The European Union must be Ukraine's wartime financier of last resort

Publishing date
26 February 2024
Nicolas Véron
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Ten years after Russia’s initial military aggression of Ukraine and two years after full-scale invasion, several things are clear. Ukraine’s fight is aligned with the European Union’s defense. Ukraine’s future is EU membership. As Zsolt Darvas recently explained in this space, the recent unlocking of the EU’s €50 billion Ukraine Facility will also support institutional change in Ukraine.  

The hope that the EU’s wartime assistance would soon morph into postwar reconstruction financing has not been realised. The horizon for now is continued warfare, during which Kyiv must sustain the country’s military effort and keep providing public services to its people. For that, Ukraine’s own resources must continuously be complemented by external assistance. The corresponding burden was initially broadly balanced between the EU and the United States, with additional contributions from others. But that balance has eroded, with no visibility on US Congressional dynamics, even in the event of a Biden re-election in November.  

The US military contribution remains indispensable and must be maintained. On the financing front, however, the EU must accept that it is now the leading anchor of Ukraine’s viability throughout the war period and beyond, even though other participants including the US still have incentives to contribute. The EU’s central role is increasingly reflected in institutional infrastructure such as the Donor Coordination Platform for Ukraine with a twin secretariat in Brussels and Kyiv and the independent Audit Board that will scrutinise the implementation of the Ukraine Facility.  

The EU is right to resist the temptation of confiscating Russia’s immobilised reserves, which in the current circumstances would not comply with international law. Even if the Ukraine Facility is expanded, as appears likely, the EU’s financial support to Ukraine will remain in low tens of percentage points of its GDP. This is eminently affordable and a critical investment in the EU’s own security. 

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About the authors

  • Nicolas Véron

    Nicolas Véron is a senior fellow at Bruegel and at the Peterson Institute for International Economics in Washington, DC. His research is mostly about financial systems and financial reform around the world, including global financial regulatory initiatives and current developments in the European Union. He was a cofounder of Bruegel starting in 2002, initially focusing on Bruegel’s design, operational start-up and development, then on policy research since 2006-07. He joined the Peterson Institute in 2009 and divides his time between the US and Europe.

    Véron has authored or co-authored numerous policy papers that include banking supervision and crisis management, financial reporting, the Eurozone policy framework, and economic nationalism. He has testified repeatedly in front of committees of the European Parliament, national parliaments in several EU member states, and US Congress. His publications also include Smoke & Mirrors, Inc.: Accounting for Capitalism, a book on accounting standards and practices (Cornell University Press, 2006), and several books in French.

    His prior experience includes working for Saint-Gobain in Berlin and Rothschilds in Paris in the early 1990s; economic aide to the Prefect in Lille (1995-97); corporate adviser to France’s Labour Minister (1997-2000); and chief financial officer of MultiMania / Lycos France, a publicly-listed online media company (2000-2002). From 2002 to 2009 he also operated an independent Paris-based financial consultancy.

    Véron is a board member of the derivatives arm (Global Trade Repository) of the Depositary Trust and Clearing Corporation (DTCC), a financial infrastructure company that operates globally on a not-for-profit basis. A French citizen born in 1971, he has a quantitative background as a graduate from Ecole Polytechnique (1992) and Ecole Nationale Supérieure des Mines de Paris (1995). He is trilingual in English, French and Spanish, and has fluent understanding of German and Italian.

    In September 2012, Bloomberg Markets included Véron in its second annual 50 Most Influential list with reference to his early advocacy of European banking union.


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