Subject matter
1. This Regulation establishes the Ukraine Facility (the ‘Facility’) for the period 2024 to 2027.
It lays down the objectives of the Facility, its financing and budget for the period 2024 to 2027, the forms of Union funding under it and the rules for providing such funding.
2. The Facility shall provide support to Ukraine under the following three pillars:
(a)
Pillar I: financial support provided to Ukraine for the delivery of reforms and investments to implement the Ukraine Plan as well as to maintain the macro-financial stability of the country, as set out in Chapter III;
(b)
Pillar II: a specific Ukraine Investment Framework to support investments and provide access to finance as set out in Chapter IV;
(c)
Pillar III: technical assistance and related support to Ukraine to design and implement Union accession-related reforms and to foster Ukraine’s administrative capacity, borrowing costs subsidies and provisioning, as well as other relevant activities, as set out in Chapter V.
Definitions
For the purposes of this Regulation, the following definitions apply:
(1)
‘measures’ means reforms and investments under the Ukraine Plan;
(2)
‘conditions’ means qualitative or quantitative steps relating to ensuring the maintenance of economic and financial stability or relating to the implementation of the reforms and investments set out in the Ukraine Plan;
(3)
‘blending operation’ means an operation supported by the Union budget that combines non-repayable forms of support, repayable forms of support or both, from the Union budget with repayable forms of support from development or other public or commercial financial institutions, including export credit agencies, or from investors.
Objectives of the Facility
1. The general objectives of the Facility shall be to support Ukraine to:
(a)
address the social, economic and environmental consequences of Russia’s war of aggression, thereby contributing to the peaceful recovery, reconstruction, restoration and modernisation of the country and to the post-war recovery of Ukrainian society, including by creating the social and economic conditions for internally displaced persons and persons under temporary protection to return;
(b)
foster social and territorial cohesion, democratic, economic, environmental resilience, progressive integration into the Union and global economy and markets and upward economic, social and environmental convergence towards Union standards;
(c)
adopt and implement the political, institutional, legal, administrative, social and economic reforms required to align to Union values and to progressively align to Union rules, standards, policies and practices (‘ acquis ’) with a view to future Union membership, thereby contributing to mutual stability, security, peace, prosperity and sustainability.
2. The specific objectives of the Facility shall include:
(a)
helping to maintain the macro-financial stability of the country and easing Ukraine’s external and internal financing constraints to ensure the continued functioning of the Ukrainian state;
(b)
rebuilding and modernising infrastructure damaged by the war, such as energy infrastructure, water systems, internal and cross-border transport networks including rail, roads and bridges and border crossing points, and educational and cultural infrastructure, and fostering modern, improved and resilient infrastructures;
(c)
contributing to demining and other mine action efforts; restoring food production capacities; helping to address social and health challenges, including mental health, and improving and strengthening the social care systems and their accessibility, in particular for specific groups, such as veterans, internally displaced persons, single parents, war widows and widowers, children, especially those without parental care, persons with disabilities, minorities, young and elderly people, and other persons in vulnerable situations;
(d)
strengthening security against hybrid threats, such as cyber threats, as well as strengthening resilience against disinformation, foreign information manipulation and interference;
(e)
fostering the transition to a sustainable, climate neutral and inclusive economy and a stable investment environment;
(f)
supporting the integration of Ukraine into the internal market; repairing, rebuilding, safeguarding and improving social infrastructure, such as housing, social, sports, youth and healthcare facilities, schools and higher education institutions; strengthening economic and social development and inclusion, with particular attention to women, as well as youth, including through quality education, training, reskilling and upskilling, and employment policies, including for researchers;
(g)
promoting science and research; support the creative sector and independent media; supporting culture and cultural heritage including cultural infrastructure; strengthening strategic economic sectors; fostering an institutional framework for investment and competition to enable individuals, and businesses, with a focus on SMEs and innovation, inter alia, by promoting equal opportunities for access to funding, regardless of the size of companies, to develop modern, competitive and sustainable products and services; supporting sustainable agriculture and rural development, aquaculture and fisheries, including alignment with Union standards and control systems concerning food safety, animal and plant health, as well as animal welfare; reforming Ukraine’s financial and banking sector, improving access to loans and insurance coverage;
