[Asia Economy Reporter Park Byung-hee] European Union (EU) leaders are expected to finalize a 9 billion euro (approximately 12.2538 trillion KRW) financial aid package for Ukraine at their meeting on the 23rd-24th (local time).
Bloomberg News reported on the 20th, citing EU officials, that the EU will finalize the details of its support for Ukraine within this week.
According to EU officials, the EU will provide 9 billion euros in aid to Ukraine, which will begin repaying the principal after 10 years. The interest on the financial aid will be covered by the EU budget. This means the EU is effectively supporting Ukraine interest-free.
The 9 billion euro aid plan was proposed by the European Commission around mid-last month. The EU initially planned to finalize the aid package early this month and start support from July, but the schedule was delayed due to disagreements during the detailed coordination process.
There had been differences of opinion between the Commission and some member states, including Germany, on the form of support. While the Commission advocated for support in the form of loans, the German government insisted on grants to avoid financial burdens on Ukraine. The decision to have Ukraine repay only the principal without interest is seen as a compromise between these two positions.
Another issue was how much of Ukraine's debt burden EU member state governments would bear in the event of a default. According to officials, in case of default, 8 billion euros will be covered by EU member states, and the remaining 1 billion euros by the EU budget. This means the EU would absorb the losses if Ukraine defaults.
Even with full support from the EU, Ukraine is expected to continue facing a shortage of funds. Ukraine is currently reported to need about 5 billion euros monthly.
Officials said the EU plans to provide the 9 billion euros in 3 to 4 installments, with the first support expected this summer.
At this meeting, EU leaders will also discuss not only Ukraine's reconstruction but also granting Ukraine EU candidate status. Since the European Commission has already expressed support and major leaders from Germany, France, and Italy have indicated their backing, Ukraine is expected to be granted candidate status without major surprises.
Ursula von der Leyen, President of the European Commission, said in an interview with Germany's ARD broadcaster that she is confident a positive decision will be made regarding Ukraine's acquisition of EU candidate status. She called it a "historic decision that the EU summit must make," adding, "We are well prepared, and I am confident."
Earlier, on the 17th, the Commission proposed granting EU candidate status to Ukraine and Moldova. On the 16th, a day before the Commission's decision, German Chancellor Olaf Scholz, French President Emmanuel Macron, Italian Prime Minister Mario Draghi, and Romanian President Klaus Iohannis visited Kyiv, the capital of Ukraine, and at a joint press conference with Ukrainian President Volodymyr Zelenskyy, expressed their support for granting Ukraine EU candidate status.
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