Brussels has proposed freezing €1.5 billion in EU funds to Ukraine after Kyiv fell short on implementing reforms linked to tackling corruption and the rule of law.
Ukraine has completed 13 out of the 16 measures previously agreed under the €50 billion Ukraine Facility, which was set up last year to support the war-torn country’s reconstruction. This means it will now receive €3 billion instead of the expected €4.5 billion in the next quarterly payout, said European Commission spokesperson Guillaume Mercier.
The missed reforms include the failure to pass laws relating to the “decentralisation” of executive power and the Asset Recovery and Management Agency (ARMA), a body tasked with tracking down assets acquired through corrupt or otherwise illegal means, Mercier said. They also include measures relating to the selection of judges to the country’s High-Anti-Corruption Court, he added.
The move comes after after President Volodymyr Zelenskyy faced rare EU criticism and the first major anti-government protests since Russia’s full-scale invasion in 2022 over sweeping changes to two key anti-corruption bodies.
Zelenskyy has since sought to reverse the changes, which sharply increased his office’s control over Kyiv’s National Anti-Corruption Bureau of Ukraine (NABU) and the Specialized Anti-Corruption Prosecutor’s Office (SAPO). A bill undoing the reforms is expected to be discussed in parliament later this week.
However, the suspension is unrelated to Kyiv’s reforms of NABU and SAPO, according to people familiar with the matter.
Mercier also noted that Ukraine had itself reported last month that it had failed to implement all of the reforms required to receive the full payout.
The €1.5 billion figure – which must still be approved by EU member states – was calculated using a “methodology” agreed by the bloc last year, Mercier said, adding that Kyiv can still receive the money if it completes the reforms within the next twelve months.
The news follows Zelenskyy’s announcement last week that Kyiv is facing a budget shortfall of $40 billion (€35 billion) this year.
The United Nations also recently estimated that rebuilding Ukraine will cost $524 billion (€506 billion) over the next decade, which is nearly three times the country’s annual GDP.
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