EU Bolsters Support for Ukraine Amidst Funding Challenges

The European Union has launched a significant financial package for Ukraine, amounting to up to 35 billion euros. This initiative was approved by the permanent representatives of EU member states in Brussels. Announced by EU Commission President Ursula von der Leyen during her visit to Kyiv, the package is part of a broader effort by the G7 to support Ukraine with 50 billion US dollars.

However, the proposal faces hurdles, particularly due to Hungary's resistance. Hungary blocks key aspects of the initiative, such as the use of interest from frozen Russian assets to fund the aid. This opposition stems from the EU sanctions against Russia, which require unanimous renewal every six months. Hungary's stance complicates the long-term financing strategy proposed by the EU Commission, which aims to extend the use of these funds over three years.

The EU's package, requiring a qualified majority, still needs formal approval from member states and the European Parliament. The financial strain on Ukraine necessitates swift action, with decisions expected by the end of October. Meanwhile, the EU anticipates additional contributions from G7 partners, including the US, Japan, and Canada, to reach the target amount. However, diplomatic sources indicate the US's participation remains uncertain due to Hungary's blockade and potential political changes following the upcoming US elections.

In parallel, Ukraine is grappling with its economic challenges by implementing domestic measures. The Ukrainian parliament has enacted a retroactive tax increase to fund the ongoing war, raising the war levy on incomes from 1.5% to 5%, exempting soldiers. This step is crucial as Ukraine relies heavily on foreign loans and aid to support its budget, which has already received over 88 billion euros in assistance since the conflict began.