Federal Minister of Finance: “It’s about ensuring the Ukrainian state’s ability to act.”
(Photo: dpa)
Berlin Federal Finance Minister Christian Lindner (FDP) has announced further financial aid for Ukraine. Germany will make one billion euros available, said Lindner at a meeting with his colleagues from the most important industrialized countries (G7) near Bonn. “It’s about ensuring the Ukrainian state’s ability to act.” A double-digit billion sum is needed for the coming months.
The International Monetary Fund (IMF) estimates that Ukraine will need up to 15 billion euros in the next three months. This is intended to finance current expenditure from the state budget. The aim of the G7 countries is to raise this sum as much as possible. “It’s about closing Ukraine’s short-term liquidity gap,” said Lindner.
The US government had pledged $7.5 billion before the meeting. The other G7 countries also want to contribute financially. Lindner is expected to announce a total of commitments on Friday as chair of G7 finance ministers. Pledges of support are being collected, he said during the meeting.
The Federal Minister of Finance did not want to commit to a sum on Thursday, but spoke of a “significant magnitude”. If the finance ministers don’t get the 15 billion euros together at their current meeting, the heads of state and government could deal with the topic again at their G7 summit in Elmau, Bavaria, at the end of June.
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The short-term financial aid will come in the form of grants that Ukraine will not have to repay. In addition, there is also other support that has already been announced in recent weeks.
The IMF had already pledged an emergency loan of 1.4 billion dollars in early March. The European Investment Bank (EIB) has decided to disburse a loan of EUR 668 million in the short term. The European Bank for Reconstruction and Development has approved financial support of two billion euros.
Reconstruction talks started
The EU is also helping with a program. A so-called macro-financial aid of 1.2 billion euros has already been approved, with which Ukraine is primarily intended to service its foreign liabilities. The first half has already been paid.
At the same time, discussions about financing the reconstruction of the destroyed infrastructure and economy in Ukraine have already begun. This will cost billions, said Chancellor Olaf Scholz (SPD) in his government statement in the Bundestag. “Therefore, as the European Union, we must now start the preparatory work for a solidarity fund that will be fed by contributions from the EU and our international partners.”
The EU Commission wants to help the war-torn country with up to nine billion euros in loans in the short term. The EU countries should give additional guarantees. Payment is planned in several tranches, with a long term and preferential interest rates. In the longer term, a reconstruction program is planned, in which the EU, according to its own estimates, is likely to become the largest donor.
The EU Commission is considering including sanctioned Russian assets in the reconstruction of Ukraine. This could affect frozen assets of Russian oligarchs on the one hand and deposits by the Russian central bank in the European Union on the other. According to the Ministry of Finance, the central bank’s frozen funds amount to around 143 billion euros.
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The Federal Minister of Finance is open to this possibility. “I’m politically open to the idea of confiscating foreign assets from the Russian central bank,” Lindner told Handelsblatt. Appropriate proposals are already being discussed in the group of G7 nations and in the EU. “With private wealth, we need to see what is legally possible,” he added. “We must respect the rule of law even when dealing with Russian oligarchs.”
The US, meanwhile, is not currently planning to seize the frozen assets of the Russian central bank. That would not be legal in the US at the moment, Treasury Secretary Janet Yellen said shortly before the G7 meeting.
The sanctions against Russia were also discussed in Bonn. The US government has expressed internal skepticism about an oil embargo by EU countries. She thinks punitive tariffs on Russian energy exports are a better tool. The background is the concern that world market prices would rise further if the Europeans tried to buy additional oil from other countries.
More: Interview with Christian Lindner: “I am politically open to the idea of confiscating the foreign assets of the Russian central bank”