(3rd LD) S. Korea to withdraw some embassy staff from Ukraine amid N.K. POW dispute

The European Commission is evaluating whether Ukraine's recently passed laws will qualify it for a €3.7 billion ($4.3 billion) EU payment, according to spokesperson Balázs Ujvári in Brussels on October 19th. Ujvári also disclosed that Ukraine's 2027 funding gap is approximately €70 billion, with the EU stating it cannot cover this alone.

The ongoing conflict with Russia has left Ukraine facing a budget shortfall before any additional military spending. To help alleviate this, foreign funding is essential in supporting salaries, pensions, and repairs while Ukraine utilizes its own revenue for defense purposes. Each delayed payment in funding impacts the domestic population as Russia continues to target Ukraine's energy infrastructure.

This payment represents the second tranche of the EU's macro-financial assistance to Ukraine; its approval depends on the implementation of reforms, as stated by Ujvári at the Commission's briefing. On its third try, Ukraine's parliament passed a law on October 15th abolishing the VAT exemption for foreign parcels valued at up to €150 starting July 1st, 2027, and requiring online marketplaces to collect the tax.

The Commission has noted this law as one of 12 conditions for the tranche. Despite the IMF's pressure, fewer than 1% of the 75 million parcels received annually by Ukrainians have been taxed so far. Approximately €30 billion is set to be allocated for Ukraine this year, primarily through the EU's €90 billion support loan if reforms persist, according to Ujvári.

A €70 billion funding gap for 2027 emerges when considering the current pledges of €45 billion ($52 billion) from the EU and commitments from other partners. Ujvári emphasized the need for partners to increase their pledges and fulfill commitments, as they cannot accomplish this collectively. President Volodymyr Zelenskyy had previously requested at least €70 billion more for Ukraine's budget in 2027, prompting the EU to task the Commission with developing a proposal without setting a deadline.

While the Commission is examining options related to using frozen Russian assets, Ujvári suggested it was "a little bit early" to delve into those specifics. Additionally, borrowing by the EU has become more expensive since 10-year rates have increased from 3.2% to just above 4% in the past six months. The originally designed €90 billion loan assumed the war would conclude by 2026, which has now proven inaccurate.

Slovak Prime Minister Robert Fico revealed that Slovakia and Hungary would decline new aid but would not obstruct the allocation of funds to other nations.