Estonia is saying what others are thinking - that to pay for supporting Ukraine’s defence, a bond issue is the way to go forward.
Financing international support for Ukraine’s defense has been a problem since the threat of a large-scale invasion from Russia was detected. Using tax payer money from for the extra expense – even of 90% of the money stays in the donor country, in the end – is a weak link. In a war where public opinion is also considered a weapon, Russia’s use of disinformation to weaken support for budget-funded aid has already been seen.
The government of Estonia has a solution. War bonds totalling €120 billion a year should provide the funding that closes the gap between budget allocations and what Ukraine needs. Kusti Salm, Permanent Secretary of the Estonian defence ministry, told EurActiv that this amount “is a ballpark figure for what should be enough for Ukraine to win the war.”
A show of strength on the markets
Speaking at the Ramstein Group meeting of Ukraine’s supporting governments on March 13, Salm claimed that the European Commission could raise funds from the financial markets. The 27 EU member states could guarantee the bonds. The figure comes from recommendations floating for months that Western countries invest 0.25% of their GDP in military aid to Ukraine.
Salm told the group that the amount does not include other forms of military aid from the donor groups, or Ukraine’s own defence spending. He also emphasized that using war bonds sends the message that Ukraine’s supporters are beginning to flex their muscles, “which helps take off a bit of that defeatist attitude, and shows it actually requires very little effort from us so Ukraine wins the war,” EurActiv reports. It also shows a level of independence from American-driven aid and fits with recent statements by French president Emmanuel Macron regarding Europe’s defense.
Eurobond issues for extraordinary expenses, such as COVID recovery efforts, are already a known path. The idea of using bonds to pay for the defence effort is gathering support from across EC member countries, and dissent, such as that by Hungary when budget funds are used, has not been noted. An effort by Czechia at the national government level to raise €1.2 billion to buy artillery shells for Ukraine was resolved within weeks by willing governments and has resulted in Ukraine being assured of an ammunition constraint being resolved after months of having to ration shells.
