Committee on Budgets Ordinary meeting
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BUDG European Parliament
Follow its sittingsCarla Tavares
That we're going to have this exchange of views, sharing experiences, sharing food for thought. This is obviously a very important issue for the EU. The support that the EU has already given to Ukraine to rebuild, but it's also been given for strategic purposes. And what we're hearing from the commission is that it's giving structured support against the backdrop of the conflict. There are two or three things that are very important to me.
We should include Ukraine in global Europe, but it should also have a separate funding stream because we in this committee want there to be flexibility, but also predictability for Ukraine. And, of course, there are short-term needs, but also medium and long-term needs as we look to modernize and rebuild Ukraine. And, of course, there are many challenges. Course, one major challenge is the sheer scale of the financing, that will be needed because what we're understanding is that what has been given in recent years isn't enough, and we are worried about the upcoming MFF. Will the next MFF be able to provide the support needed in these unfortunate circumstances?
And then if we look at the breakdown of the support, we know that a lot of what is being given is in the form of loans. You know, is it good to give loans to Ukraine given it's such a highly-indebted country? So we need to look at balancing between different financial instruments. We also need to ensure that macroeconomic stability in Ukraine is maintained, while we allow for recovery. So budgetary instruments can play a particularly important role, can contribute to the mobilization of private investment, and can help mitigate risk.
So I'm trying to keep it brief, but there's one other matter that I'd like to raise, which is the issue of conditionality and the conditionality framework to which Ukraine is subject. You know, Ukraine must progress in areas such as the fight against corruption and budgetary discipline. These are key areas for Ukraine. So it's important that we continue to look at the conditionality framework, that the conditionality framework continues to evolve based on real economic conditions. So we need to also ensure that we have a clear, reliable regulatory framework for Ukraine.
And that will help to create a favorable economic environment, which will enable entrepreneurial activity in Ukraine. So support for Ukraine under the next MFF is going to be very important. Of course, this is an interim report, an interim matter. And, of course, it goes without saying this is an economic issue for us, a political issue for us, but also a strategic issue for us. So it's not just about finding the necessary resources.
It's also about ensuring consistency between different financial instruments and the conditionality and the long-term goals. So those were my initial thoughts at this point in time. Thank you very much.
Monika Hohlmeier
Thank you very much, Carla. Now we open the panel. The first speaker is Ms. Jana Kopsova, and then we go to the next speaker. You have the floor.
Jana Kobzova
Thank you so much. Good afternoon. Thanks for the invitation to speak on this informal but important topic. Before I speak, I'd like to thank all of you, this house, its members, and all the people who work here for being such a strong supporter of Ukraine and its European dream ever since the 2004 Orange Revolution and all the way now. Your support has been vocal.
It's been visible, and it has been often decisive. But you haven't been blind to the challenges, and that's very important. Ukraine needs friends like you who are supportive, but also not blind to the problems and challenges on the way. I was asked to speak about some of these challenges, especially those linked to the financing of Ukraine's reconstruction. And as we just heard, the sheer size and scale is really unprecedented.
We heard it's an issue that's economic and political and strategic. It's also a matter of our own security, as I will highlight in a moment. Others will speak about numbers and instruments. So I will speak about two things. What is ahead of us, and what challenges must be addressed along the way?
But before I do that, I would like you to imagine two possible scenarios for 2030, which is roughly in the middle of the next MFF. So it's 2030, and Ukrainians' resistance failed to expel Russia fully from their territory, but they have carved out their next-best outcome. Frontline is mostly stable despite the absence of NATO membership, as was the case for Germany, or finance final peace agreement, as was the case and is still the case for South Korea. But the situation allows the rest of the country to rebuild, recover, and prosper. Ukraine has basically consolidated into a stable, prosperous, modernizing state, and its security is underpinned by a robust web of European guarantees.
Its critical infrastructure has been protected. Its defense industry has been scaled up, and it's now an integral part of a shared European defense capacity, which we are growing, nevertheless, and against the background of a thinning transatlantic link. This win-win cooperation has also rebooted Ukraine's own economy, employing veterans coming from the frontline and attracting people who had previously fled the war to return home. Europeans, we have changed our peacetime procedures, and in unprecedented time, we built physical connections with Ukraine that allowed the most seamless trade ever between the EU and Ukraine. And even if the shadow of a conflict is yet to formally end, defense protections, rapid innovations, and deep European partnership have already transformed Ukraine's future.
There is a second scenario in which, four years from now, Russia gets a victory of sorts in Ukraine. Even if it initially failed to gain control over the whole country, it has since wrecked its security, governance, politics, and economy. Ceasefires are periodically ignored. Moscow has dramatically increased it and intensified its war in the hybrid domain while continuing to accumulate troops and weapons for the next large scale assault. In this scenario, Western and especially European assistance didn't suffice to stabilize Ukraine and to rescue its economy.
Investors stayed away out of fear of renewed fighting. Ukrainians were disappointed by Europeans' ineffectual response and embittered by the inconclusive end of the horrible conflict. So the postwar elections became a divisive feast of recriminations. Moscow's assets in Ukraine peppered the campaigns with Russian propaganda. Internal security has become harder to preserve from everything, starting with smuggling of weapons and people.
The country has economy in default. Millions were left jobless. More refugees left, and a few of those living abroad returned. The EU's efforts to stabilize its neighbor have failed because we welcomed the ceasefire without putting in place a proper, prepared, and coordinated plan to help. The temporary cessation in fighting also led to the cessation of substantial aid, as European voters and politicians moved on to the next crisis.
All the potential strengths and advantages offered by a friendly and stable Ukraine went nowhere. In this scenario, EU member states could face constant full-spectrum threats right along their border. Now as things stand, Ukraine is much closer to the first scenario, especially thanks to their own bravery, but also thanks to the European support Ukraine is already receiving. But these scenarios also illustrate the critical part the EU plays in our shared future. We're not bystanders.
Our steps have a direct impact on what's gonna happen, including the decisions we take on the next MFF. Now we talk a lot when you look at Ukraine and what's the situation at the battlefield, but it's worth bearing in mind that if you're looking at the situation in the battlefield, it's usually the result of the decisions we took or didn't take six months ago. So when we are looking at the scenarios for 2030, that year is gonna look the way we decide, and the decisions we and Ukrainians take today and in the next few months and years. And I think this house understands the importance of these decisions and their timing. What sees the need for a longer-term commitment to Ukraine and a substantial commitment to Ukraine?
When it comes to financing, the reports we've heard are right. Ukraine, despite the proposed volume of money, is still going to face a substantial financing deficit, and the amount and projections for 2028 and 2034 are lower than the annual averages since the 2022 invasion. So when it comes to challenges in financing Ukraine, its sheer size is, of course, the number one challenge. But how we structure that support, what we prioritize, and whatnot is equally important. Yes.
I will slow down a bit. Yeah. But talking about the challenges is also one of the focus and of priorities. So my three recommendations in terms of financing for the years going ahead are as follows. And I'm gonna say them.
Its first one is defense. Because if Ukraine loses on the battlefield, there won't be much left to reconstruct or reform. Second is energy. Because the power generation and critical infrastructure are becoming a strategic vulnerability. It's not just a question of people's well-being.
It's a strategic vulnerability that is growing. And third, real economy and business, because Ukraine needs to generate its own income to make a sustainable recovery. Now if we don't follow these recommendations, and I will explain very briefly why these are important, I think we will see a situation in which deterioration and attrition continue. They won't happen overnight. They will be incremental but increasingly problematic.
Just as one of Hemingway's characters in a novel responded when asked about how he went bankrupt: in two ways, gradually and then suddenly. So prioritizing different areas is very important, and prioritizing them already now with substantial allocations of financing is very important. Let me zoom in on defense. As things stand, the war trajectory is unlikely to dramatically shift on the battlefield. Both sides are able to sustain their operations, and neither is able to make a strategic breakthrough or a victory.
In other words, battlefield dynamics alone won't suffice to produce a decisive outcome. Yes. Russia is starting a spring offensive, but Ukraine has been able to offset the Russian quantitative advantage through technological leaps, especially in drone warfare. And unlike before, it's able to scale things up. Today, Ukraine produces 50% of the weapons used on the frontline, including most of the long-range strike capabilities.
Defense sector has expanded from roughly 300 companies to almost 1,000. 80% of them are private, and that has all happened in the last four years alone. So there are lessons we can learn about scaling up our own defense industries. The EU's loan of 90,000,000,000 is gonna provide critical short-term stability and reinforce Ukraine's defenses. But, of course, we all know what the strategic liabilities and vulnerabilities are.
These are especially linked to air defense, and especially the interception of ballistic missiles. So focusing the funding on capabilities which both Ukraine, but also Europeans need and urgently need and are in short supply is very, very critical. This is a direct impact on the second point, which is the protection of energy and critical infrastructure. As we all know, Ukraine has just emerged from the harshest winter of the war yet. This is, again, not just about the subzero conditions in your apartments.
This is also about relentless war by Russia on the country's energy infrastructure, especially power generation and thermal power plants. Even if some of this is repaired, Ukraine is gonna face a three to five, three to six gigabyte deficit a year, the average demand is 16 to 18. So the deficit is really huge. And the problems with supply will continue, and they can't be fixed in the short term. Water supply is one more critical and increasingly vulnerable area that needs to be looked at.
This is also going to affect Kyu's position in the settlement talks. It's not just about people being in darkness. It's also whether the companies have electricity to produce stuff that is needed on the front line. My last point is on the real economy and business climate. According to the latest reports, Ukraine is seventh globally in military spending, but it's first in proportion to GDP.
In other words, 40% of its GDP is now spent on military financing. Just for comparison, Russia's is 20, not to mention the NATO countries are asked to spend 5%, but it's 63% of Ukraine's state budget. Now this is not just about military capacity. The fact is that a lot of that military spending is now done through Western assistance. That is not sustainable long-term.
We need to help Ukraine invest in the real economy, improve the business climate, and allow the country to produce more of its own income. And that is, again, linked to the energy. You can't have companies producing stuff if they don't have access to electricity. Russia has been hammering Ukraine's export infrastructure, ports, roads precisely to deny that kind of leverage. So talking about air defense and protections is, again, something that we will need to seriously invest in.
