The Ukraine Facility
CIVEX-VII/025
The Ukraine Facility
FEEDBACK
Outcome of the trilogue on the Ukraine Facility
5 March 2024
Meeting
On 27 February 2024, the European Parliament gave its green light to the establishment of the Ukraine Facility with large majority (+536, - 40, o39). The day after, the Council adopted the related legislative act and the regulation came into force on 29 February 2024 (Official Journal).
Purpose The Ukraine Facility is a dedicated financing instrument that ensures substantial financial assistance for Ukraine (EUR 33 billion in highly concessional loans and EUR 17 billion grants) in the period 2024-2027. The government of Ukraine will prepare a 'Ukraine Plan' outlining its priorities for the recovery, reconstruction and modernisation of the country. It will also indicate the reforms that Ukraine is planning to undertake as part of its EU accession process. Under pillar III of the Facility, the EU will provide pre-accession assistance, capacity building support and other supporting measures helping Ukraine to align with EU acquis.
The European Parliament improved the initial wording of the European Commission proposal and ensured that the Ukrainian Parliament, regional and local authorities, and civil society organisations in Ukraine are duly informed and consulted on the design and implementation of the Ukraine Plan. The regulation is also foreseeing a 'Ukraine Facility Dialogue' which gives the opportunity for the European Parliament to invite the Commission to discuss the implementation of the Plan, at least every four months.
Effective output of meeting
The amended regulation broadly reflects the demands of the CoR, improving the initial wording on the regional perspective and increasing the related financial support.
• At least 20% of the non-repayable financial support under Pillar I will be allocated to the recovery, reconstruction and modernisation needs of Ukraine’s sub-national authorities, in particular local self-government.
• In the investment part of Pillar I and in Pillar II taken together, 20% of the investments should contribute to green goals.
• Pillar III: Union accession assistance and support measures will get 26% of the funding, according to the indicative distribution in the regulation (however, it needs to be noted that this will cover also the borrowing cost subsidies and provisioning from previous support to Ukraine - making it difficult to determine the exact amounts left for the assistance. In any case, this should be higher than the initially proposed by the Commission 5%.)
• The Union should recognise and support the multiple roles played by the local and regional authorities as promoters of an inclusive territorial approach to local development, including decentralisation processes, participation of civil society organisations and local communities, transparency and accountability, and further enhance its support for local authorities’ capacity building, including for the implementation of projects under the Facility, in line with the principle of local self-government as defined in the European Charter of Local Self-Government, to which Ukraine is a signatory.
• Regions and municipalities, as well as of civil society organisations, should be meaningfully involved at all stages of the democratic process allowing for enhanced democratic scrutiny.
• The Ukraine Plan should in particular enhance the economic, social, environmental and territorial development of Ukraine’s regions and municipalities and support decentralisation reform across Ukraine and convergence with Union’s standards. The Plan should demonstrate how meaningful participation of stakeholders was planned and conducted via consultations, with sufficient timeframes and transparency, and clear follow-up procedures to input given.
• The completion of the decentralisation reform as a sustainable and irreversible element of multi-level governance in Ukraine is an important priority. This should include a clear delineation of powers between central and local levels, appropriate internal structures for municipal administrations, and a proportionate framework of supervision of local authorities in line with the European Charter of Local Self-Government, as well as continuing the work on granting legal personality to municipalities under public law based on European practice and in line with the constitutional order of Ukraine.
• Fostering territorial cohesion, is now among the general objectives of the Facility [Article 3.1(c)] and among the more specific aims there are:
strengthening democratic institutions, in particular the Verkhovna Rada, as well as regional and municipal representative bodies, and their powers of oversight and inquiry over the distribution of and access to public funds
supporting political and administrative decentralisation and local development, especially by supporting meaningful consultation and a level playing field for all levels of government when accessing funds via open, fair, neutral, and transparent procedures;
supporting cross-border cooperation with the Member States bordering with Ukraine in the areas such as trade, environment protection and fight against international crime, provided that Ukraine remains the sole beneficiary of the funding.
• The support to institutional capacities and decentralisation is now explicitly among the actions covered by Pillar III, including through twinning and town twinning, as well as through promotion of peer-to-peer cooperation and programs embedded in partnerships between European and Ukrainian cities and regions, where relevant.
• The Commission is requested to evaluate if the Ukraine Plan takes into account, where appropriate, the inputs of stakeholders, including local and regional representative bodies and authorities, social partners and civil society organisations, in accordance with the national legal framework.
Follow-up action points and lead Directorate
• Communicate the positive results for the local and regional authorities - Directorate D.
