Front-loading financial support to Ukraine: It's now or never

As Ukraine must fight against an aggressor with an economy more than 10 times larger, its own resources have been far from sufficient to finance all its needs, which in turn has forced the country to rely on significant external financial support. Unfortunately, there have recently been interruptions, uncertainty and inordinate delays when it comes to providing military support and funding. Moreover, as loans (rather than grants) have been the main form of external financial aid, macro-financial imbalances have been accumulating in the economy. Without sufficient military and financial support, Ukraine will not be able to withstand Russia's military aggression and prevent even more damage to its economy and social fabric. In addition to having a much smaller economy compared to Russia, Ukraine also has a much smaller population - which means it will eventually lose a long war of attrition. If sufficient aid is not provided, Ukraine's defeat would likely result in far higher social, political and economic costs to Europe in the form of additional refugee flows and greater security risks, including spill-over effects on other neighbouring regions. The EU needs to expand its role as a donor of financial aid. Although it is already the main donor, there is still significant potential for the EU to scale up its aid to Ukraine. Increasing and front-loading macrofinancial and reconstruction assistance - primarily via grants - would enable Ukraine to have an accelerating economic growth trajectory as well as benefit Europe by improving its security situation and boosting its prosperity. Additionally, the assets of the Russian Central Bank that have been frozen by Ukraine's Western allies, which amount to approximately USD 300bn, should finally be made available to Ukraine.