You may notice I didn't talk more about it. I talked mostly about priorities, or not about anti-corruption and transparency. I'm not gonna deny their problems. I think they're real, but I also want to draw attention to two points. One is Ukraine has done a great deal. For those of you who are following Ukraine since 2014 or even before, in 2004, it's a completely different country now.
That doesn't mean that there is nothing to do about corruption. There is. But I think the EU conditionality and the continuation of the accession talks, as well as Ukraine's vibrant society, are really good break on those who are trying to abuse the system. So I'll stress that's an important area, but I won't dwell too much on this. My very last point is how we do things is equally important.
We have the MFF. We have the rules. But if we continue acting in a peacetime temple with peacetime procedures, we are nowhere near what is needed in Ukraine for the moment. So it's also adapting our own procedures. Thank you.
Monika Hohlmeier
So thank you very much. I'm sorry that I had to stop you, but we have a certain timeline that is a bit limited. It was a little bit impolite, but I
hope I'm
Monika Hohlmeier
Now it's Mr. Pietro Pomprezi, the research fellow at the Keel Institute.
Pietro Bomprezzi
So good evening, everyone. Thank you, first of all, for this invitation, and thank you everyone for being here. I think I will keep it rather short. So just to give a quick introduction, I'm Pietro Bunklezzi from the Keel Institute. What we do is we are a research center specialized, among other things, in collecting real time data on external support for Ukraine.
Probably some of you have heard of this, the Ukraine support tracker. So I think what I'm going to present to you today is kind of the insights that we can bring from now four years of this data effort. And I have a couple of, let's say, key statistics for you specifically regarding European EU support for Ukraine and what we can learn from this. I'm sorry for that. So as our colleague in the front was mentioning in the opening remarks, the EU has become over time the most significant donors, specifically in the financial realm.
So, talking broadly about budget support. This is unfortunately due also to the withdrawal of The US. So as the figure in the front shows, right, this is the year-on-year composition across donor in financial and humanitarian support. There's a clear jump in the relative importance of the EU as a financial supporter of Ukraine. I think that one of the important things to notice from this is that this kind of disappearance of US support is not really only political, but it's also structural.
So a lot of the vehicles that the Biden and the previous administration was using to channel financial support, budget support to Ukraine are being dismantled from the inside. So this is not only a political issue, something that we can hope, you know, if there's a change in the political winds that we could go back to before. Unfortunately, there's a certain administrative stickiness to this. So this really underlines the importance of the EU institutions of setting up proper channels that, you know, can work far into the future for Ukraine. So if we kind of dive a little bit into this and we take a look at the history of how EU financial support has evolved over the years, what this figure shows you is the cumulative support by instrument type.
I'm sure a lot of you in this room already know about this. But broadly, we can, you know, we've tracked this kind of financial budget support under three macro categories of instruments. So we had originally the original macro financial assistance instruments. Then we moved on to the Ukraine facility, which is, as we all know, composed both of grants and loans. And more recently, we've kind of seen the shift towards these less traditional instruments.
So these extraordinary revenue acceleration loans, these very particular loans that are backed, guaranteed by frozen Russian assets, with all the legal and political trickiness behind that. So I think, again, I want to emphasize the point that was made in the introductory remarks. It's very important to think about the debt burden that is being placed on Ukraine when we provide different types of budget support. So, it is correct, yes, that so far, the majority of this financial assistance has been in the form of loans. It's also important to note that in a lot of cases, the debt burden is different perhaps than what the loan would, this broad category, this broad dichotomy of grants versus loan would suggest.
These loans are highly concessional. They have very long maturity periods. A lot of times, the interest payments are covered by other parts of the EU budget. In the case of frozen Russian assets or the frozen Russian asset loans contingent that these assets remain frozen, you know, this significantly reduces the debt burden on Ukraine, the repayment that they effectively have to make. But this doesn't take away from the big picture that it is probably not a good idea to provide an economy such as Ukraine that is undergoing massive capital and physical destruction to kind of increase this debt burden in the future.
So it is definitely something that needs to be kept in mind. Another very important part or something that will become more important going on in the future is this idea of blended finance. These guarantees which fall under the pillar two of the Ukraine facility, something that up to now has been a rather small part of this financial support to Ukraine, but as this committee wants to discuss today, is something that needs to be considered more intensely because, as we said, of course, the reconstruction needs are in the orders of magnitude of hundreds of billions. And there's no feasible idea that there could be transfers of this kind from any kind of either bilateral, multilateral institution. So there is probably going to have to be a need for the private sector to step in and be stimulated through these kinds of blended finance arrangements.
So I want to, as my kind of last point, dive into this a little bit. I'm sure there's a lot of negotiations going on, and my colleague here on the left will have more to say about this as he represents more closely the private sector. But as of now, right, the kind of this kind of blended finance that has been activated by the European institutions is rather small, and it's all contingent on this multiplier idea that about €9,000,000,000 in guarantees are going to kind of generate this catalyzed finance in the order of 40,000,000,000. Of course, it doesn't take a lot to understand that this is nowhere near the kind of reconstruction financing that will be needed. And I think another important point that needs to be made is that this kind of multiplier is going to depend also very heavily on the sectors which these kind of guaranteed projects fall into.
So certain sectors of the Ukrainian economy might be able to catalyze the private sector more than others. And I finished with the last slide to kinda make an example of these sectors, and that is the defense sector. It is currently right now in Ukraine, as my colleague was saying before, perhaps the most important both in terms of output, but also in terms of productivity and value added. So, you know, it is something that is both important to them right now for, obviously, the defense and the territorial sovereignty of Ukraine, but potentially as a sector that in the future can provide also a lot of export value for Ukraine both in terms of human capital, know-how, and material goods. So with that, I leave you, and thank you very much.
Monika Hohlmeier
So thank you very much for your contribution. I would like to give the floor now to Mr. Domenico Campo Grande, director general of the European Construction Industry Federation. You have.
Domenico Campogrande
Thank you very much, and thank you for the invitation to be here today. So FIAG, the organization represents its members of the national associations from 32 different associations from 27 different countries, including Ukraine. We have a member from Ukraine since before the start of the war, and we represent construction companies of all sizes from the very small to large international groups doing all kinds of construction works. What is important to underline also, at the European level, we are officially recognized as social partner. We have a social dialogue for the construction industry where we represent employers, and this also plays an important part in the discussions about the reconstruction of Ukraine.
I will come back to that a little later. What I would like to underline also is that in July 2022, so a few months after the beginning of the war, we have set up a dedicated task force within our organization on Ukraine, preparing the reconstruction of Ukraine. We meet every six weeks online, and we do that since 2022, and we continue. So to come to the points that are on the discussion today, about the size of the situation, what we are talking about, I think it was mentioned, it's huge. The amount of almost $600,000,000,000 has been mentioned.
And depending on the level and the ambition that you want to achieve, whether it is intervention for urgent repairs or to restore what has been managed or a step further, looking at the integration of Ukraine into the EU with European standards, with better energy performance, circularity, safety, overall life cycle quality of buildings, then it brings us to, of course, another dimension. If we look only at housing and the situation, around 14% of the housing stock has been damaged. It concerns around 3,000,000 households. And what is important to keep in mind is that we're not talking about only housing because housing alone is not something isolated. It is connected to energy, water, transport, local services, and the same for industry.
It needs logistic, electricity supply, and so on. So we have to think a little bit also from a wider perspective. Second point is already, of course, what can we do now when the war is still on, and there are things that can be done. Today, the key aspect is preparation. Preparation.
For project to be carried out, we need, first of all, a strong pipeline of bankable projects. So it means that nowadays, it's already time to identify the priorities, prepare feasibility studies, secure permits, technical documentation. And without this groundwork, the funding, even if available, cannot be absorbed in an efficient manner. So preparation is very important. MFF will not answer all the needs.
So it indeed needs to look also at what comes before the reconstruction. So within the MFF, there needs to be support for financing engineering works, studies, and also support to municipalities and contracting authorities who have to prepare these projects. In relation to this very closely, public procurement. This is also something that needs to be looked at. There are improvements that have been made.
There is this ProZoro platform that has been set up, but there are improvements that are still needed. And in particular, to develop a culture of going beyond the price only, there need to be other criteria related to best value that need to be applied to the projects. Regions close to the border of EU can also help being kind of laboratories for testing situations, and these are something that can be put in place now. Logistic hubs, industrial park, custom procedure, this is something that can be prepared nowadays. But reconstruction is not only about physical projects.
It's also about people, in particular, in an industry like construction. We've seen, of course, a significant reduction of the workforce in the construction industry around 40%, which means that there will need to be a lot of investments also to be done in skills development, training for safer worksite, asbestos removal will be an important point, including also the management of explosive hazards. These are all things that need to be taken into account, and funding for this will be needed. For your information, with our counterpart, our social partner representing the workers, we have signed a memorandum of understanding two years ago in order to help the local social partners to put in place what is needed to set up a, I would say, social environment, which will also help in the future reconstruction. What are the possible obstacles?
Russian frozen assets, as has been mentioned, of course, this is one source of funding, but extremely risky. And we all know about the difficulties, legal problems, political, also question related to that. So it will not replace a stable and predictable framework such as the MFF. I heard already, it was mentioned, the financial situation of the member states, budgetary constraints. So, support will be limited also from that perspective.
And the 100,000,000,000 euros that are foreseen at the moment in the MFF, of course, are a small amount compared to what is needed. Another important element is the risk environment for companies, which is already, today, extremely high. Business face payment uncertainty, security risk, insurance constraints. These are not theoretical risks. They are daily realities.
And I would like to point out that, to nowadays, there is almost no European construction company present in Ukraine, although some reconstruction is already going on. This is important to keep in mind when we look at the amount of EU funding that goes to the country. There is also the concern related to availability of materials, so the supply chain disruptions, but also the costs of these materials. In particular, in the current geopolitical context, it is already affecting Western Europe. It will be certainly an issue if we look at Ukraine.
