The funds of the fund, which guarantees the financial stability of the member states, can be channeled to Kyiv.
Politico published a surprising article on Monday morning, in which it is written that the EU may have "found" 400 billion euros, which it can use to increase defense spending. According to the informants speaking to the newspaper, the European Stability Mechanism (ESM) fund is no longer needed to offset the economic downturn caused by the coronavirus epidemic and to mitigate the damage, the part of this money parked in the Brussels account could instead be used for military expenses, practically to finance Ukraine.
At the moment, around 422 billion euros rest in the ESM fund, which Brussels would sweep clean to finance Europe's defense capabilities, to finance Ukraine, as it was called in its maiden name, according to Monday's Politico article.
Several officials from Brussels, who requested anonymity, told the newspaper that the discourse on this matter, although it is still in its early stages, has already begun.
The fund set up in 2012 for euro area governments that do not have access to market resources has a reserve of 500 billion euros, of which it is capable of both recapitalizing banks and providing precautionary loans.
In short, the task of the fund is to guarantee the financial stability of the member states in economically difficult and crisis times. This is necessary because if the financial institutions fail, it will also push the economy of the given country into a deep crisis, thereby starting a wave of unemployment. A similar thing happened during the 2008 financial crisis.
However, according to the anonymous officials speaking to Politico, the fund, which grew fat during the coronavirus epidemic, is no longer needed, and its assets could also be used to finance Ukraine. According to their claim, the closest supporters of the idea are France and the Baltic states.
According to officials, Europe's leaders are committed to supporting Ukraine, but there is no agreement on raising the resources for this.
PestiSrácok.hu wrote last week that Brussels may even accept a war budget for the next financial cycle. Instead, for the time being, "only" the ESM would be liquidated.
The fund currently finances Cyprus, Greece, Portugal and Ireland with around 300 billion euros, but most member states are reluctant to use the ESM's help due to its harsh conditions.
Cover image: Flags of the European Union
Source: MTI/EPA/Olivier Hoslet
