Ukraine Facility: Council agrees on elements of new support mechanism for Ukraine

Today, member states’ EU ambassadors approved a partial negotiating mandate on a proposal to set up a new single dedicated instrument to support Ukraine’s recovery, reconstruction and modernisation, while supporting its efforts to carry out reforms as part of its accession path to the EU.

The Ukraine Facility would thus pool the EU’s budget support to Ukraine into one single instrument, providing coherent, predictable as well as flexible support for the period 2024-2027 to Ukraine, adapted to the unprecedented challenges of supporting a country at war.

The Council’s partial negotiating mandate does not include budget-related issues, in particular the overall size of the instrument and the share of grants and loans, which will depend on the final outcome of the horizontal negotiations on the mid-term revision of the multiannual financial framework for 2021-2027.

Main elements of the partial Council position
The partial negotiating mandate preserves the main building blocks of the Commission’s proposal. These include the objectives of the Facility and its structure in three pillars:

• pillar I: The government of Ukraine will prepare a ‘Ukraine Plan’, setting out its intentions for the recovery, reconstruction and modernisation of the country and the reforms it plans to undertake as part of its EU accession process. Financial support in the form of grants and loans to the state of Ukraine would be provided based on the implementation of the Ukraine Plan, which will be underpinned by a set of conditions and a timeline for disbursements
• pillar II: Under the Ukraine investment Framework, the EU will provide support in the form of budgetary guarantees and a blend of grants and loans from public and private institutions. A Ukraine Guarantee would cover the risks of loans, guarantees, capital market instruments and other forms of funding supporting the objectives of the Facility
• pillar III: technical assistance and other supporting measures helping Ukraine align with EU laws and carrying out structural reforms on its path to future EU membership

Link to the long-term budget
The Commission has proposed a total budget of €50 billion – €17 billion in grants and €33 billion in loans – for the Facility.

Next steps
The partial position will serve as the Council’s mandate for negotiations with the European Parliament. Once an agreement is reached, the regulation will need to be formally adopted by the Council and the European Parliament.

Background
On 20 June 2023, the Commission adopted a proposal for the revision of the multiannual financial framework (MFF) 2021-2027, together with two proposals for regulations setting up a Ukraine Facility and a Strategic Technologies for Europe Platform (STEP).

Today the Council also adopted a partial negotiating mandate on STEP.