Also, I heard about governance. Indeed, the current institutions have done a lot to go to a better governance, particularly in terms of corruption, but there still needs to be something done in terms of public procurement. We have heard that, nowadays, in many cases, there are almost 80% of the procedures which receive only one bidder. This is not a healthy way, I would say, of spending and using public money. When we look at the role, of course, of the EU budget, we heard EU budget is significant.
It cannot do everything, but it can make everything else possible. The main role of EU intervention should be, as a catalyst, multiplying effects, not just allocating funds. It should play also a leverage role. We have heard, already now, we have seen from the previous presentation about the Ukraine investment framework with that it's hopes to leverage from around 9,500,000,000 up to 40 billion. But, of course, some situation needs to be put in place in the right manner in order for this to happen.
As regards grants, they remain essential, but we believe that they must be targeted to projects. We have a high public value and limited financial returns, such as schools, hospitals, social housing, etcetera. Guarantees are key instruments to bring companies and financials back into the market. They help cover major risks of payments, of political uncertainty, and currency fluctuations. Financing for technical assistance and project preparations, this is key from our perspective, and a dedicated window in the next MFF is certainly needed to finance feasibility studies, engineering, tender documentations, quality controls, etcetera.
And lastly, also, there should be smart conditionality. EU funding should be on those clear transparency, open and competitive procurement, best value criteria, up to the European standards. I think this is what Ukraine is wishing and wanted to go to, but also social consideration and strong anticorruption safeguards. I will stop here. And then, of course, if there are questions, I'm ready to answer them.
Thank you.
Monika Hohlmeier
So thank you very much for all your dedicated and excellent contributions. I would like to give the floor first to Janusz Levantorski. You're the only one for the EPP. Would you have some questions?
Janusz Lewandowski
Thank you. Thank you for your presentations. I am today in a listening mood. I have a lot of personal stories on Ukraine as I was in 90s to help to reform Ukraine. Coming back very soon, very depressed.
Now I am because you are losing two decades of your sovereignty, but now I am impressed with your heroic resistance and technological advance. Of course, what we have for euro for Ukraine in the next MFF is not enough. This is just a reserve. I have calculated that is the knowledge of budgetary people here in this room because we are now Poland is now the best, the biggest beneficiary. This was close to €10,000,000,000 annually.
Now it is we are victims of our growth for it. It will be very much reduced. But our overall donation from Europe was 18,000,000,000 annually. That was making 10,000,000,000 net. Now this is much less.
But I have calculated what might be for Ukraine in structural funds, and even the net position of Ukraine will be 18,000,000,000 annually. This is not up to the budget of the European Union. So we think about membership of Ukraine, reconstruction of Ukraine. We should also think about budgetary adjustments, not to mention your huge agricultural area that is really very much industrial. And, also, it would be rather not up to the budget of the European Union in direct payments.
So I'm ready. I welcome your famous Roussanne after winning Eurovision, was singing for solidarity here in Brussels. So I really appreciate it very much. And if I am very much in favor of helping, this is not enough what we have for Ukraine 02/2004, but we should be ready and adjusting for Ukraine and also in budgetary terms. Thank you.
So thanks a lot, Janus. Now Jean Marc Chamert.
Jean-Marc Germain
Yes. Thank you very much for those presentations. First, to say that we need not be convinced that what we're doing is fair, and it's not only fair to those who are fighting on the front for saving rights to Ukrainian people to live free, but also for ourselves to live in peace in Europe. And whole money that we are about to spend at European level on defense industry maybe would have been saved in a safer world. So let's build this one.
Second comment is we have a lot of audition about Ukraine, but we lack an assessment of the real needs. I mean, you try to touch upon, for example, when you say that 14% of the housing has to be reconstructed. But we need, I mean, if we want to explain to our people the amount of money that we've spent for Ukraine, if we want to avoid double standard speeches, we need to say, look, there is, I don't know, 50% of the capital, the whole capital of Ukraine, that is down because it has been destroyed by the war. And the capital of Ukraine I'm giving figures that I imagine. But for example, the capital, the overall stock of capital is 150.
So we need blah, blah, blah, and blah, blah. But we need to be able to explain in simple terms what has been destroyed, how much it costs, how much we have to pay to repair. And then the way to do it, of course, we can agree to the big principles that you stated between grounds, guarantees, loans, and whatever. The key thing here is, of course, that most of the European money would go through loans. To say that those loans will not have a burden for the Ukraine budget that would be bearable. So either it's going to be in the European or other institution budget, or it will be like the safe loans, for example, with a long period before starting payment of the interest, and, of course, a long period for being reimbursed.
Last but not least, of course, there was the issue of the accession, because as Mr. Levan Dusky said, if we take just the coercion funds and it could bring €18,000,000,000 of grants for Ukraine, which is big compared to the figures we're speaking of. My conclusion is exactly the contrary: we have to speed up the integration of Ukraine to the unions, and we have to find new own resources to finance it because, of course, it has not to be financed by the contribution of member state. But look, 80,000,000,000 is not much if we consider what is at stake. For example, the amount spent for defense by the member states themselves during 2028 and 2034 is EUR 4 trillion.
So I think it was what is at stake. Sorry for my time.
Julien Sanchez
Thank you very much, madam chair. I hope I'll also be allowed to speak for 3 minutes. Ladies and gentlemen, let me remind you that this war is a tragedy. And I think of all those who lost their lives and who have been injured, first and foremost, we're talking about hundreds of millions of euros to rebuild Ukraine. We're talking about reconstruction when the war isn't over, and our main priority should be extricating ourselves from the conflict, and we're putting the cart before the horse.
I think the war needs to end to make sure that we have a sustainable reconstruction. The financing needs are more than €580,000,000, €1,000,000,000. And we've provided quite a lot since the beginning of the war. There is a political contradiction, though, in the EU. On the one hand, the European Commission has spent millions of euro, has frozen millions of euro, like in the case of Hungary. On the other hand, we see massive disbursement of money to Ukraine, and yet there is not much oversight.
And I, despite the fact that there have been so many cases of corruption and institutional fragility in Ukraine, so I'm quite shocked to hear you say or put this in relative terms. So the report says that these initial instruments to support Ukraine did not contain any oversight specific to Ukraine. And I mean, there are strings attached, of course: rule of law, democratic accountability. But how can we freeze the funds? What is the suspension mechanism in practice?
And we'd like to also know for how many more years President Zelensky will be there. We're talking about millions of euros spent on Ukraine. Often, we're told that the EU is giving a lot of loans, but who can assure you that these loans will be repaid? A lot of Europeans are shocked by these amounts. In many outermost regions in the EU, our overseas departments and territories don't have proper drinking water, for example.
And €588,000,000,000 is almost half of the MFF, as our chair said. Could you speak a little bit more slowly, says the chair? €588,000,000,000. As you said, Madam Chair, that's almost half the current MFF. So how far are we going to go in providing financial support? Which programs are you going to whittle down?
Can you tell us? Mister Germain is talking about own resources and increasing own resources. Which, how, and who's gonna pay? And as was said by the socialist speaker, you're acting without really assessing the real needs, and that is what really bothers me. Thank you very much.
Lucia Yar
Missus Yar, Lucy Yar.
Chair, and thank you speakers for coming and telling us quite an interesting overview of what's going on and what are the projections and what are the challenges as well. I actually wanted to speak in Slovak because I could finally address my fellow citizen here, one of the brightest minds on Ukraine in Slovakia. But we don't have a Slovak translation today. Nevertheless, I we perfectly understand each other. As I know that I'm always speaking after the patriots and far right, and I can do my I could perhaps write my lines already following them and following exactly what they are going to say.
I exactly pick the topics of the corruption and who is going to pay. This is always what we are also facing back home, two questions. So I will be addressing to you, in a way, those two questions because the corruption is a topic especially brought from far right and from other countries like my own. And when it comes to corruption, Ukraine has made major progress. If you could maybe Anna Kobsova explain a little bit more of what exactly has been going on, because it's not a relative when we are talking about conditionality, when we're talking about the accession process, when we are talking how much society is being changed.
Just let me remind you. And secondly, to mister Capo Grande, very interesting to also know how are the realities for the companies. And you've mentioned that there is almost no European company present. And obviously, you also listed the reasons why that is. However, I'm curious whether the companies are interested in doing it despite the security risks.
But what might be other kinds of constraints or concerns that companies have? Obviously, security is one of the top. But if you could list others, I would be very curious to know. Thank you very much once again.
Thomas Geisel
Have a question for Ms. Kopsova. So I'm speaking German. A question for Miss Kopsova. You said that there are two different scenarios.
I didn't necessarily understand the differences between the two scenarios. Scenario one, the EU provides enough funding in a targeted manner, and then it is dispersed correctly. And scenario two, perhaps there is funding, but there's not enough, and it's not targeted enough. And then some of the money is lost to corruption, doesn't end up benefiting Ukraine. But aren't there other scenarios?
Another scenario is the following. The war goes on, and then the other scenario is that the war ends. So if we're talking about reconstruction, we must have the second scenario. We can only talk about reconstruction when the destruction ends. So as long as the war goes on, there is a risk to the reconstruction funds, because the war hasn't ended.
So shouldn't the EU focus on really helping Ukraine? If we really want to use funds well, then we must make efforts to end the war. And the war can only end if the territorial integrity of Ukraine is recovered, and Russia has to pay reparations. And then three, Ukraine has to become a member of NATO. But if we want all those three criteria to be fulfilled, then we're going to continue the war.
You know, it's wishful thinking. We're living in cloud cuckoo land if we want all those three criteria to be fulfilled. So if we really want reconstruction in Ukraine, then Europe must make efforts to end the war in a realistic way, with realistic conditions. If I'm honest, I don't think we can have Ukraine that is blighted by warfare where the Ukraine depends on us. It's kind of on a European drip, where it depends on us for CAP funds, and where it's just got a military industrial perspective.
