Germany rejects pooling EU debt to rebuild Ukraine

Germany’s finance minister on Friday ruled out any joint EU borrowing to help cover the massive cost of rebuilding war-torn Ukraine, After top European officials floated the idea,

Christian Lindner, who presided over G7 talks in Germany that saw countries pledge nearly $20 billion (19 billion euros) in aid to Ukraine, said there would be no repeat of the EU’s landmark post-pandemic recovery fund, known as “Next Generation,” which is financed by common debt.

“If there is any consideration of doing something like ‘Next Generation EU’ again, then the answer would have to be no. This was a one-off opportunity,” Lindner told reporters in Koenigswinter.

Top European Union officials earlier this week urged member states to be ambitious in helping Ukraine rebuild after the war, possibly using the pandemic fund as a model.

With the war still raging, the extent of Ukraine’s reconstruction needs is not known, but the European Commission believes the damage already done is already in the hundreds of billions of euros.

“There is a time, sooner or later, when we will have to look at funding on a European scale as we did for Covid,” Commission Vice President Frans Timmermans said in Brussels on Wednesday.

In a document reviewing ways the EU could help Ukraine, the Commission said the rescue of Ukraine could be paid through added contributions to existing EU programs and by boosting the EU budget.

But, it said, “given the scale of the loans that are likely to be needed, raising funds on behalf of the EU or with national guarantees from member states is among the options being considered.”

The 800-billion-euro Next Generation EU fund had to overcome deep reticence by so-called “frugal” member states such as the Netherlands and Denmark to come into being.

Aware of the potential for opposition to the idea of new shared debt, an EU official said the commission’s plans were purposely vague.

“We are inviting member states to play with ideas and see whether there is a willingness to go along and take this further,” the official said.