EU Weighs Looser Aid Rules as Ukraine War Hits Bloc’s Economy
EU Weighs Looser Aid Rules as Ukraine War Hits Bloc’s Economy
(Bloomberg) -- The European Union is weighing how to help stem the economic hit from the war in Ukraine, including a possible relaxation of the bloc’s tough state-aid rules.
The European Commission is “looking at all tools at our disposal” and “is ready to use the full flexibility of its state-aid toolbox,” spokeswoman Arianna Podesta said in an email. EU nations would be consulted before any new measures were adopted, she said.
Amid international efforts to isolate Russia following its invasion of Ukraine, the U.S., the U.K. and the EU have ramped up sanctions, with the 27-nation bloc imposing two sets of sanctions against Russia and planning further measures that will also include Belarus. The EU is also bracing for potentially severe economic consequences should Russia cut off natural gas supplies in retaliation for sanctions.
French finance minister Bruno Le Maire, whose nation currently chairs EU meetings, said after a videoconference with his counterparts last week that state aid and business loans could be part of the short-term response to this crisis -- in particular to support the most vulnerable businesses and companies more exposed to the energy prices hike.
Valdis Dombrovskis, the EU’s economy commissioner, said that the commission is also looking at reprogramming some EU funds to tackle the economic fallout.
Current EU rules allow for compensation of specific companies or sectors for damage suffered, under certain conditions, or for aid in case there’s been a “serious disturbance to member states’ economies.”
But in periods of crisis, such as the Covid-19 pandemic, the EU has put in place special frameworks to allow governments to give higher amounts of aid to support local businesses.
Key in any new decisions will be to keep a “level playing field,” said Podesta. “The commission will assess any support measures notified” by EU nations “in the context of the current crisis as a matter of priority.”
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