I don't think that's good for Ukraine. I don't think it's good for us. Well, just to react to you, no one is laying down the conditions that you're talking about. Why don't you read the resolutions that this Parliament has passed? Well, I've read these resolutions, and Putin must also want to end this war and stop attacking private houses.
He's attacking kindergartens. He's attacking hospitals. Now, during wartime, of course, there are needs. If energy infrastructure is struck down during winter, you have to repair that infrastructure immediately so that people don't freeze to death. Can I react?
Miss Kobseva said that €90,000,000,000 was needed for short-term stability. So if we continue to make lots of money available, and 90,000,000,000 is a lot, if that is what is needed just for short term stability, then I think we're on the wrong path. Alright. You have said what we shouldn't do, but what should we do? What is feasible?
What can be solved? We all know what we don't want, but we have to ask, what is realistic? What is feasible? Putin hasn't offered anything, nothing that is sensible, and the result is that we are where we are, and Ukraine has to hold on. And you have a very rosy view of Russia.
I don't wear those rosey glasses. So now I give the floor to the colleague from Afit. Do you want to take the floor? Sebastian Tinkinen. No?
Monika Hohlmeier
Okay. Prefers to listen, and so now we hand over to the experts so that they can be listened to, Miss Kopsova.
Jana Kobzova
Thank you so much. I think there's been a number of questions, so I'll just start answering some of them, being mindful of the time and the fact that I stole some of the time from other speakers before. One is on corruption and oversight. I think Ukraine is not starting from zero. I agree.
I mean, I was first in Ukraine in 2004, and I remember what it was like to cross the border back then, and how it is now. So I think, you know, nobody is saying that Ukraine is perfect. Far from it. But I also think we don't appreciate the level of oversight and control that the EU already has and the conditionality that the EU has on Ukraine. I'll give you two examples.
One is the whole issue of asset declarations for public servants. Nothing like that is comparable to any of the EU member states. If you are working for the state on a local or regional level, you have to publish your asset declarations publicly every year. So that's a lot in terms of transparency. If you're working for the state, you're also automatically becoming a lifelong politically exposed person, something that we do not really have an equivalent of in the EU.
So that's first. Second, that doesn't mean the system is foolproof or they're not false. We just heard the emphasis on cost sometimes comes at the expense of quality. But I think there are a lot of people both in this house and in the European Commission who are looking really hard at how to make sure that conditionality helps to work to improve the governance. Over the past ten years, Ukraine has jumped 40 points in the corruption perception index.
It's still less than it could be, but it's quite a lot. One way the Ukrainians and especially this administration has been dealing with corruption and transparency is digitalization. You basically take out the human factor. Ukraine has jumped from 120th place to fifth place in digital services provision globally. So that's one way of how they can deal.
Is it going to change everything? No. Does war create opportunities for corruption? Yes. In every conflict.
But I think we have quite a leverage, institutional memory, and understanding. Ukraine and Europe have been working together for a very long time. It's not like they're starting now. We know how the system works. There are a lot of partners on the ground who can help.
I agree. The best way to reconstruct and start reconstructing Ukraine is to end the conflict. Where I'm sitting, I do not see the will on the Russian side to end it on any other terms than Ukraine's capitulation. That's for Ukraine to make the choice. It's not for us.
But I also haven't heard from the Ukrainian leadership for the past year to talk about NATO, or what I've heard was willingness to negotiate, willingness to compromise, understanding that while Ukraine is not gonna change its internationally recognized borders, it is very open and understanding that not all territories are gonna be conquered by force anytime soon. So where I stand, and this is in terms of negotiations, this is not really about Russia, Ukraine. But if you do not see your other counterpart willing to make a deal now, I think you can do it two ways. Start talking to them nicely, which we've done, don't seem to work, or increase the pressure. And where I see Russia moving is that pressure, including thanks to European sanctions, thanks to what the member states are doing in terms of targeting Russia's income, is bringing fruit.
And that is something that's gonna continue. I don't think any of that is a silver bullet, but I think the more pain is gonna happen, the more the Kremlin is gonna be willing to negotiate. I just do not see how you can end the war now, unless you want Ukraine to capitulate. And I think the question then is, what does that mean for European security? My very last point is, I think, although the question has been put in the place of, you know, how much of what we give to Ukraine is gonna bring investment, I think the right question to ask is, you know, we are the European Union.
We are defending our own interests. How much of what we are investing in Ukraine can bring mutual security and prosperity? And I think that's a bit of a different question. I think our own costs will increase if Ukraine is the biggest neighbor, if you're not counting Russia, of the EU, is gonna be an unstable country. So how can we invest in a way that is making it stable?
And I just don't see any other way than helping to stabilize the country through making sure they have strong defenses so they are not vulnerable to another attack, that they can have a normal economy, which is not vulnerable to 800 drones a night targeting their critical infrastructure. And in terms of EU integration, that is sorry. My last point, I don't wanna be speaking for too long. I think there are very few people in Ukraine who believe to get access to all the benefits of the EU membership in terms of all the access to all the funds. I come from an accession country that was an accession country 20 years ago.
Our transition periods lasted a number of years. It's not unusual. There are caveats, and I think the EU is amazing at creativity. I think the point that Ukraine is making is that for joint security, we need to find a way forward that is beneficial to both of us. I do not think the Ukrainians expect charity, and I don't think we should be engaged in charity.
I think it's about mutual interests, including addressing the interests of our groups such as agriculture. That's not to say to ignore them, but I think there are workable solutions around it.
Monika Hohlmeier
Thanks a lot for your very valuable contribution. And now to mister.
Pietro Bomprezzi
It seems that there weren't questions directly directed at me, but I think I'll just make two small contributions. So one of them on the topic of corruption that seems to come up a lot, and I want to give the perspective from, you know, from our side, from the Kiel Institute that we take really a deep dive into a lot of these financial flows to Ukraine, and I want to reiterate that beyond what the EU gives also all from what all the other kind of bilateral donors and multilateral financial institutions are giving, these are some of the most heavily scrutinized flows in the world and probably in history. We've seen examples. Our colleague has given examples of, you know, the type of due diligence that is done on the Ukrainian side. But, you know, just to give an example on our part, a lot of this budget support was going through World Bank multi donor trust funds, not from the EU side, but from other forms of budget support.
And there are many layers of oversight before this gets dispersed to Ukraine, to the treasury, to the ministry of finance. So, I mean, I'm not naive. Of course, corruption is a problem. Corruption is a problem everywhere, but I want to iterate that, really, these are heavily scrutinized funds. On a second point about when to engage in reconstruction, again, the perspective, you know, looking at it from things happening in real time, I would say, in my opinion, it's not a good idea really to wait till the end and then try to pick up the pieces.
This will lead to a much longer reconstruction process if we wait for all the important factors of production, you know, be it railways, be it critical supply chains between different parts of the Ukrainian economy. If we wait for all of this to really be completely destroyed and then we try to pick up the pieces and put them back together, it's a lot less efficient than addressing some of the critical issues now. You know? So assisting Ukraine in rebuilding important parts of their infrastructure, which is important both from a human side, but also from an economic perspective. It will allow a kickstart to the economy that will be much faster than waiting for it to be destroyed.
Monika Hohlmeier
Mister Campo Grande, it would be a very interesting question, either how can our economy profit from reconstruction.
Domenico Campogrande
Thank you very much. I will try to answer the questions in the order that they were put forward. So first, Mr. Germain. There are already now indications of the needs for the different areas. And as far as construction-related sectors are concerned, if I look at transport needs, it's around 96,000,000,000 US dollar equivalent.
Energy, 90,000,000,000. Housing, 89. I didn't go into the details because of the sake of time, but I can, of course, share also here with the secretariat more precise information. So there exists some indications which are relatively precise, their estimate, of course. I will share that.
Regarding the question to Missus Ya, why, at the moment, no European construction companies are present there. There are different reasons. The first one is simply also internal governance rules of companies, especially large groups. They are not allowed to work in territories where war is going on at the moment. This is a very relatively simple reason.
I will not address the issue of corruption because it's present. It has been mentioned already. But I would like to come back to this example that I cited at one of our meetings of our task force. There was a presentation by the state agency Ukrainian state agency for restoration and development, and they indicated that on 352 tenders that were launched for consulting engineering services, 85%, 85, 84, sorry, as I said, had only one bidder. And in total, five companies only captured more than 70% of the value.
So you can, if you put yourself at the point of view of a company willing to enter into that, you can, you have some questions and then need to be sure that procedure, healthy transparency, and clear. This is probably the second reason. So governance rules that still need to be improved. And the last one is a bit very also a pragmatic one in the sense that construction companies are facing labor shortages already in the EU, and they cannot even answer the demand they have on their own territory, which is much less risky, of course, than going to Ukraine at the moment. Having said that, construction companies are also very pragmatic.
And the day, the war is over, and things will start to run into normal, I can assure that there will be a number of construction companies also willing to go there. Our perspective is not only to ensure that western companies are there, but also to secure that local construction companies are able to benefit from the EU funding and to reconstruct themselves and reconstruct the local economy as well.
Monika Hohlmeier
So thank you very much for this very good debate. Thank you to all colleagues. We will have a short break, with the exchange of experts. Thank you very much for coming. So dear colleagues, I think we restart now.
Monika Hohlmeier
We take the Panel two and the next MFF as a lever for Ukraine's reconstruction. We have with us firstly, Elena Wysna Malinovska, Deputy Director and Head of Unit for the Reconstruction Excession of Ukraine at the European Commission, and Matteo Rivelini, Head of the Ukraine Investment Team at EIB. We start as we did before, and I think I would like to give Mr. Mateo Rivelini as the first, and then Elena Wissna Malinnovska. You have the floor.
Matteo Rivellini
Thank you. Thank you, chair, and good afternoon to the ones that remain in the room. And, it is never a pleasure to be here and to share a few thoughts about the way the European Investment Bank is operating in Ukraine. Just let me share a few thoughts that represent the practical implementation of many things that were said earlier on in the first panel. So we're I'm coming with a, let's say, an angle that is very much the practitioner angle in terms of investing, the resources that have been or some of the resources that have been mentioned earlier on.