(h)
further strengthening the rule of law, democracy, respect for human rights and fundamental freedoms, including through strengthening democratic institutions, in particular the Verkhovna Rada, as well as regional and municipal representative bodies, and their powers of oversight and inquiry over the distribution of and access to public funds; promoting an independent judiciary to support deoligarchisation efforts, strengthen the fight against fraud, all forms of corruption, including high level corruption, organised crime, tax evasion and tax fraud, tax avoidance and the illicit trafficking of firearms and cultural property; strengthening compliance with international law;
(i)
strengthening the freedom and independence of the media and artistic and academic freedom as well as an enabling environment for civil society; fostering social dialogue and civil society involvement; promoting non-discrimination to ensure and strengthen respect for the rights of persons belonging to all minorities, and the promotion of gender equality, the overall empowerment of women and girls, as well as, the rights of children and persons with disabilities; reinforcing the effectiveness of public administration; encouraging access to information and the participation of civil society in decision making processes and public scrutiny, and supporting transparency, structural reforms and good governance at all levels, including in the areas of public financial management and public procurement, competition and state aid; supporting initiatives and bodies and organisations involved in supporting and enforcing democracy, international justice and anti-corruption efforts in Ukraine;
(j)
developing and strengthening environmental protection, a sustainable and just green transition in all economic sectors, including Ukraine’s transition towards climate neutrality, in accordance with the Paris Agreement; improve the awareness of and fight against environmental crime; promoting digital transformation as an enabler for sustainable development and inclusive growth; supporting ecological rehabilitation following the environmental damage inflicted by military operations and contributing to decontamination, the demining effort and clearance of other explosive remnants of war as well as pollution caused by military activity;
(k)
supporting political and administrative decentralisation and local development, especially by supporting meaningful consultation and a level playing field for all levels of government when accessing funds via open, fair, neutral and transparent procedures;
(l)
supporting cross-border cooperation with the Member States bordering Ukraine in areas such as trade, environmental protection and the fight against international crime, provided that Ukraine remains the sole beneficiary of the funding.
General principles
1. Cooperation under the Facility shall be based on and shall promote the development effectiveness principles, where applicable, across all modalities, namely ownership of development priorities by Ukraine, a focus on results, inclusive development partnerships, transparency and mutual accountability. The Facility shall strive to ensure a balanced and needs-based allocation and use of resources and an appropriate geographical balance of projects.
2. Support from the Facility shall be additional to the support provided under other Union programmes and instruments. Activities eligible for funding under this Regulation may receive support from other Union programmes and instruments provided that such support does not cover the same costs.
3. In order to promote the complementarity, coherence and efficiency of their actions and initiatives, the Commission and the Member States shall cooperate and shall strive to avoid duplication between support under this Regulation and other support provided by the Union, the Member States, third countries, multilateral and regional organisations and entities, such as international organisations and the relevant international financial institutions, agencies and non-Union donors, in line with the established principles for strengthening operational coordination in the field of external assistance, including through enhanced coordination with Member States at local level and through the harmonisation of policies and procedures, in particular the international principles on development effectiveness. In order to avoid the duplication of support, increase ownership from the Ukrainian authorities and simplify administrative work, support under the Facility shall, as far as possible, be integrated into international efforts towards a financial architecture for the recovery of Ukraine and be coordinated with relevant donors and international financial institutions.
