The European Union should stop financing Putin and his regime. This was emphasized by Luis Garicano, a Member of the European Parliament, Professor of Economics, Vice-President in charge of Economic Affairs at Renew Europe during the public talk in Kyiv. The public talk took place on April, 21 at the Kyiv School of Economics (KSE) and focused on the issue: “Liquidity and Sanctions: putting the European economy on a war footing”. Garicano also called on the EU to provide emergency assistance to Ukraine now.

He said that the European Union has already taken a number of unprecedented actions to counteract the aggressor and to support Ukraine as well.

“Individual sanctions have been imposed on Russian oligarchs, a number of financial measures have been taken, such as a ban on SWIFT for 7 banks and a ban on transactions with the Central Bank of Russia. The sky was closed for Russian planes, coal was banned in the energy sector, military technology was banned in the defense sector, and so on. On the other hand, macro-financial assistance and budget support of €1.2B of Ukraine, global fundraising campaign ‘Stand Up for Ukraine’ that raised €9.1B, humanitarian aid package of €550M, Ukrainians were granted residency rights, labor & housing access, etc.,” Luis Garicano said.

At the same time, he stressed, EU energy imports keep financing Putin’s war. He named such amounts: 782 million euros – coal, 12,440 million euros – oil, 24,010 million euros – fossil gas. But, according to Garicano, a total ban is manageable for the EU economy. Alternatives exist across fuels.

The percentage of fossil fuel payments to Russia, in particular, coal, since February 24 is 2%. Coal can be easily replaced with imports from other countries such as Colombia. Although the EU has approved a ban on Russian coal imports, it will only be possible from August. Payments for oil – 34% and for gas – 64%. Solutions to replace these energy sources also exist, but the bans have not been approved.

“We should not just be paralyzed by this “All or nothing debate”. A tariff on Russian gas and oil is a good start. A tariff would reduce the EU’s consumption of Russian gas while allowing those who cannot do without gas to continue purchasing it. The price for EU buyers would rise, but the EU could use the revenues of the tariff to compensate them,” Garicano said.

He also advised not to wait for reconstruction: Ukraine needs emergency funding now. Luis Garicano noted that the war has a significant impact on Ukraine’s economy. So, that 30% of companies have stopped producing. Infrastructure losses after a month of war equal 120bn. Most populated areas are the most affected by the war. 5 million Ukrainians have left the country since February, 24.

“What can we do now? First of all, current int’l aid is insufficient. Ukraine needs exceptional support to cover the costs of the war and reconstruct the country from the IMF, EBRD, EIB. The European Union should increase its Macro financial assistance to Ukraine (MFA), which stands currently at EUR1.2bn. Next step is the debt suspension and restructuring and additional loan guarantees. Loan guarantees mobilize investments and lower the cost of debt. Also, SDRs could go to Ukraine in the form of loan guarantees, loans (e.g. a perpetual loan) or even direct grant money. And Ukraine should ask the EU to issue new bonds to mobilize funding for Ukraine,” Garicano expressed.

“Ukraine is fighting for the freedom of all of us. We must share the costs,” he said.

Luis Garicano Gabilondo is a Spanish economist and politician, who is currently a Member of the European Parliament from Spain since 2019. He is also Vice President of Renew Europe and Vice President of the European political party Alliance of Liberals and Democrats for Europe.