So I would like to share a few thoughts about the way the IB is operating in the current context, in the current MFF and in the context of the available resources provided by the MFF, and then give a few thoughts about the way we're positioning ourselves for the next MFF. Now the way we work in Ukraine today, the way we invest in Ukraine today, it is the same way we operate in other European member states. We have in mind three pillars that are driving our actions, that are the same pillars driving our actions in France, Italy, Germany, and elsewhere in Europe. Number one, we are investing to promote cohesion across the jurisdiction, possibly balancing investing to balance the gaps vis a vis the most regions in need versus the ones that need less. And we have financial instruments that are deployed in this way.
Number two, we're working to connect the country within its domestic borders more and, most importantly, with the European single market. Third, we are promoting investments that support the convergence of the economy towards the level of the economy that we see, or average level of the economy we see in Europe. In practical terms, to give you some examples about the way this is translated into our activities in, for example, 2025, that meant new financial commitments for about €1,500,000,000, where we had a clear priority for the energy sector. I'll get back to this with a specific example. We have supported social cohesion from frontier to Europe to frontline through financing the municipal sector, municipalities, particularly the ones that are more in need. With over 500 projects that have been inaugurated one after another across the jurisdiction, and we're talking about basic services, speaking of schools, kindergarten, hospitals that are under the remit of the municipalities.
Third, we're financing the banking sector to support SMEs. And this year, we will be very likely further support the equity space through the European flagship fund. You may have heard of this key instrument that is intended to counterbalance the initiative undertaken by the US and Ukraine under the Ukraine Reconstruction Investment Fund. So in this respect, I would like to just give you or take you to one example that has been paradigmatic for our action, in the course of 2025. You might have heard that beginning of last year, Russian attacks depleted about 70% of the production capacity of gas in Ukraine.
That meant that Naftogaz, the national operator, was not capable anymore to extract gas and serve firms, companies, and also power to electricity plants, as well as, let's say, heating. And under the let's say, with in close collaboration with the European Commission, not only for this investment, but in particular for this investment, we were called up to the point to act very quickly, very fast to engage and support NAFTA gas, particularly ahead of what was gonna be the harshest winter ever since the full scale invasion, the one that we have just put behind us. So what we've done, and that is very interesting, is very quickly, we have engaged to finance the purchase of gas. And we are talking about the European Investment Bank that is the climate bank of the European Union, very far away from any fossil fuels. But with an exception, we intervened in this respect because, you know, when it's a technicality, but when you need to basically have the network working again without the production capacity being available, you need to push gas into the system from other entry points being at the border with Poland and Slovakia, for example, to ensure that the network is capable to serve the exit points and also to refill the storage, so that then by natural pressure, the gas can go back into the network.
So we have financed these purchase of gas with 350,000,000 loan plus channeling 127,000,000 from Norway, but with two major caveats. One is that we have contractually bound enough to gas to use the proceeds of the sales of the gas purchase with our funding for capital expenditures for green projects. So we've given them a period of time to finalize the preparation of wind parks, photovoltaic parks, and so on. But at the end of that moment, they will have to invest the proceeds of the loans for those green CapEx, for those green project. And two, we have engaged immediately since day one for Naftogaz to undertake a serious and credible plan for decarbonization, meaning, like, not only transitioning away from oil and gas industry to the extent possible, but also engaging in a transit in a decarbonization plan for its own production, which entails a number of actions.
So that is to say that we kept our climate bank approach also in this derogatory investment in the context of this crisis. And by the way, we've been recently awarded as development lender and climate finance pathfinder from an international organization for this specific deal. I think a lot have been said about the massive reconstruction needs that have been identified by the World Bank, United Nations, Ukraine. So I will not get back to this. Just two comments.
One of these numbers looks impressive if you compare it with the national GDP of this jurisdiction. However, they include the entirety of the geography of the jurisdiction, including the occupied territories that are to be taken into account. And second, it is an amount that needs to be spread over the coming ten years. I'm saying this because it would be counterproductive to have a number that is super inflated and then react by saying we're not capable to address these numbers. Yes, we are.
We need to decompose these numbers as needed. A lot has been said about the way we basically engage also with the European company. I think it's important to say that we are operating, and I'll get back to this. We're operating under, let's say, the edges of the support provided by the European Union, and more will be said later on. And this requires that we are privileging the, let's say, suppliers and bidders that are coming from either Ukraine or the European Union or the candidate countries.
And this is a novelty which we are proud to be capable to implement. It was said earlier on that there is a little interest for European companies. I give you the news. Yesterday, I was in a committee to assess an investment that is covered by this guarantee, and this article 11 of the Ukraine facility that is imposing on us this restriction is producing results. We were seeing 11 bidding companies, some in joint venture with Ukrainian companies, but all of them with a leg in the European Union.
I think we're going in the right direction. Obviously, it takes time. And in the meantime, we've also applied our strategic procurement. Our strategic procurement means early stage involvement to ensure that the European supply chain is more knowledgeable and capable to invest in Ukraine, and we are happy to also accompany with technical assistance when needed for European companies to invest in Ukraine, as we have started observing. To, let's say, conclude on the current setup, we are working in the current setup as a strategic partner of the European Union.
We are working and investing thanks to the guarantees and the financial resources that are provided to the IB by the European Union. Just to give you a couple of numbers, look, if you look at these slides, we have been given for the period of time between '25 and '27, basically 2,700,000,000 to invest for the public sector, almost 350,000,000 for the private sector, and more and more is expected to come. And I just would like to mention that these are financial resources that are invested by the European Investment Bank, thanks to the European Union budget Ukraine facility through the pillar two of Ukraine investment framework. But we are operating as a bank, so we are carrying out our due diligence, the strictest possible due diligence. A lot was said about the anti-corruption and European safeguards.
At the same time, we are very much mindful of the robustness of our credit, of our debtor, of our counterparts because we have a duty of care vis a vis our guarantor that we need to respect. And I give you another piece of news. There is no loan that is not being served as per the contractual provision so far. What's next? We're preparing for the new MFF, and we have the ambition to remain the key partner of the European Union.
We have been the largest implementing agency of the Ukraine facility so far of Ukraine pillar two of Ukraine facility. We want to remain as such in a modality that has been already experienced by our bank. We have already accompanied previous enlargement waves of the European Union. We are ready to remain the bank of the enlargement of the European Union in partnership with other financiers, scale investment I mean, scaling up is needed for addressing the massive needs we mentioned earlier. And if you look at this house that we want to build together in Ukraine, on your left hand side, you may see the financial instruments that we are willing to deploy to derisk and to mobilize even additional, I mean, to unlock additional private investments if possible.
And on your right hand side, you will see the way we want to help this jurisdiction to prepare better, but also improve their absorption capacity because, obviously, they need to invest in it, they need to prepare to absorb even more when they will join the European block, hopefully sooner rather than later. Thank you for your attention.
Monika Hohlmeier
So thank you very much for this very interesting insight. And now Miss Elena Vishnu Malinovska.
Elena Višnar Malinovská
Thank you very much. I'm very pleased to be here and very grateful for the commission to have a place here to discuss these very important topics. I have been listening very attentively to the conversation that was here at the end of the previous session, and I wanted to maybe break news here, because we are already reconstructing in Ukraine. In fact, the EU has mobilized over 200000000000 in total since 2022. But besides budgetary support, social recovery, humanitarian support, crisis response, it also went to recovery and reconstruction.
I can agree with those that mentioned that the Ukraine support loan, although it's a game changer, is still an essential means to maintain the stability of Ukraine, and it will not necessarily go to reconstruction. There is a major part of it that will support the ongoing war effort. Nevertheless, looking into the briefings, we thought it's very useful to highlight what we do already today with the tools we have, thanks also to this house, at our disposal. So first of all, Ukraine facility. It has been a very successful and flexible instrument of 50,000,000,000 that allowed us to keep Ukraine functional, resilient, because it combined the budgetary support with investments and with technical capacity.
Now on the pillar one, against very strict conditionalities, the European Union has dispersed around 38,600,000,000. I'm here from the team that implements the Ukraine investment framework, and I would like to say that this is already the instrument that has been deployed with remarkable speed and efficiency, like the operation that Matteo presented shows. And this is actually the primary vehicle nowadays that allows for recovery and reconstruction. These investments that we do cover large and small scale investments, private, public, central, municipal, even frontline. And in a range of vital sectors, be it social recovery, like health and social housing, transport, energy, green investments, support to small and medium-sized enterprises, and lately, even critical raw materials or dual-use goods where Europe indeed has a competitive edge.
And we have been providing the main instrument that is designed to spread the risk or to derisk, and with the aim to crowd in public and private capital. This has huge added value for several reasons. First of all, the market alone nowadays is not able to absorb early-stage risk and to encourage investments. Second, every euro that has been spent, and I know that you represent constituencies that look at taxpayers' money. I can reassure you that every euro actually helps to mobilize 3 to 4 € that come in from private or state companies.
Financing by public financial institutions goes also with the know-how that, for instance, the European Investment Bank has and the institutional capacities. The framework is quite unique in the sense that the commission leads, but it's a collaboration effort together with the government of Ukraine. And our steering board actually has also the European Parliament member, Mister Yanush Levandovsky, as the observer in the group. Now we have attracted also the non-EU members like Norway. It means we instill trust.
Norway has contributed with quite some substantive grant capacity, and other countries, non-EU countries, are also considering contributing. We have seen also the European companies being more and more interested in expanding either the presence in Ukraine or coming to Ukraine. And we have, you know, seen that capacity allocated to the Ukraine investment framework is often oversubscribed, which means that it is very attractive for the international financial institutions, but also to others to apply. So just to say, I will take the words of the minister of economy, mister Sobolev. The Ukraine Investment Framework is the best capital mobilization tool available, and it's European.
Now going forward, supporting Ukraine's reconstruction. In the next budget, we will be there together with Ukraine as the proposal in the Global Europe shows, because the Ukraine reserve has 100,000,000,000 there, and these cannot be reallocated to other priorities. Of course, as you have heard from the panel before, the needs are huge, and it is important that Ukraine is rebuilt in a better way. So it's with big Build Back Better being to account for people with disabilities, for greener energy, and so forth. So when it comes to the ratio between loans and grants, for the timing, as the war is going on, of course, it is very difficult to set the ratio between the two.
