Commission weighs joint borrowing for Ukraine

The European Commission is planning to issue new EU debt to cover Ukraine’s short-term financing needs over the next three months, estimated at €15 billion, three diplomats with knowledge of the discussion told POLITICO.

The plan would be unveiled as early as May 18, they said.

According to the Ukrainian government and the International Monetary Fund, Ukraine needs €5 billion per month to keep the economy afloat — from paying wages and pensions to caring for displaced populations and other war-related costs.

The United States has pledged to provide a third of that sum, which would leave €10 billion uncovered.

The Commission briefed EU ambassadors Friday on a plan to bridge that gap, which would entail the Commission issuing debt on the back of guarantees provided by EU countries. That’s similar to the so-called SURE program used during the pandemic to raise funds for the short-term unemployed, the diplomats said.

At the time, the Commission asked €25 billion in guarantees to raise €100 billion.

While Ukraine’s financial gap is much smaller, the Commission hasn’t provided details of how much would it need and how would that be divvied up between countries, the diplomats said.

A few countries, including Germany, Austria and Greece, asked the Commission to provide alternative financing options ahead of presenting its plan on May 18. If other non-EU countries — like Japan, the U.K., Norway and others — chip in, that would leave the EU with a few billion to cover. And that could happen by bilateral donations, their thinking goes.

“Whenever there’s a problem with money, [the Commission] says SURE!” quipped a diplomat.

The French Presidency wants to bring up the matter for heads of state and government to discuss at the end of May.