• Potential consideration in the context of the 2024 Annual Impact Report.
• Continue to follow the developments in view of the Ukraine Recovery Conference (Berlin, 11-12 June 2024) – Directorate B.
• Follow up in the context of the European Alliance of Cities and Regions for the Reconstruction of Ukraine and the Working Group on Ukraine meetings, as appropriate - CIVEX
Overall evaluation/feedback
• The outcome of the trilogue is very positive and broadly reflects the requests of the CoR opinion on the Ukraine Facility, which was unanimously adopted by the Plenary on 11 October 2023.
Next steps
• Ukraine will have to present the Ukraine Plan within two months. Specific conditions for financial support will be agreed in a Memorandum of Understanding between the Commission and Ukraine. However, a 6-month financial bridge period was established to ensure predictability and continuity of the EU assistance towards Ukraine (max monthly financial support: EUR 1.5 billion).
Outcome of the trilogue on the Ukraine Facility
5 March 2024
Meeting
On 27 February 2024, the European Parliament gave its green light to the establishment of the Ukraine Facility with large majority (+536, - 40, o39). The day after, the Council adopted the related legislative act and the regulation came into force on 29 February 2024 (Official Journal).
Purpose The Ukraine Facility is a dedicated financing instrument that ensures substantial financial assistance for Ukraine (EUR 33 billion in highly concessional loans and EUR 17 billion grants) in the period 2024-2027. The government of Ukraine will prepare a 'Ukraine Plan' outlining its priorities for the recovery, reconstruction and modernisation of the country. It will also indicate the reforms that Ukraine is planning to undertake as part of its EU accession process. Under pillar III of the Facility, the EU will provide pre-accession assistance, capacity building support and other supporting measures helping Ukraine to align with EU acquis.
The European Parliament improved the initial wording of the European Commission proposal and ensured that the Ukrainian Parliament, regional and local authorities, and civil society organisations in Ukraine are duly informed and consulted on the design and implementation of the Ukraine Plan. The regulation is also foreseeing a 'Ukraine Facility Dialogue' which gives the opportunity for the European Parliament to invite the Commission to discuss the implementation of the Plan, at least every four months.
Effective output of meeting
The amended regulation broadly reflects the demands of the CoR, improving the initial wording on the regional perspective and increasing the related financial support.
• At least 20% of the non-repayable financial support under Pillar I will be allocated to the recovery, reconstruction and modernisation needs of Ukraine’s sub-national authorities, in particular local self-government.
• In the investment part of Pillar I and in Pillar II taken together, 20% of the investments should contribute to green goals.
• Pillar III: Union accession assistance and support measures will get 26% of the funding, according to the indicative distribution in the regulation (however, it needs to be noted that this will cover also the borrowing cost subsidies and provisioning from previous support to Ukraine - making it difficult to determine the exact amounts left for the assistance. In any case, this should be higher than the initially proposed by the Commission 5%.)
• The Union should recognise and support the multiple roles played by the local and regional authorities as promoters of an inclusive territorial approach to local development, including decentralisation processes, participation of civil society organisations and local communities, transparency and accountability, and further enhance its support for local authorities’ capacity building, including for the implementation of projects under the Facility, in line with the principle of local self-government as defined in the European Charter of Local Self-Government, to which Ukraine is a signatory.
• Regions and municipalities, as well as of civil society organisations, should be meaningfully involved at all stages of the democratic process allowing for enhanced democratic scrutiny.
• The Ukraine Plan should in particular enhance the economic, social, environmental and territorial development of Ukraine’s regions and municipalities and support decentralisation reform across Ukraine and convergence with Union’s standards. The Plan should demonstrate how meaningful participation of stakeholders was planned and conducted via consultations, with sufficient timeframes and transparency, and clear follow-up procedures to input given.
• The completion of the decentralisation reform as a sustainable and irreversible element of multi-level governance in Ukraine is an important priority. This should include a clear delineation of powers between central and local levels, appropriate internal structures for municipal administrations, and a proportionate framework of supervision of local authorities in line with the European Charter of Local Self-Government, as well as continuing the work on granting legal personality to municipalities under public law based on European practice and in line with the constitutional order of Ukraine.
• Fostering territorial cohesion, is now among the general objectives of the Facility [Article 3.1(c)] and among the more specific aims there are:
strengthening democratic institutions, in particular the Verkhovna Rada, as well as regional and municipal representative bodies, and their powers of oversight and inquiry over the distribution of and access to public funds
supporting political and administrative decentralisation and local development, especially by supporting meaningful consultation and a level playing field for all levels of government when accessing funds via open, fair, neutral, and transparent procedures;
supporting cross-border cooperation with the Member States bordering with Ukraine in the areas such as trade, environment protection and fight against international crime, provided that Ukraine remains the sole beneficiary of the funding.