Our line has been that this will need to be looked at at the time of the implementation. I would like to go to the public investments because these are very much needed, and the government will remain the core of this delivery machine. And here, talking about reforms, talking about controls, we have the public investment management reform that the government of Ukraine is implementing, and this is allowing for both transparency, accountability, and prioritization. And to be honest, this is, again, a model for a reform I haven't seen in any of the countries in the European Union. Now the public investments will be supported by also the Ukraine Investment Framework, where around 60% already goes to public investments, and also by the pillar one where the budgetary support certainly goes there.
So it has been mentioned in the previous panel that we need to be present in the construction sector. Allow me to make a little publicity for one of the technical capacity programs we have, EU for reconstruction, because this is exactly where Europe helps together with partners, helps to push through important construction reforms in Ukraine. And, of course, then it is up to the different companies to increase their risk appetite and to be present in Ukraine for tendering. By the way, the privatization is going on. The assets are being put to sale.
It is a very transparent process. So we hope the European Union companies will take benefit of it. Now to the private investments. They will be important for the recovery and reconstruction of Ukraine. The rapid needs assessment shows that up to 40% should come from the private pockets, but this is also very reform dependent.
If the reforms will not be there, there is probably a likelihood that we will see only 10% of private capital to be in Ukraine. If the reforms are duly implemented, this number can go up as much as 75%. So, as you may see, the reforms make perfect sense. We're very proud, actually, of many projects we have been investing in,
Elena Višnar Malinovská
It is the new wind parks, thousands of SMEs that have benefited already from credit lines, the largest foreign direct investment in 20 years in telecom sector. Postal services, they all show that the approach works. So let me conclude that support and reconstruction of Ukraine is also part of the European transformation. If we stand by building the industrial capacities and stronger base, economic security, strategic autonomy, or when we start doing the unprecedented investments into dual use or defense, these are all the objectives where Ukraine is very central and where it can support our goals. So this is a reason why I strongly believe as a Central European, as a country, as a national of two countries that entered the union in 2004 and that have benefited from the presence there, that the reconstruction and accession is indeed a geopolitical priority.
And I hope the next budget will support this ambition forcefully. Thank you.
Monika Hohlmeier
So thank you very much. I perhaps would start for the EPP. Looking at the next MFF, we have the Ukraine reserve with €100,000,000,000. Now we hear it's $588,000,000,000. Yes, we will face some leverage effect. But how could we increase the leverage effect? So the incentives for industry to invest in Ukraine, because we know that we cannot do everything with public money.
So what would be your opinion on the possibilities of leverage effect? Then already, the colleague Thomas Geisel was mentioning the irritation if perhaps the agricultural sector of Ukraine could make a lot of trouble inside our agricultural sector because they have a huge sector. There are some ideas like the so called e 20 fuel and all these initiatives to have more independence from fossil fuel and at the same time to have more needs on the agricultural sector to create a situation where, let's say, the irritations of the markets could be reduced a lot. So how is the commission thinking about this type of possibilities? This is only one under a lot of others to increase the use of agricultural goods on one side, and on the other side to have a possibility to help Ukraine within our own possibilities.
This would be my question, and I see already Gala Tabresch as the second speaker.
Thank.
Carla Tavares
You, Chairman. Speaking Portuguese, as you may have noticed. Thank you for this second panel, where we've learned more about Ukraine. We need to increase investment and absorption capacity. We know that the next MFF, I'm talking about the parliament MFF proposal, not the commission proposal.
That's even more worrying. But our MFF proposal from the parliament, even that, probably wouldn't be enough to meet all the needs. And then what Monica just said was very important. How do we involve the private sector? How do we manage to generate more financial resources?
But this money must not just come from the union. And, of course, there's a great deal of unpredictability, which none of us has got control over. Then there's this other issue which was raised, which is the ratio between grants and loans. I don't think any of us know how that is going to turn out. But I'm always left with the same questions in my mind.
If I look at the next MFF, no. Let me reframe that and be more positive. How are we going to be as ambitious as we need to be for Ukraine? How are we gonna do that without talking about new own resources? At the end of the day, when we look at the next MFF, that's the big unanswered question.
Of course, we need to continue to be Ukraine's biggest ally. But in order to do that and be a steadfast partner, we need to have the resources. And that's why I really want to focus on new own resources. Thank you.
Angéline Furet
Thank you very much for your presentation. Thank you to you and the first set of panelists. None of us is calling support for Ukraine into question, but let's not commit Europe's financial suicide. In bad budget, we're hearing about dizzying figures. Another €100,000,000 in loans, that adds to the huge amount of money that's already been spent.
But who are we lending to? According to IMF, Ukrainian debt will be at 100%, 108.7% of GDP. That's already the case. The fact is there will be 170000000000 by 2027, and then 147 is from our budgetary margins. We know that this debt cannot be recovered.
All of this is being put on the back of our citizens by the Commission. I have a simple question. You know that they will default on this payment in Ukraine. When will you have the courage to say to European taxpayers that you are going to dip into their pockets to repay these 147000000000 that will inevitably be lost?
Giuseppe Lupo
Anybody else? Would anyone else like to take the floor? Doctor Rivellini. Rivellini, would you like to take the floor? Mister Rivellini.
Matteo Rivellini
Thank you. And I may limit myself to two practical replies as regards the leverage effect and perhaps the agricultural sector from a broader market perspective. Leverage effect, I think it has been said that the needs cannot be addressed with public spending only, and private spending, private investment are needed. I think it has already been said that the key factor to ensure private capital mobilization is the reforms aligned with the European key, not the least, the rule of law. It has been said a lot about transparency, but judiciary, predictability for investors, are the reforms that are key for European investors in particular to feel more comfortable to invest in this jurisdiction that investors are aware of it, especially after ceasefire will become one of the, let's say, largest market opportunity ever in the or at least since the World War two.
But beyond the reforms, I would like to mention three things. One, and I speak again based on the practicalities operated by the EIB. Partnership for good. EIB is always operating on the basis of the fact that there are other investors joining the investment. We provide a label of, let's say, quality after our due diligence that makes other investors feel more comfortable in joining the club of a certain project.
That is not new. This has been always the case also in Europe to ensure that private players are available and are able to join. And in particular, you may remember we've been very successful in implementing the same logic under the so called plan in Europe, in ensuring the private capital mobilization. So when we say Team Europe, obviously, we have in mind other financiers of the public sector, but for us it means really partnerships also with the private sector. And then derisking tools, financial instruments that Elena mentioned, the leverage effect of each euro.
Also, derisking tools allow for further leveraging. If you think about, for example, the financial support that has been given to the AB by the European Union, that has represented a guarantee that technically has covered the portfolio of investments whereby we have assumed certain, let's say, risks and topped it up with our capital. So in simple terms, they have given us an amount, but we have invested more than that amount, and that is already showing the leverage effect of financial instruments more when we operate, for example, for SME sector, and we implemented the so-called partial portfolio guarantees with financial intermediaries with banks. We are guaranteeing a portfolio of investments that is always normally three or four times higher than our guarantee that is given to each and every bank. So financial instruments that are derisking, let's say, portfolios, are obviously creating additional leverage.
So all this to say that we are aware of the fact that at the basics there is European taxpayers money, but we are trying, all, every possible way to further lever these amounts and create more space for private sector mobilization in terms of capital. Last point on agriculture. It is obviously true and political sensitivity, I don't enter into as regards to the agriculture sector as far as the entry of Ukraine into the single market. What I would like to point is that point to the fact that together with the European Union, we're assessing very carefully how to enhance the value chain of Ukrainian agri food sector pointing to third countries that represent, as of today, the largest markets for the Ukrainian agricultural sector. And we are also deploying technical assistance to ensure that this enhancement of value chain for those markets and those countries will further consolidate, and we're happy to see that, for example, Ukraine has already established a hub in Ghana.
For example, there is one of the jurisdiction that is the most benefiting from the agri food sector of Ukraine, and others will be coming. But just to say that agri food enhancement, the value chain of agri food enhancement in Ukraine, does not represent only a risk, but also an opportunity for investments also globally. Thank you very much.
Elena Višnar Malinovská
Thank you very much. I would probably start with leverage, because we have concrete figures that I could offer to this audience. So to date, under the Ukraine investment framework, from the total envelope of 9,500,000,000 that has been, we have allocated 8,400,000,000 in guarantees and blended loans and grants. And that is to unlock 25,000,000,000 of fresh investments to Ukraine. This is not wishful thinking.
This is what we have already on the books through the contracts and the sort of prospect. So it's reality. In terms of leverage, of course, the more you do the public investment, the less leverage you have unless you have the bankability that Mattel and colleagues from the bank very much understand. And the bankability means you create a cash flow out of your investment. How to create a cash flow in a country that is torn by war, where, of course, the tariffs are being put rather to a lower level because people are simply struggling, that's, of course, difficult.
But we already have good projects on water recovery. We have also a commitment on increasing the tariffs as the conflict recedes. So I think even for the public investments, we will see leverage. Nevertheless, we bet a lot on private investments. And here, we go also to, I would say, very innovative space of critical raw materials where you know very well that the European Union is still very resource inefficient and very resource dependent, and where Ukraine indeed can provide a source for our value chains.
Another sector, a very important sector for our industrial capabilities, is defense. Of course, when I say defense, everybody will, you know, visualize a missile. We can also talk about the drone. A drone, technically speaking, has all the components that you need for an automated car. As soon as we talk about cars, we need to get to the European industry.
So I think there are many areas where the collaboration with Ukraine makes a lot of sense. I have myself visited Ukraine last week. I've been to a city that has now relocated a company, a school furniture company from the Kharkiv region. And I can tell you it is a very competitive company, and its goods should definitely already compete in the European market. Another cluster that is in the making is the IT cluster.
