Yellen also raised the issue in a private meeting this week at the International Monetary Fund with European Commission Executive Vice President Valdis Dombrovskis and European Economics Commissioner Paolo Gentiloni, according to a person familiar with the matter who spoke on the condition of anonymity to describe the private meetings. . She raised the issue again at a subsequent meeting of all EU finance ministers, the person said.
New forecasts from the World Bank last week indicate that the Ukrainian economy will do just that Contracting up 35% this yearThe country’s finance officials say inflation could reach 40 percent early next year — close to what economists define as “hyperinflation”. Even as the situation on the battlefield has turned in Ukraine’s favour, the country’s exports have plummeted, tax revenue has collapsed, millions of people have fled and Russian attacks have destroyed vital infrastructure, including the power grid.
International assistance has not proven sufficient to bridge the gap. Zelensky said on Wednesday that Ukraine needs $38 billion in emergency economic aid from the West for next year’s budget alone. This figure excludes an additional $350 billion that the World Bank has estimated will be necessary for Ukraine Long-term reconstruction once the war is over. The United States provided $8.5 billion in economic aid and will disburse another $4.5 billion by the end of the year, while US officials say the European Union pledged 11 billion euros but only disbursed about 3 billion in loans.
“We call on our partners and allies to join us in paying off their existing obligations to Ukraine and quickly doing more — to help Ukraine continue its essential government services and help Ukraine begin to build and recover,” Yellen said. Tuesday.
On Wednesday, Yellen again stressed the need for quick disbursement of direct cash payments – rather than loans that must be repaid – to help the country’s economy. Yellen’s comments were a veiled reference to the European Union, which has almost entirely provided its loan assistance.
“Donors must continue to come forward,” Yellen said. “The volume, predictability and award of payments must improve.”
Ukrainian and US officials are careful not to antagonize their European allies with harsh public condemnations, but they still communicate their sense that the commission is moving too slowly.
“I know they are very disappointed,” a former senior Treasury official said, speaking on condition of anonymity to reflect private conversations with Treasury leadership. “US officials want to see Europe perform much faster… they want Europe to perform much faster. They need to deliver.”
In a statement, European Commission spokeswoman Neues Verl strongly rejected the idea The EU has been slow or insufficient in disbursing aid. The total commitment of Team Europe – including not only the European Union, but also member states and financial institutions such as the European Investment Bank – amounts to about 19 billion euros, Ferrell said.
The European Commission also pledged to disburse €10.2 billion in emergency economic support to Ukraine by the end of the year, excluding military aid, Ferrell said. While the vast majority of the assistance is in the form of loans rather than grants, these loans are given on very favorable terms to the borrowers.
Part of the challenge is that Such decisions must be unanimously supported by EU capitals, creating an opportunity for roadblocks, while the United States can agree to aid without having to consult other countries.
The European Union welcomes and takes care of millions of refugees from Ukraine on the territory of the European Union. A European official, who spoke on condition of anonymity, added to reflect the EU’s position frankly. In addition, the European Union made long-term commitments to post-war reconstruction of Ukraine. For us, this is not a race or a beauty contest. Helping Ukraine is in our vital interest, and we are determined to do everything in our power to help defeat the aggressor and rebuild their country.”
The European Union faces its own set of challenges amid a bleak global economic outlook. Europe faces a Sharp economic slowdown and possible recession this winter Russia is stifling the continent’s energy resources in response to the war’s sanctions. Inflation in Europe continues unabated, and energy prices are higher there than in the United States.
But the economic situation in Ukraine is worse, and warnings have accelerated in recent weeks despite the nation’s battlefield victories over Russia.
Ukraine’s tax revenue is now almost entirely devoted to military operations, forcing the country’s government to print new money – driving up inflation and devaluing its currency. Inflation has already exceeded 30 percent, and the country’s currency, the hryvnia, has depreciated by about 70 percent, according to Marian Zablotsky, a member of the Verkhovna Rada and a member of its finance committee. Speaking remotely at a World Bank meeting on Wednesday, Zelensky said inflation-adjusted incomes among Ukrainians have fallen by more than a third.
“We understand that a lot of Western countries have their own issues and problems, but the current aid is barely enough to feed people,” Zablotsky said in an interview.
Kenneth Rogoff, Harvard University economist and former chief economist at the International Monetary Fund said: He is concerned that inflation in Ukraine may continue to rise Within six months to a year if no additional assistance is achieved. With its large budget deficit, Ukraine was forced to print money to cover spending commitments – devaluing the currency and raising the costs of imports and other goods.
“They are in a desperate situation that you can’t even imagine…in a sense, while they are winning the war, their economy is losing,” Rogoff said. Europeans have to pay much more. I don’t care if they are in the doldrums. Ukraine is at war as it is defending Europe’s borders.”
Yellen’s comments this week reflect how US officials’ long-running frustration over European economic aid to Ukraine is now starting to emerge, according to Jacob Kierkegaard, a senior fellow at the German Marshall Fund of the United States and at the Peterson Institute. The United States has committed $1.5 billion a month to cover the Ukrainian government next year. The European Commission made a similar pledge in recent weeks, but it faces doubts from international experts about its ability to fulfill this pledge, given its inability to achieve its goals so far.
“They were not ready to rise to the level that the United States clearly wants,” Kierkegaard said on Wednesday. “When you read Secretary Yellen’s comments today, it’s clear that they are clear.”