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Estonia proposes €120 billion funding plan for Ukraine

Estonia proposes €120 billion funding plan for Ukraine Permanent Secretary of the Ministry of Defense of Estonia Kusti Salm (Getty Images)
Author: Maria Kholina

Borrowing on financial markets or from national budgets are the prime methods to supply Ukraine with what it needs to triumph in its war against Russia. Currently, Estonia is seeking over 100 billion euros to achieve this objective, according to the Permanent Secretary of the Estonian Ministry of Defense, Kusti Salm.

"Allocating €120 billion a year to military aid to Ukraine is a ballpark figure for what should be enough for Ukraine to win the war," Salm said.

He suggested that part of this amount could be financed through Eurobonds, where the European Commission could raise funds on financial markets and use EU countries as guarantors.

Over the past few months, Estonian politicians and officials have repeatedly said that for Ukraine to win the war, Western allies need to invest 0.25% of their GDP in military aid to the country, based on a strategy developed by the Estonian Ministry of Defense.

"If the 50-plus countries in the US-led ‘Ramstein’ coalition supporting Ukraine militarily spent that percentage, it would amount to more than €120 billion a year. With this money, by 2025, Ukraine will get to a point where they can impose attrition to Russia," Salm said.

At the same time, he added that even if this amount starts flowing into budgets now, its impact will take almost a year.

"It will take another [around nine months] to get the supplies to the level needed for Ukraine to credibly get to this attrition level," said the Estonian Ministry of Defense secretary.

EU program

On February 28, the EU Council finally approved the Ukraine Facility program, under which Ukraine will be provided with 50 billion euros in long-term credits until 2027. The first tranche of 4.5 billion euros is expected in March of this year.

According to Ukraine's Prime Minister Denys Shmyhal, this is a program to support investments, economic support, and the movement towards EU membership.