"The €50 billion from the EU might be revised upwards, but Ukraine has to restart its economy to repay debts." Ukraine's ambassador to the EU

Wednesday, 14 February 2024 — , European Pravda, from Brussels

Vsevolod Chentsov is one of the current Ukrainian diplomats who has been working on European issues the longest. He was a member of the negotiating team for the Association Agreement fifteen years ago.

As Ukraine’s Ambassador to the European Union, Chentsov will soon be taking an active part in the negotiations on Ukraine’s EU accession. He is preparing his European counterparts for the fact that opening negotiations with Ukraine requires a fundamentally different approach than the EU has taken so far.

We met in Brussels, shortly after the EU had adopted its decision to provide Ukraine with the long-awaited €50 billion aid programme. As it turns out, Ukraine expects this amount to be reviewed. That wasn’t the only news we heard in this interview. The consultations on the fate of Ukrainian asylum seekers whose right to stay in the EU expires in early 2025 deserve special attention.

"Will we be satisfied with a cap of €50 billion? Probably not"

Has the EU really understood that Ukraine will join the Union? Are they really hoping to see Ukraine there?

The European Union has always expected us to join, but it was not openly discussed.

Now it’s finally clear. There is a clear direction of movement, next stages, and to some extent even time frames.

It turns out that EU enlargement only becomes possible when the "stars align", meaning when a geopolitical window of opportunity appears. And it’s clear in both Brussels and other capitals that such a window of opportunity is open right now.

We'll talk about accession later. I want to ask about the recent EU decision that was adopted in early February, albeit belatedly – the €50 billion long-term financing for Ukraine.

This decision was indeed not easy.

There was a very dramatic moment in December when the EU summit approved the political decision to open negotiations on Ukraine's EU accession, but the decision on the new financial instrument for Ukraine was postponed until February. Now, finally, even this political decision has been adopted.

We are working on the implementation documents – the memorandum and the credit agreement.

We’ll receive the first tranche of this assistance around mid-March.

Are we planning to receive a lot at once?

Yes, we want to receive a lot at once.

Last year, the EU’s macro-financial assistance (MFA) was allocated in €1.5 billion monthly tranches [the last tranche under the programme was received in December – ed.].

Thanks to the efforts of the National Bank, the Ministry of Finance and the government, we’ve got through the first two months of 2024 without this resource. And we expect to receive a large tranche via this new financial instrument in March. I don't want to speculate on the amount.

Will Ukraine receive €50 billion in total?

I think Ukraine will receive more than €50 billion.

Because in the middle [of the programme] – that is, after two years – there is a possibility for this instrument to be reviewed. 

And I think the amount will be revised upwards.

Firstly, when we are talking about our macro-financial stability, about the investment component... about technical assistance, including what we need to prepare for membership, I think our needs will be defined more precisely.

Secondly, let's look at the logic of this decision by the European Union.

They are considering providing Ukraine with €17 billion as grants and €33 billion as loans. The plan is to use income from frozen Russian assets to finance the grant portion. And even if we are talking about income, well, over four years, as they’ve calculated, it's €17 billion. So we expect that member countries will fill the grant portion not just with income from Russian assets.

Will we be satisfied with a cap of €50 billion? Probably not.

Regarding loans, if we borrow tens of billions of euros, how will Ukraine service them, and how will we repay these huge amounts?

There is only one way to repay borrowed funds relatively painlessly: to restart the Ukrainian economy so that we can replenish the budget ourselves and repay these debts.

At the moment, as we all know, a significant part of the Ukrainian budget is covered by loans. The EU provides almost half of this donor part.

The loans we receive are long-term – for 20 years or more. They are provided on very attractive terms. Here, the EU is acting similarly to how it did with the "post-Soviet" recovery instruments that were previously created for EU member states, and accordingly, the borrowing conditions are very favourable.

The EU has been emphasising that it's time not only to provide money to Ukraine, but also to expect Ukraine to meet certain conditions. What conditions will we face?

Work is currently underway on a plan for economic recovery and development to complement the financial instrument. There's nothing new here: a country receiving European funding takes on certain commitments, primarily relating to economic development.

And democracy.

And there's nothing new there either.

We're talking about our EU accession. So reforms related to enlargement are closely intertwined with macro-financial stability.

As for the list of these reforms, we have to wait for the plan to be approved by the EU Commission and member states, but there won't be any surprises. There will be reforms where we have already made significant progress, including judicial reform, institutional stability, and administrative reform.

"Our accession must be beneficial for everyone. Including Poland"

Do you have a sense that the EU is ready for enlargement, and for Ukraine to become the 28th member state?

We are not shy or hesitant about repeating to our friends in the EU and in the member states that we applied to join the EU as it is now. We understand its foundation and the logic behind its functioning.