In the past, Kharkiv used to be an IT valley for the country, is in the making. So just to say, please look at Ukraine with the lenses of the future, because they are really incredibly innovative. On the question of how to increase absorption capacity, we are working on it. So far, the absorption capacity for investment is around 7,000,000,000. It needs to triple in order to get to a pace whereby we would see faster investments in place.
There is, of course, also administrative capacity crunch, which is a combined, let's say, outcome of many reasons that I could develop if I had much more time. Going to agriculture. Ukraine is not asking for payments from the Common Agricultural Policy. They are not begging for that. They have farms as big as Luxembourg.
What they ask for is market access, because they are very competitive. Now, a couple of years ago, in the European Union, we were talking about food security issues. Nowadays, we are back to competition. Maybe these two objectives are compatible, maybe they are not. But it is important to know that Ukraine, a sort of freer access, would probably be able to compete on our market.
And I agree with what Matteo said. We need to help Ukraine climb up the value chains to add value to the agri food industry. And thanks to some of the operations, we have already done. So we, for instance, financed a project for soya protein that is used as feed for salmon. Salmon is a product which is, I must say, widely appreciated across the continent.
Now.
You mentioned European suicide. I don't think that's the case. But I would like to highlight some issues. The EU budget is 1% of the EU GDP. I mean, you'll have to see whether it's too much or too little.
But with 1% of the EU GDP, we're capable of accomplishing a lot. Secondly, when it comes to loans, let me explain how it works at the moment. The European Commission or the investment framework provides the guarantees so that our partners, such as the EIB, can issue loans. Up to now, we haven't had a single case where the loan has not been repaid. So no cases with any major risk.
So that gives us the certainty that Ukraine is not a bankrupt state. It's got a well-functioning administration, and this country has some pretty impressive ministers that work day and night. They, we hold them accountable, and they provide information on what they're doing. And I think that Ukraine will be able to prove to European taxpayers that the money has been invested properly and used well in a country and a country that could be an opportunity for Europe in the future, a country that will develop new industries, that will be innovative, and a country that will have a future that I'm sure we all want them to have.
Thank.
Giuseppe Lupo
Thank you very much. Thank you very much to every one of you. I'd like to thank our guest speakers. So heartfelt thanks for this debate, and I am very grateful to all the experts who found the time to come and speak to us this afternoon. These contributions will prove to be very timely input in the negotiations ahead of us both on the MFF regulation and on the global Europe regulation.
They also bolster our understanding of the huge challenge ahead of us. I'm referring to the challenge of Ukraine's reconstruction. The scale of financial needs is immense, and the international community, with Europe in the lead, will have to meet this challenge head on and will also have to support Ukraine without any hesitation. So we're a little bit early, so we'll take a little break until quarter to five, just to give time to those shadows who might not be here to come to the room. So we'll start again at 16:45.
So quarter to five, we'll proceed with the next item on the agenda. Ladies and gentlemen, let's continue our meeting. Now we can move on to item 16 on the agenda. It's establishing the European Social Fund as part of the national regional partnership plan set out in regulation, establishing conditions for the implementation of the Union support to quality employment. I am the shadow rapporteur, excuse me.
I am the rapporteur, and that will be hearing from the shadows. So, ladies and gentlemen, the ESF, the European Social Fund, as we know, is one of the tools that is the most appreciated in the EU. It symbolizes the European Pillar of Social Rights. And for some time now, it's been promoting social progress across the EU. The commission's proposal, however, is jeopardizing the ESF because I feel it's getting watered down in the NRPPs, in the National and Regional Partnership Plans, making it just a simple cross-cutting goal across policies without a specific financial envelope.
So what does this mean? This means that we cannot know in advance the amount of resources that will be actually allocated to employment, social inclusion, the fight against child poverty, and support for the most vulnerable groups in our society. The ESF, a minimum quota of 25% for social inclusion, 5% for helping the most deprived. And those resources allocated to the child guarantee and the youth guarantee were not something kept in the Commission proposal. The ESF, however, needs strong support.
It needs to be a stand-alone fund within the upcoming MFF, making sure that we have a stand-alone and separate financial amount allocated to it so we can deal with the social pressures that we have. In this budgetary assessment, this draft budgetary assessment will be part of the interim report on the MFF, and we're asking for the ESF to remain independent and to have a very specific amount of over €124,000,000. So we have to make sure that we have this consolidated practice of specific targets, specific financial envelopes for youth employment, social inclusion, helping the most deprived, capacity building of social partners and civil society, and in order to help us tackle homelessness and child poverty. So, therefore, not only should we have sufficient budget, excuse me, enough money, we also need sufficient number of dedicated budget lines in the nomenclature to make sure that this remains separate to everything else. So I'm going to open up the floor to the shadow reporters. Yes, madam.
Go ahead. You are first.
Kinga Kollár
Thank you, chair. I will speak in Hungarian.
A lot of people live in poverty and exclusion in Europe. The European Social Fund is therefore of key importance because it seeks to answer these problems, supporting social integration, job creation, training, retraining, and further training. It's a very important area, and I would like to thank everybody for their work who have contributed. A special thanks to mister Murashan, who is responsible for the interim MFF report, which laid the basis and the groundwork for further programs. What's the next step?
Sectoral rules are needed. Parliament needs new rules which reflect its position concerning the social fund. The current commission proposal poses several problems. Integrating the social fund into the national and regional partnership programs provides no guarantees for our social objectives. With competing sectors, we can easily find ourselves in a situation where social considerations are on the back burner.
That's why the European Social Fund needs dedicated, earmarked funding. This is the only guarantee that we're going to have, enough funding, and we can provide predictability. Parliament's role must not be weakened in the whole process. Concerning budgetary issues, we need democratic oversight. This is clear for everybody.
Our decisions today are basically about building a Europe, which really responds to social challenges and leaves nobody behind. Thank you.
Angéline Furet
Thank you very much, Madam Collard. Missus Furet is next. Are we speaking French? Now the European Commission is a real genius because of the magic here, the budget magic. You talk about quality employment, and yet you're siphoning off money from the ESF.
This is fascinatingly cynical. I've looked at the financial lines for this new project, and there's nothing. You took a tool that helped us train our workers, and it is now drowned in a big black hole of the NPRP. It's no longer a budget. It's a magic trick, which means that we no longer have a role as parliament, and our rapporteur is very worried.
But if you read the fine print, you realize why you want to get rid of the traceability of this money. If the fund were to be transparent and stay transparent, everyone would see that there is a misappropriation of funds. The priority is no longer to train our citizens and help the most deprived families in the EU. Your priority is to use this pot of money to foster the integration of third country nationals and to give money to your militant NGOs. The EU shouldn't use social poverty to fund its migration policy through the backdoor.
The commission wants to get rid of the budget transparency. And because of this, we'll be tabling amendments to get rid of these lines focusing on migration, in order to make sure that it's the workers who get this money. Thank you. Thank you very much, Missus Fure. Any other shadow rapporteurs who would like to take the floor?
Giuseppe Lupo
It doesn't seem to be the case, so I'm going to give the floor to Miss Maritmag for her issue because she is co-rapporteur.
Yes. Thank you, Chair. Thank you for inviting us here today. I will also speak on behalf of my co-rapporteur, David Kanza. Thank you for the good job that you have done and presented here in the budgetary assessment in the budgetary committee on your budgetary assessment.
Marit Maij
And I think your opinion supports what we have already seen in our position in EMPO. For now, in the proposal of the commission, we see that the European Social Fund is actually an empty shell with no dedicated budget. And this means that the resources allocated for social measures can easily also be allocated for different kinds of social measures that are not necessarily European Social Fund measures, which lead to the risk that the people that need it the most will not receive it. And besides this, there will be a lot, and I emphasize, a lot less funding available for social measures if you compare the current proposal of the Commission to the current European Social Fund. Spain will lose more than 60% of its resources for social spending.
Italy will lose almost two three of its resources for social spending. France, Romania and Portugal, they will lose more than half of the resources of social spending. These numbers, they are calculated on the basis of what we received from the commission on how to do the comparison between the current European social fund and what is in the proposal on, sorry, ESF and NRPP right now from the commission. We have asked the commission many times whether these very disturbing numbers, these calculations are also the calculations that they have made themselves. And up to now, we have not received an answer.
And I must say this is not transparent, and this does not respect the relation institutionally between the European Parliament and the Commission. It does, however, strengthen us in our belief that the numbers we have calculated are right. And this is indeed very worrying. So we keep fighting for a separate European social fund with a clear budget that is standalone, that has its own clear objectives and thematic concentrations. And I'm happy to cooperate with David Casa with you on this matter.
Thank you so much.
Giuseppe Lupo
Unfortunately, the commission isn't present, so we won't be able to hear from them. But I'm sure there will be other opportunities for us to delve into more details with the commission present. I'd like to thank all of those who spoke. I don't know if anyone else wants to take the floor. We still have a little bit of time.
So if anyone would like to take the floor, you can any request for the floor? Thank you very much. Thank you once again to the speakers. I talked about the importance of the European Parliament, the ESF. I fully agree with you highlighting this, and I'm eagerly awaiting your amendments.
I'm sure that we'll be able to work together well to achieve the best possible result. So that means we can move on to the next item. Let me just remind you on item 16 that the deadline for tabling amendments is 05/13/2026, three p. M, and the vote will take place when we meet on 07/15/2026. So now I can move on to item 17, the proposal for regulation of the European Parliament and the Council establishing the Union support for internal security for the period from 2028 to 2034.
The rapporteur is Halitsky, Mr. Halitsky, but Mr. Hanje Pantella will be replacing him.
Michalis Hadjipantela
Thank you, chair. I will speak on behalf of mister Halitsky because he couldn't attend the meeting today. First of all, the Rapporteur welcomes the proposal of the commission to increase the allocation for the internal security fund by more than three times compared to the current MFF. Additionally, he also welcomes the proposed increase by the parliament in its interim report. This increase is in line with the expectations of European Union citizens for more security.
