Joining the EU, Ukraine will be the poorest country in the bloc.

The Brussels-based Bruegel think tank has just released a report showing how much money Ukraine would receive from the bloc's budget if it joined the EU, with two scenarios: Ukraine would maintain its current territory, population, and economic resources; or Ukraine would regain the eastern regions controlled by Russia.

The numbers given…

Shortly after Russia launched its military campaign in Ukraine in February 2022, Kiev applied to join the European Union (EU). Since then, the European Council granted Ukraine candidate status in June 2022 and agreed to open accession talks with the Eastern European country from December 2023.

Euronews on March 7 quoted Bruegel's report saying that if Ukraine's accession to the EU becomes a reality, the conflict-ridden country could receive 110-136 billion euros from the bloc's seven-year budget, equivalent to 0.10-0.13% of the EU's gross domestic product (GDP).

The report uses existing rules and designs of the 2021-2027 budget to forecast how much Ukraine would receive after its accession.

Bruegel's figures exclude the huge cost of reconstruction, estimated at at least €450 billion over the next decade, and are based on the assumption that Ukraine regains all the territories in the east that the Russian military controls.

World - Joining the EU, Ukraine will be the poorest country in the bloc — A view of a burned tank amid the Russia-Ukraine conflict in the city of Volnovakha, Donetsk region, March 2022. Photo: Anadolu

Bruegel predicts that Kiev will benefit from €85 billion from the Common Agricultural Policy (CAP) – the bloc’s massive subsidy package for farmers. When the program is rolled out on a hectare (agricultural land) basis, Ukraine, with its powerful agricultural sector, will be the biggest recipient.

Ukraine will also receive €32 billion from the Cohesion Fund, which will finance development projects. The Cohesion Fund allocation is capped at 2.3% of a member state’s GDP. Without this cap, Ukraine would receive around €190 billion, or six times more.

In addition, 7 billion euros from other programs may also be allocated. In total, Ukraine will receive about 136 billion euros (at current prices) over the 7-year budget period.

This figure is much lower than the 186 billion euros reported by the Financial Times last October, based on a leaked study drafted by the European Council.

However, if Ukraine fails to regain the East and is permanently reduced in territory, population and economic resources, Bruegel estimates that the allocation the Eastern European country receives will drop to 110 billion euros.

…Still just a hypothesis

Ukraine's membership would “barely change” the ratio of net contributors to net beneficiaries of the EU budget, but would cause a marked change in budget allocations.

Even if Ukraine manages to recover strongly from the war, it will still be significantly poorer than the EU's poorest country, Bulgaria, and even poorer than the Western Balkan countries that are also seeking to join the bloc.

As a result, the EU's GDP per capita would fall, leading to changes in the level of Cohesion Fund allocations to each eligible region, said Zsolt Darvas, a senior fellow at Bruegel and one of the report's authors.

In addition, the wealth gap could trigger an exodus of some 3-6 million Ukrainians to other European countries in search of higher wages and job security.

World - Joining the EU, Ukraine will be the poorest country in the bloc (Figure 2). — A tractor collects straw from a field at a private farm in Zhurivka, Kiev region, Ukraine, August 2023. Despite losing large areas of arable land to the war, Ukrainian farmers have managed to maintain production. Photo: NPR

“If the average goes down, it means that some of the EU regions that are currently at the bottom could move up to transition regions and some of the transition regions could move up to more developed regions,” Darvas told Euronews. “We also see that the current EU countries will receive around €24 billion less from the Cohesion Fund, simply because of the mechanical impact of Ukraine.”

Mr Darvas noted that the increase in the EU budget would be “relatively modest” and therefore “doable”, but stressed that these projections were purely “hypothetical” as the EU is expected to review its internal rules and decision-making before expanding further east.

The European Commission (EC) – the EU's executive body – stressed last October that the future EU budget would not simply replicate the current one, but would need to be reformed, including on how money is raised and where it is spent.

“From our previous experience, the impact of an extension will depend on many parameters – such as scope, timing, policy design. Therefore, extrapolation at this stage is not very telling,” an EC spokesperson said at the time .

Minh Duc (According to Euronews, Politico EU)

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