• The support to institutional capacities and decentralisation is now explicitly among the actions covered by Pillar III, including through twinning and town twinning, as well as through promotion of peer-to-peer cooperation and programs embedded in partnerships between European and Ukrainian cities and regions, where relevant.
• The Commission is requested to evaluate if the Ukraine Plan takes into account, where appropriate, the inputs of stakeholders, including local and regional representative bodies and authorities, social partners and civil society organisations, in accordance with the national legal framework.
Follow-up action points and lead Directorate
• Communicate the positive results for the local and regional authorities - Directorate D.
• Potential consideration in the context of the 2024 Annual Impact Report.
• Continue to follow the developments in view of the Ukraine Recovery Conference (Berlin, 11-12 June 2024) – Directorate B.
• Follow up in the context of the European Alliance of Cities and Regions for the Reconstruction of Ukraine and the Working Group on Ukraine meetings, as appropriate - CIVEX
Overall evaluation/feedback
• The outcome of the trilogue is very positive and broadly reflects the requests of the CoR opinion on the Ukraine Facility, which was unanimously adopted by the Plenary on 11 October 2023.
Next steps
• Ukraine will have to present the Ukraine Plan within two months. Specific conditions for financial support will be agreed in a Memorandum of Understanding between the Commission and Ukraine. However, a 6-month financial bridge period was established to ensure predictability and continuity of the EU assistance towards Ukraine (max monthly financial support: EUR 1.5 billion).
THE EUROPEAN COMMITTEE OF THE REGIONS
- welcomes, including on behalf of the European Alliance of Cities and Regions for the Reconstruction of Ukraine, the Commission proposal for a Ukraine Facility, as necessary to ensure predictable financing for Ukraine until 2027;
- acknowledges that the Facility clearly mentions a key role for Ukraine's local and regional authorities. However, the CoR proposes a series of measures to ensure their proper involvement and suggests that the Facility apply the partnership principle as defined in the European code of conduct on partnership in the framework of the European Structural and Investment Funds in order to prepare the approximation of Ukraine with EU regional policy;
- argues that the overall budget of Facility should be EUR 60 billion, rather than EUR 50 billion for the 2024-2027 period;
- is pleased that the Ukraine Facility builds on the EU's borrowing capacity, providing loans to Ukraine on very good terms, as well as non-repayable support of up to EUR 17 billion and guarantees, and therefore does not involve cohesion policy-related funding;
- proposes reinforcing the share of funds made available for capacity building (under Pillar III of the Facility) in order to reinforce the support for the implementation of EU accession-related reforms, the necessary capacity building of local and regional authorities and dedicated cooperation programmes;
- underlines that the Commission must ensure consistency between the assistance provided under the Facility and the enlargement policy framework;
- recommends adding a territorial component to the Multi-¬Agency Donor Coordination Platform, with the European Alliance of Cities and Regions for the Reconstruction of Ukraine playing a coordinating role in this component.
- welcomes, including on behalf of the European Alliance of Cities and Regions for the Reconstruction of Ukraine, the Commission proposal for a Ukraine Facility, as necessary to ensure predictable financing for Ukraine until 2027;
- acknowledges that the Facility clearly mentions a key role for Ukraine's local and regional authorities. However, the CoR proposes a series of measures to ensure their proper involvement and suggests that the Facility apply the partnership principle as defined in the European code of conduct on partnership in the framework of the European Structural and Investment Funds in order to prepare the approximation of Ukraine with EU regional policy;
- argues that the overall budget of Facility should be EUR 60 billion, rather than EUR 50 billion for the 2024-2027 period;
- is pleased that the Ukraine Facility builds on the EU's borrowing capacity, providing loans to Ukraine on very good terms, as well as non-repayable support of up to EUR 17 billion and guarantees, and therefore does not involve cohesion policy-related funding;
- proposes reinforcing the share of funds made available for capacity building (under Pillar III of the Facility) in order to reinforce the support for the implementation of EU accession-related reforms, the necessary capacity building of local and regional authorities and dedicated cooperation programmes;
- underlines that the Commission must ensure consistency between the assistance provided under the Facility and the enlargement policy framework;
- recommends adding a territorial component to the Multi-¬Agency Donor Coordination Platform, with the European Alliance of Cities and Regions for the Reconstruction of Ukraine playing a coordinating role in this component.
