based international order. But when you compare these very high stakes with the EU’s own vast resources, the EU’s financial commitment is miniscule.
Indeed, Europe is a paragon of prudence compared to the United States. In Washington, funding for Ukraine has completely dried up because a few right-wing Republicans are in thrall to Donald Trump, who is no friend of Ukraine. The dysfunction of the Capitol is a terrible blow to American prestige and self-interest.
But by many measures, the EU’s efforts are inadequate to the challenge and paltry compared to the continent’s resources.
Europe is rich. The bloc’s 27 countries together account for one-sixth of the global economy. In total, the EU’s economic output is roughly equivalent to the size of China’s economy. Approved an $800 billion relief fund for member countries during the pandemic. About a quarter of that was allocated to Italy, the world’s eighth largest economy.
If the EU can provide more than $200 billion for a prosperous and peaceful Italy despite its chronic growth problems, it is natural to ask why it can only raise $54 billion for a Ukraine in an existential struggle. right.
Given the staggering scale of destruction in Ukraine, this issue is likely to become even more pressing as Western countries face the challenge of rebuilding. Already, the mission is changing the debate over seizing Russian assets frozen in the West and Japan, including more than $200 billion held in European banks.
So far, outright foreclosure is widely considered to be both legally and financially risky. But recently, EU officials have warmed up to the idea of using interest generated by Russia’s frozen assets as a down payment on repairing what Russia has destroyed in Ukraine.
That would be a smart opening move for Kiev, generating nearly $5 billion a year. Ultimately, however, if Western leaders shy away from seizing Russian assets themselves, the remaining options are few and unattractive. Without Moscow’s money, “it’s Western taxpayers and governments. There’s no one else,” said economist Sergei Guliyev, president of Paris’ Polytechnic University.
Mr. Orbán is certainly a thorn in the side of the EU, but European leaders showed this week that they can manage and tame him. Now is the time for those same leaders to seriously consider what more they can do.