What measures has the EU taken in response to the Russian invasion of Ukraine?
Russia invaded Ukraine on 24 February 2022 and the conflict is still raging. He war in Ukraine has immense humanitarian consequences for the country and has triggered an unprecedented flow of refugees to various EU member states. On 4 March 2022, the Council decided to activate the Temporary Protection Directive for the first time since its introduction on 7 August 2001. Ukrainian nationals displaced by Russia’s military invasion can now seek temporary protection in the EU. Temporary protection means Ukrainian nationals can stay in the EU member states for up to 2 years without having to apply for asylum. They have a right to housing and education and may work in the EU.
By the end of May 2022, more than 6.5 million Ukrainians had fled to the EU. About 3 million of them had registered for temporary protection This page posted by the European Commission provides up-to-date information. By the end of May, nearly 60,000 Ukrainian refugees had registered in the Netherlands. More information (in Dutch) is available on this page.
The EU has imposed 6 packages of sanctions on Russia since the start of the war. They include economic sanctions, e.g., in the financial sector and bans on the import and export of certain goods. The measures are designed to: 1) weaken the Kremlin’s ability to finance the war, 2) impose clear economic and political costs on Russia’s political elite responsible for the invasion, and 3) diminish Russia’s economic base. See this page on the European Commission’s website for further information on the sanctions.
Energy security and energy prices
The member states rely on Russia for some of their energy requirements, especially gas. The war in Ukraine has affected both energy security and energy prices. On 18 May 2022 the European Commission presented its REPowerEU Plan in response to the consequences of the war in Ukraine for energy security, high energy prices and the EU’s reliance on fossil fuels from Russia. The Commission’s plan is designed to reduce reliance on Russia’s fossil fuels in the near term and accelerate the energy transition.
Financial measures to support member states
The economic sanctions, the influx of refugees, energy security and high energy prices have financial consequences for the member states. The EU has taken a raft of financial measures to meet these challenges.
Adjustments in EU money flows
- Cohesion’s Action for Refugees in Europe (CARE)
Regulation 2022/562 was adopted on 6 April 2022. It allows the member states to grant emergency support within the current cohesion policy to Ukrainian refugees (Cohesion’s Action for Refugees in Europe; CARE). CARE provides greater flexibility in the member states’ cohesion policy as they may redirect unspent EU resources in the 2014-2020 cohesion funds (ERDF, ESF and EMFF) to meet migration challenges. Resources in the ERDF and ESF may also be applied for all manner of measures regardless of whether they would normally be funded from the ERDF or ESF.
The €10 billion in recovery assistance for cohesion and the territories of Europe (REACT-EU) available for 2022 can be applied to address migration challenges. REACT-EU is a top-up to the member states’ cohesion policy for 2014-2020 and has the overarching goal of recovery from the COVID-19 crisis. Expenditure on specific actions for refuges has been eligible for assistance since 24 February 2022. Regulation (EU) 2022/613 was adopted on 12 April 2022. It increases the pre-financing member states can receive from REACT-EU resources by €3.4 billion in total.
On 29 April 2022 the European Commission had provided pre-financing to a total of €3.5 billion.
- Migration and security funds
Regulation (EU) 2022/585 was adopted on 6 April 2022 to provide additional funding for Ukrainian refugees. It extends the implementation period in which funding can be awarded from the migration and security funds (AMIF and ISF) 2014-2020 by 1 year. The member states can thus fully use unspent amounts from these funds. In addition, unspent amounts in the AMIF that had been earmarked for other actions can be released. This is expected to release around €420 million in additional support from unused funds.
- Support for the fishery and aquaculture sector
The European Commission presented a proposal to amend the regulations regarding the European Maritime and Fisheries Fund 2014-2020 (EMFF) on 13 April 2022. The amendment provides financial compensation for loss of income and additional costs, for the storage of products for the fishery and aquaculture sector and for the temporary cessation of fishing operations when their security is in jeopardy. These measures supplement similar crisis measures the European Commission published on 25 March 2022 regarding the EMFF 2021-2027.
Relaxation of the Stability and Growth Pact (SGP)
Relaxation of the SGP began during the COVID-19 crisis and has been extended by 1 year to 2024 on account of the war in Ukraine. The member states’ budget deficits and public debt may now exceed the SGP’s reference values (3% and 60% respectively) without the European Commission imposing sanctions. See this page for current figures on the Netherlands.
Temporary crisis framework for state aid measures
To prevent unfair competition, in principle state aid may not be awarded to enterprises in the EU. An overview of what the EU defines as state aid and how the Commission investigates it is available here. In exceptional cases the European Commission can approve state aid subject to stringent conditions.
To mitigate the economic impact of the war and to support businesses and sectors badly affected by it, the Commission presented a Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia on 23 March 2022. The temporary crisis framework will in any event be in place until 31 December 2022 and allows member states to grant aid to businesses affected by the sanctions imposed on Russia and to compensate them for additional costs due to high gas prices.
EU member states must apply to the European Commission for permission to grant state aid in the context of the war in Ukraine. The Commission had approved approximately €35 billion in state aid under the temporary framework by 23 May 2022 (as calculated by the Court of Audit). This amount excludes a French aid measure of €155 billion granted in the context of corona support. In so far as we are aware, the Netherlands had not applied for a state aid decision as at 1 June 2022. More information on state aid relating to the war in Ukraine is available here.
EU measures to support Ukraine
In addition to receiving refugees and imposing sanctions on Russia, the EU and its member states have provided humanitarian support to Ukraine, including material support through the European Civil Protection Mechanism and humanitarian operations and military support. They have also provided financial support. European leaders agreed at the end of May, for instance, to award Ukraine €9 billion in new exceptional macro-financial assistance in 2022. More information on the various forms of EU assistance to Ukraine is available on this page.
As from 4 June 2022 all import duties on products originating in Ukraine will be removed for a year. The same is true of EU anti-dumping measures and exemptions for steel imports from Ukraine. These measures are designed to stimulate Ukrainian exports to the EU and alleviate the circumstances of Ukraine manufacturers and exporters.
What do the EU measures in response to the war in Ukraine mean for supreme audit institutions?
At the beginning of March 2022, the Netherlands Court of Audit decided to suspend its participation in activities chaired or organised by the Accounts Chamber of the Russian Federation. EUROSAI has also suspended its work with the audit institutions of Russia and Belarus. The Russian audit institution no longer chairs INTOSAI.
For information on EUROSAI and INTOSAI see this page.