The European Union is falling behind on its high-profile promises to deliver a substantial aid package to Ukraine at the same time the bloc is confronting the prospect of severe economic pain at home.
It was nearly two months ago when European Commission President Ursula von der Leyen proposed sending 9 billion euros in emergency loans to Ukraine. So far, the bloc has only managed to agree on an initial tranche that covers a ninth of that target.
Heading into the traditionally sleepy summer period in Brussels, the EU will face new challenges as the specter of a total cut-off from Russian gas and the tightening of monetary policy risks pushing the region into a second recession in two years.
The ministers on Tuesday managed to agree only on a 1 billion euro loan for Ukraine as a first tranche of the larger macrofinancial assistance package. The bulk of the financial package, which was approved in principle by EU leaders in May, has been blocked for weeks over differences between the commission and Germany on how to structure the funding.
The impasse is unlikely to be solved before Brussels scatters for the summer break, according to people familiar with the state of the discussions. All 27 member states must give their blessing to the terms of the aid package.
The commission asked member states to provide guarantees for the loans. But Germany wants to reduce the volume of its responsibilities, arguing that it gave 1 billion euros in non-refundable grants to Ukraine via the International Monetary Fund, a German official said. Berlin called on other member states to provide additional guarantees.
Separately, a 1.5 billion euro loan provided by the European Investment Bank to Kyiv also remains blocked inside the EU machinery since the commission is calling for a higher volume of guarantees compared with the standard operations of the bank. A commission official said the EU needs to make sure that it can absorb losses in the event of a Ukrainian default.