But of course we have questions about the enlargement methodology that currently exists. So we are also not shy of repeating that this methodology is in need of an overhaul.

It is no secret to anyone that it was prepared in such a way as to prevent EU enlargement. And we want to change this logic and speed up the process, removing artificial delays.

Brussels is gradually coming to an understanding that this will need to be done.

Ukraine has already moved the enlargement process from a standstill.

And I believe that we will be able to find the right balance between speed and quality.

Because it’s not just speed that’s important. It’s important for us to get everyone – the state, institutions, businesses – ready to function once Ukraine is a member. After all, EU membership isn’t just about opportunities to receive funding or access to the market. It’s also about competition, and we have to be prepared for that. These are serious matters, and we need to build up our muscles.

Because it’s going to be tough at times. You can see the first signs already – agriculture, transport.

But will we join the EU in this decade?

I think so. I hope so.

We really can see that the path to membership is not going to be easy. Our neighbours are anticipating competition from Ukraine. How can we overcome the resistance of the Poles, who are blocking not just the border, but also our integration into the European market?

I think we will find a solution.

But we will have to rise above bilateral competition. Poland and other states alike need to move away from the logic of "I have to squeeze as much as I can out of my neighbour and narrow their opportunities as much as possible, or if not that, I won't let them into the European Union".

Instead, we need to switch to the logic that we can do this together.

We have a lot to offer the EU and the main European players. Our market is huge, and I hope that will only improve after our victory. We have people who have proven their ability to adapt fast and learn fast, and above all to keep moving forward.

We have resources, the will to win, and the ability to achieve results.

All this will strengthen the European Union.

Remember, when Central and Eastern Europe joined the EU, everyone benefited from enlargement. Even countries like Germany or the Netherlands, which were already in the EU, benefited too, because production was transferred, investments were encouraged and so on.

Our accession should be beneficial for everyone, including Poland.

The European Commission and member states are preparing new trade rules with Ukraine to replace the completely free trade of 2022-23. What will these contain? Will the EU restrict imports from Ukraine?

The Commission has tried to please both Ukraine and EU member states. Of course we have questions about the option being proposed because in certain areas, Ukrainian agriculture may export more to the EU than certain states are willing to accept.

But overall, this is a decent option. Export limits from Ukraine would be set at the level of average exports between 2022 and 2023. If this limit is exceeded, the European Commission, if requested to by member states, may apply restrictions.

We are still discussing how this mechanism will work. For example, whether Ukraine will be able to apply any control measures rather than waiting for us to enter the red zone. And in the course of this dialogue, we will defend the interests of our producers.

"We’ll be fighting for our people"

How many Ukrainians are there in the EU who left after the full-scale war started?

The numbers change constantly because there is movement across the border, but we are talking about millions of Ukrainian citizens.

There is a temporary protection mechanism for Ukrainians in the EU. It expires in 2025. Will Ukrainians be permitted to continue to stay in the EU?

The current instrument is indeed temporary, and it was designed for a maximum of three years.

Those three years expire in March 2025, so the question arises about what to do next, and what our citizens’ status will be.

Various options are being considered, and I am 100% [certain] that the European Union will not allow itself to make any sudden moves. 

There won’t be a legal vacuum, when you have legal status one day and your document expires the next, and the police are asking what you’re doing in the European Union.

That won’t happen – 100%.

This means that Ukrainians should be warned well in advance and there should be a transition period in the event of any dramatic changes.

There may be some temporary options. But for those people who are able to come back to Ukraine, special conditions should be created to help them do so.

So there may be a special EU programme to assist Ukrainians?

Yes, we are talking about it, and we’ve been talking about it from the beginning.

Just as there was funding for special programmes to help Ukrainians settle in EU territory [money from the EU cohesion fund and national funds], so now we are talking about the same logic in the context of our people returning in the future.

Even simple things like tickets and transport. And also where people whose homes have been destroyed can settle in Ukraine after they return – because the people returning will face the same issues in Ukraine as they did when they arrived in EU countries.

A foundation needs to be set up to support those who return to Ukraine. We are discussing this with the European Commission and explaining to them that the return of our people has to be considered in the context of rebuilding Ukraine.

Because this is human capital. There will be no reconstruction without our people.

As a realist, I understand that Ukrainians – white, Christian, hard-working people – are desirable migrants for many countries. Some countries will not want to help Ukrainians return.

There is a danger that some countries will not want to help Ukrainians go back to Ukraine.

Again, this is about competition. We have to be competitive as a country and create the right conditions for our people. That's what we need to do.

Let's see what assistance the EU will offer. I think there’s going to be a battle over our people here in Brussels 2025, and not only in Brussels.

We will fight for them.

Sergiy Sydorenko

Editor, European Pravda from Brussels

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