Hopefully, after the negotiations with the council, the allocation for this fund will not be decreased because there is a clear need to step up investments in fighting terrorism, radicalization, and to improve the cooperation between law enforcement agents. Together with the proposal to increase the resources for Europol, this proposal of the commission can help member states to be more coordinated and better tackle the threats to our security. Then draft budgetary assessment does not enter into specifics of the fund, but rather on the entire architecture, because there is a need to ensure coherence between the home affairs funds. And while the Rabortel supports flexibility among various objectives of these funds, he also believes predictability and ensure that long term investment to European Union Security can continue in a stable manner. This is why it is also important that investment in security as well as those in defense are exempted from rules, which will make them more difficult in practice, like the application of to no significant harm or the need to comply with the climate spending target, for example.
The approach from the performance regulation is a realistic one and should be preserved. It is also important to ensure coherence with other European Union funds, like cohesion. This is why the overall implementation structure of the fund should remain the NRPP. When evaluating the plans, the commission should make sure that this coherence is ensured. Finally, the Rabortel also considers that there is a need for more detailed budgetary breakdown and nomenclature to ensure transparency and to safeguard the prerogatives of the budgetary authority.
The deadline for table amendment is set to be the 05/20/2026 at 12, and the vote in the budget is scheduled to take place on the 07/15/2026. Thank you.
Angéline Furet
Thank you, chair. On paper, the objectives for this fund of €6,100,000,000 euros is essential fighting terrorism, organized crime, or cyber crime. But behind the words, the org, the commission is organizing a mission to transfer sovereignty away from us. First of all, budget. The budget. We have black holes in these NRP plans.
The reporter Anders has shown this. The dedicated budget lines have been removed. We demand the immediate return of these earmarked budget lines. Then the geographical change where you're using the security budget for our internal security to equip police in North Africa. We use the money to finance our delegations abroad like those in Ghana, which we have from this morning who are being spendthrift.
Then we have, the text asks NGOs to drop ideological security doctrines. We see here radicalizations, and militant organizations are telling our law enforcement officers how to act. We cannot support this ideological approach, so we will table amendments for a stand-alone budget and to exclude NGOs from the management of our security. Thank you.
Thank.
Giuseppe Lupo
Thank you very much, missus Furet. Would anyone else like to take the floor? I don't see any other shadow repertoires. No one else wants to take the floor. And in this case, like in the previous one, we don't have a commission representative.
Let me just tell you that the deadline for tabling amendments is May 20 as the previous speaker said, but at 3PM. And the vote will take place on July 15. Thank you very much. That means that we can move on to the next item, and that's item 19, the proposal for a Parliament and Council regulation establishing the Union support for the Schengen Area for European integrated border management and for the common policy on visas for the period from 2028 to 2034. I will be presenting Missus Van Brugge's points because, unfortunately, she cannot be here with us today.
So on behalf of the rapporteur, I would like to present the draft budgetary assessment on the proposal establishing the Union support for the Schengen Area for European integrated border management and for the common policy on visas. So from the outset, let me say that in the preparation of this assessment, we have made sure that this dovetails with the other draft budgetary assessment on internal funds, especially the Asylum Migration and Integration Fund and the assessment on the Internal Security Fund. It is vital for these three tools to be assessed in a consistent way, and in a comparable way, because their policy objectives are interconnected. The assessment, the draft budgetary assessment, looks at different aspects. The need to be flexible when it comes to the internal goals, looking at allocation of resources, harmonized prerequisites to fight against fraud from the very outset, solid audit and control, and pure transparency when it comes to revenue, and looking at contributions from third countries.
Giuseppe Lupo
The assessment includes 4 amendments. Amendment one says that the commission is obliged to coordinate with AMIF, the AMIF, and the ISF, to maximize the impact of EU funding and avoid duplication. Amendments two and three introduce two new recycles: one on parliamentary scrutiny and the budget nomenclature, and one that puts budgetary assessment in line with Article 310 Para 4 of the treaty. Amendment four is purely technical, saying putting the number in the interim report on the proposal, and this stems from the MFF. So now we can hear from the shadow rapporteurs.
Mr. Sanchez.
Thank.
Julien Sanchez
You, chair. I'd like to thank the rapporteur as well for their work on this file. You've mentioned the protection of our external borders. This is a priority for our political group, as you know. We have repeatedly called for this in our interventions and our amendments related to the MFF, including in the interim report.
Security must remain at the heart of our policies. However, as the opinion shows, there are many gaps in terms of control and transparency. In particular, there is a lack of sufficiently detailed budget nomenclature, and this risks limiting the budgetary authority's role. There is also a lack of objective criteria for the different resources. This creates a lack of coherence and efficacy in the use of funds.
We insist on the need for total transparency in the use of funds, as well as the strengthening of prevention, detection, and correction mechanisms for fraud from the very beginning of the implementation. We will table some amendments going in this sense, in order to ensure that there is real democratic control and the efficient use of resources. Thank you.
Giuseppe Lupo
Thank you very much. Would anyone else like to take the floor or catch the eye? If you want to take the floor, please say so. And once again, we don't have the commission representative here. So the deadline for amendments is May 20 at midday, and the vote will take place on July 15.
We're a little bit ahead of schedule, so let's take a five-minute break. Maybe a little bit longer than five minutes, just to wait for colleagues to come in. Ah, here we are. Here's our colleague. We'll just give him a chance to sit down.
So we can now move on to item 20. Research and training program of the European atomic energy community for the period 2028 to 2032, complementing Horizon Europe, the framework program for research and innovation, and providing for the community's contribution to the ITER project. Mister Rattas has the floor. Go ahead, sir.
Jüri Ratas
Okay. Thank you, chair, and thank you to the rapporteur for her work as the EPP shadow rapporteur for the budgetary assessment. I would like to make a few remarks. First, I welcome the fact that the commission proposed more than the doubling of the allocation for this instrument compared to the current MFF. I think it's the strong signal of the importance of supporting the Schengen Area's integrated border management and the common visa policy.
I also welcome the European Parliament in its MFF interim report, proposes to increase the budget even further by an additional €1,500,000,000. This reflects the importance of the EU citizens' attached to the proper protection of our external borders. I also would like to mention that this is essential not only to address irregular migration, but also to counter the use of migrants for political pressure as we have seen, for example, in the Baltic states in the context of actions by Belarus. In this regard, I want to underline the particular importance of our eastern portent borders. These are the key points I wanted to highlight at this stage.
Thank you.
Giuseppe Lupo
Thank you very much, sir. Yes, we listened to you with interest, but in fact, we'd already finished item 19. So, but it was useful to hear your opinion. So, but now I would like to ask you to move on to the report under item 20 because you are the rapporteur for the opinion. Item 20, research and training program of the European Atomic Energy Community.
Go ahead.
Jüri Ratas
Yes. Thank you, and I apologize. About the repertoire for this budgetary assessment, I would like to raise a few points first. I want to underline that the main task of the budgetary assessment is to explain the financial and budgetary aspects of the proposal, and to ensure that the legislative and financial elements are fully aligned. Parliament's role as a co-legislator and as a budgetary authority must be protected throughout this process.
I also would like to recall the need for predictable and sufficient annual resources for the program, especially given the long-term nature of the projects it supports, as well as the need for educated human resources in line with the interim report that was recently adopted. Predictability is essential. The increase in flexibility proposed by the commission must not come at the expense of stability. Sudden changes in available resources would negatively affect beneficiaries, researchers, companies, SMEs, and also start ups working in the sector. They need a clear and reliable budget framework that does not shift from year to year. These are the main priorities I intend to reflect in my report, and I look forward to hearing your feedback.
Thank you.
Giuseppe Lupo
Thank you very much, sir. Now we'll hear from the shadow reporters. I'll kick off as the S and D shadow. Thank you very much to the reporter for presenting the draft budgetary assessment. As the S and D, we understand the added value of ITER, and we're in favor of funding supporting this important project.
Not only is there the potential for fusion energy for the future, these kinds of large scale energy projects have created and will create a lot of positive externalities that will help not only with energy infusion but beyond. The member state energy mix is something that falls within their remit, but the production of renewable energy is more economical than a newly constructed nuclear power plant. So the Eurotome research project will allow for a very useful exchange of know-how on the whole issue of nuclear power. But I have the impression that this draft budgetary assessment might be raising hopes a little too much when it comes to the project and its capacity to expand nuclear capacity. Now I would also like to say that as we know well, the Eurotome research project is limited by the treaties to five years, while the multi-annual financial framework is seven years long.
So if in the future we can revise the treaties, if we will at some point be in that position. I think we need to tackle the fact that these two time frames don't align. So thank you once again to the rapporteur. Now, mister Sanchez.
Julien Sanchez
Thank you, chair. Thank you, rapporteur. Thank colleagues, I'd like to thank the reporter for his work on this file. For my party group, the position is clear. We're clear.
We support nuclear. It's a key pillar of our energy security and our sovereignty. We also support the ITER project, which is a strategic long-term investment for Europe in terms of innovation and industrial competitiveness. As the budgetary assessment shows, this project has already generated positive results in terms of research and jobs. We need greater budgetary control and transparency, though.
We would also like to see a greater criteria for the various budget lines. We also need to identify the various spending throughout the period. We need control mechanisms and complete traceability of the funds to guarantee an efficient and responsible use of every euro. The assessment text shows that we need horizontal performance indicators to guarantee greater coherence and more efficient monitoring of spending. The European Court of Auditors report asks us, tells us we need to be careful about imprecise indicators which are centered on administrative steps, as well as the persistent difficulties establishing a clear link between spending and results.
There is a real risk of measuring the implementation rather than the actual performance, and this weakens the credibility of the budgetary framework, and limits the parliament's oversight capacity. We will therefore table amendments that deal with these issues. Thank you.
Giuseppe Lupo
Sanchez, no. Thank you very much, mister Sanchez. We don't have any other shadow rapporteurs in the room. I don't know if any other colleague would like to take the floor. So if the rapporteur doesn't want to add anything, then I'd like to remind you that the deadline for tabling amendments. Oh, would you like to take the floor, sir? Okay.
Perfect. 05/13/2026 at 10 AM. That's the deadline. So we finished the meeting for today, and we'll be back tomorrow at 9. Thank you.
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