4. Activities under the Facility shall comply, to the extent possible in a war-torn country, with the climate and environmental standards of the Union. Those activities shall mainstream climate change mitigation and adaptation, environmental protection and biodiversity conservation, human rights, democracy, gender equality and non-discrimination, where relevant, disaster risk reduction and energy infrastructure safety, and shall support progress towards the United Nations Sustainable Development Goals, promoting integrated activities that can create co-benefits and meet multiple objectives in a coherent way, contributing to the reduction of poverty and promoting peaceful and inclusive societies. Those activities shall, to the extent possible, avoid stranded assets, be compatible with the principle of ‘do no harm’, as well as with the sustainability mainstreaming approach underpinning the European Green Deal and shall be also guided by the ‘leaving no one behind’ principle.
5. The Facility shall not support activities or measures which are incompatible with Ukraine’s National Energy and Climate Plan, if available, or with Ukraine’s nationally determined contribution under the Paris Agreement, which promote investments in fossil fuels or cause significant adverse effects on the environment or the climate or biodiversity, unless such activities or measures are strictly necessary to achieve the objectives of the Facility, taking into account the need to rebuild and modernise infrastructure and rehabilitate natural environment damaged by the war in a resilient way, and are accompanied, where relevant, by appropriate measures to avoid, prevent or reduce and, if possible, offset those adverse effects.
6. In line with the principle of inclusive partnership, the Commission shall strive to ensure, as appropriate, democratic scrutiny in the form of consultation by the Ukrainian government of the Verkhovna Rada in accordance with the constitutional order of Ukraine, as well as of relevant stakeholders, including local and regional authorities, social partners and civil society, including vulnerable groups, so as to allow them to participate in shaping the design and implementation of activities eligible for funding under the Facility and in the related monitoring, scrutiny and evaluation processes, as relevant. That consultation shall seek to represent the pluralism of the Ukrainian society and business community and the inclusion of different communities in Ukraine. All consultations shall duly take into account the participation of women. The Commission shall encourage coordination among the relevant stakeholders and shall contribute to strengthening the capacity of civil society organisations. In addition, the Commission shall ensure that civil society in Ukraine, including non-governmental organisations, is able to directly report any irregularities it may detect to the Commission via appropriate standing channels, as well as to send to the Commission opinions on the implementation of the Ukraine Plan and the evaluation of its measures by the Ukrainian government.
7. The Commission, in close cooperation with the Member States and Ukraine, shall ensure the implementation of Union commitments to increased transparency and accountability in the delivery of support, including by promoting the implementation and reinforcement of internal control systems and anti-fraud policies. The Commission shall make information on the volume and allocation of support publicly available through a single web portal, and shall ensure that data are up-to-date, easily accessible, and available in machine-readable format.
Precondition for support under the Facility
1. A precondition for the support to Ukraine under the Facility shall be that Ukraine continues to uphold and respect effective democratic mechanisms, including a multi-party parliamentary system and the rule of law, and to guarantee respect for human rights, including the rights of persons belonging to minorities.
2. The Commission shall monitor the fulfilment of the precondition set out in paragraph 1 before disbursements to Ukraine under the Facility are made and throughout the period of the support provided under the Facility taking duly into account the Commission’s regular enlargement report. The Commission shall take into account the relevant recommendations of international bodies, such as the Council of Europe and its Venice Commission, in this process. The Commission shall inform the Council of the fulfilment of the precondition set out in paragraph 1 before disbursements to Ukraine. Where the Commission finds that the precondition is not met or is no longer met, it shall submit to the Council a proposal for an implementing decision suspending the payments referred to in Article 26, irrespective of the fulfilment of conditions referred to in Article 16(2). In its assessment, the Commission shall also take into account the context in Ukraine and the consequences of the application of martial law in Ukraine. The Commission’s assessment shall be transmitted simultaneously to the European Parliament and to the Council. Where, at the request of Ukraine or on its own initiative, the Commission considers that the precondition is again met, it shall submit to the Council a proposal for an implementing decision lifting the suspension of payments. In the cases to which this paragraph applies, the Council shall act, as a rule, within one month of receiving the Commission’s proposal.
