LDN - Business

EU pledges to loan Ukraine up to $39 billion to help rebuild its economy and power grid

[September 20, 2024] By LORNE COOK

KYIV, Ukraine (AP) — The European Union pledged on Friday to lend Ukraine up to 35 billion euros ($39 billion) as part of a loan package organized by the Group of Seven major industrial nations, as it seeks to help the country repair and reconnect its war-shattered power grid.

“You will decide how best to use your funds,” European Commission President Ursula von der Leyen told President Vlodymyr Zelenskyy in Kyiv. The Ukrainian leader said that his priorities are to rebuild the energy network, build more bomb shelters, improve schools and buy more weapons.

G7 leaders agreed in June to engineer a $50 billion loan to help Ukraine in its fight for survival. Interest earned on profits from Russia’s frozen central bank assets would be used as collateral, but progress has been slow in distributing the money.

Von der Leyen arrived in Ukraine on Friday focused on helping the country to restore its electricity grid and boost its heating capacity as winter approaches.

Around half of Ukraine’s energy infrastructure has been destroyed during the war with Russia, and rolling electricity blackouts leave parts of the east in darkness for four hours at a time. Von der Leyden said it was the equivalent of all of Latvia, Lithuania and Estonia losing electricity.

Meanwhile, winter is approaching.

“Heating season starts in two weeks and Russia’s relentless attacks on Ukraine’s civilian energy infrastructure aims to inflict maximum damage,” von der Leyen said as she arrived in Kyiv for talks with Zelenskyy. “We will help Ukraine in its brave efforts to overcome this.”

The main aim is to help Ukraine decentralize its power grid, and to become less reliant on the big power stations that make easier targets for Russian forces. Around 260 missiles rained down in a major attack on energy infrastructure late last month.

[to top of second column]

President of the European Commission Ursula von der Leyen, left, holds a bouquet of flowers to place at a wall commemorating the fallen Ukrainian soldiers in the war with Russia, in Kyiv, Ukraine, Friday, Sept. 20, 2024. (Christoph Soeder, Pool via AP)

The Europeans have already sent more 10,000 generators and transformers, and they're supplying small and more mobile gas turbines too. These types of electricity-providing equipment are harder to hit and easier to repair.

Ukraine’s winter runs from late October through March, with January and February the toughest months. The Europeans hope to help supply around 25% of the 17 gigawatts of power that the country is likely to need this winter.

One aim of the EU assistance is to provide an incentive for people to stay in Ukraine. About 4 million people have fled since the war began on Feb. 24, 2022, often to Poland and other neighboring countries.

The EU is providing assistance, such as short-term help to find a place to stay, jobs or education. But recently the number of people leaving has climbed. The European Commission, the EU’s powerful executive branch, estimates that 10,000 more people are applying for help each week.

On Thursday, the commission announced that it would provide an extra 160 million euros ($180 million) to help fortify Ukraine’s energy network. Of that, 100 million euros ($112 million) come from the windfall profits the EU has earned from interest on frozen Russian assets.

Von der Leyen said the plan is to make “Russia pay for it through the revenue generated by their frozen assets.” Denmark is also leading the charge on using the money to place orders for weapons and military equipment directly with Ukraine’s defense industry.

Back to top