European Union targets Ukraine’s military needs with massive new loan programme

BRUSSELS: The European Union will dedicate most of a massive new loan programme to Ukraine’s military needs over the next two years while also injecting billions into its war-ravaged economy, European Commission President Ursula von der Leyen said Wednesday.

EU leaders agreed last month to loan Ukraine 90 billion euros (USD 105 billion) to help cover its needs in 2026 and 2027. Kyiv would only have to pay the money back once Russia ends its war and pays reparations for the damage it has inflicted over almost four years.

The International Monetary Fund estimates that Ukraine will need 137 billion euros (USD 160 billion) over the two years. The government in Kyiv is on the verge of bankruptcy and desperately needs the money by spring.

The bloc hopes that other countries like Britain, Canada, Japan and Norway will help make up the difference. The IMF is preparing a new multi-billion dollar Ukraine loan and is expected to endorse it next month.

“We all want peace for Ukraine, and for that Ukraine must be in a position of strength,” von der Leyen said as she explained the commission’s spending plans.

She said 60 billion euros (USD 70 billion) would be for military support, and 30 billion euros (USD 35 billion) for budget aid.

“With the military assistance, Ukraine can stand strong against Russia, and at the same time it can integrate more closely into Europe’s defence industrial base,” von der Leyen told reporters.

The commission wants the loan money to start flowing in by April, but EU member countries and the European Parliament must endorse the spending plan before it can enter force.

The military tranche would be used to buy equipment from Ukraine, EU countries and others in Europe’s economic area, like Norway.