What changed between the plenary report and the adopted text

(82a) In view of the need to coordinate international support to the recovery, reconstruction and modernisation of Ukraine, international organisations, international financial institutions, in particular EIB and the EBRD as key financial institutions, as well as, Member States, national development banks, third countries, or other donors can play a major role in financing or as implementing partners of measures or projects supported by the Facility. National and local private and state-controlled financial institutions in Ukraine can be involved in the implementation of the instruments.

(83) The investment framework should constitute an integrated financial package supplying financing capacity in the form of financial instruments, budgetary guarantees and blending operations in Ukraine. Support under the Ukraine Investment Framework should be implemented in indirect management, notably drawing on the financial and technical capacities of international financial institutions and European development finance institutions, including their participation to the risk linked to investments with their own resources. Given the scale of recovery and reconstruction investments in Ukraine that will require risk-sharing, it is necessary for the Union to establish a dedicated guarantee capacity, the Ukraine Guarantee. Operations covered by the Ukraine Guarantee will be implemented in accordance with Article 208(4) of Regulation (EU, Euratom) 2018/1046. Export credit agencies and other financial institutions providing trade facilitation support may act as financial intermediaries. In implementing and managing the Ukraine Guarantee, the Commission should ensure close coordination with support implemented in the framework of the European Fund for Sustainable Development Plus established under Regulation (EU) 2021/947.

(84) The flexibility of the support under the Facility should be enhanced by providing for flexible implementation of the Ukraine Guarantee, which might be granted gradually. It is appropriate to derogate from Article 211(2), second sentence, of the second subparagraph of Regulation (EU, Euratom) 2018/1046 to allow the constitution of provisioning until 31 December 2027 to be equal to the amount of provisioning corresponding to the guarantee granted instead of the amount of global provisioning. As part of the derogation, it should also be possible to constitute the provisioning gradually to reflect the progress in selection and implementation of the financing and investment operations supporting the objectives of the Facility, instead of reflecting the financial statement referred to in Article 211(2), second sentence, of the second subparagraph of Regulation (EU, Euratom) 2018/1046.

(85) In order to efficiently use the funds under this pillar, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of amending the provisioning rate for the Ukraine guarantee. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council.

(85a) To facilitate the private investment and the development of small and medium businesses, it is necessary to dedicate a portion of the funds backed by the Ukraine Guarantee to start-ups, Small and Medium-sized Enterprises (SMEs), as defined in Article 2 of the Annex to Recommendation 2003/361/EC, and to report and track the allocation of such portion of funds.

(86) Under pillar III of the Facility, support should mainly aim at progressively aligning to Union rules, standards, policies and practices (‘acquis’) with a view to future Union membership, thereby contributing to the implementation of the Ukraine Plan. Relevant recommendations of international bodies and regional alliances, such as the Council of Europe and the Venice Commission should also be taken into account in this process. Support should also aim at strengthening stakeholders, including democratic institutions, courts, social partners, civil society organisations and local authorities’ capacities as well as the capacity building of civil society actors including in their public scrutiny role.

(87a) Whereas, in accordance with Regulation (EU) 2017/1939, the EPPO is competent in respect of the criminal offences affecting the financial interests of the Union, even if the main criminal conduct takes place outside the Union, subject to extraterritorial jurisdiction of a participating EPPO Member State over an offence affecting the financial interests of the Union, it is essential, in accordance with Article 24(1) of that Regulation, that the Commission, the Audit Board and OLAF report to the EPPO, without undue delay, any criminal conduct affecting the funds awarded under this Regulation, with a view to EPPO assessing its competence and, if appropriate, initiating an investigation. It is furthermore essential that Ukrainian competent authorities treat, without delay, mutual legal assistance requests and extradition requests issued by EPPO and Member States’ competent authorities in relation to these funds, in accordance with the relevant instruments concerning international cooperation in criminal matters.

(88) In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, the European Anti-Fraud Office (OLAF) should be in a position to carry out administrative investigations, including on-the-spot checks and inspections, with a view to detecting and establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union and to reporting any criminal conduct to the EPPO, in accordance with Article 24(1) of Regulation (EU) 2017/1939.

(89) In accordance with Regulation (EU, Euratom) 2018/1046, the necessary rights and access should be granted to the Commission, the European Parliament, OLAF, the European Court of Auditors and, where applicable the European Public Prosecutor’s Office (EPPO) where relevant, including from third parties involved in the implementation of Union funds. Ukraine should also use the Early Detection and Exclusion System and report irregularities in relation to the use of the funds to the Commission.

(90) The reinforcement of internal control systems, including ex-ante controls, the fight against any forms of corruption, nepotism, favouritism or fraud, the promotion of transparency, good administration, and efficient public financial management, and verification by an independent external auditor, are important reform priorities for Ukraine and increase the legitimacy of support for Ukraine and should be supported by the Facility.

(91) The Commission should ensure that the financial interests of the Union are effectively protected under the Facility. To this end, an independent Audit Board should be set up to provide the Commission with information on possible mismanagement of funds and guarantee that a declaration of assurance is obtained through an independent external audit. The Audit Board should be subject to the reporting obligations to EPPO, in accordance with Article 24(1) of Regulation (EU) 2017/1939. Such information should be made available to OLAF, EPPO and where appropriate to the relevant Ukrainian authorities, in particular the Accounting Chamber of the Verkhovna Rada. The Commission, with the assistance of the Union delegation, should be entitled to perform regular checks on how Ukraine implements funds along the whole project life cycle. The Commission should be provided with sufficient funding and human resources to perform the audit and checks. The Audit Board should ensure regular dialogue and cooperation with the European Court of Auditors.

(92) While it is primarily the responsibility of Ukraine to ensure that the Facility is implemented in compliance with applicable standards, taking into account the principle of proportionality and the specific conditions under which the Facility will operate, the Commission should be able to receive sufficient assurance from Ukraine in that regard. To that end, Ukraine should commit in the Plan to improve its current management and control system and to recovering amounts misused. Ukraine should also commit in the Plan to improve detection, investigation and prosecution of criminal offences affecting the funds provided under the Facility. In that regard, Ukraine should commit to ensure that the competent Ukrainian authorities would treat, without delay, mutual legal assistance requests and extradition requests issued by the EPPO and Member States’ competent authorities. Ukraine should establish a monitoring system feeding into an annual progress report. Ukraine should collect data and information allowing the prevention, detection and correction of irregularities, fraud, corruption and conflicts of interests, and allowing to effectively investigate, prosecute and bring to judgment the perpetrators of, and accomplices to, criminal offences affecting the funds provided under the Facility. The framework agreement and the financing and loan agreements should provide for the obligations of Ukraine to ensure the collection of, and access to, adequate data and information on persons and entities receiving funding for the implementation of measures of the Ukraine Plan. The framework agreement, the financing agreement and the loan agreement should be made available to the European Parliament, the Council and the Verkhovna Rada.

(93) The Union financial interests should also be protected when the funds are implemented in direct management through grants and procurement and indirect management with pillar assessed entities, in particular under the second and third pillar of the Facility.

(94) Work programmes should be adopted to implement the assistance under the Facility.

(95) The communication capacities of Ukraine should be enhanced in order to ensure existence of strong and free pluralistic media and to promote understanding of Union values and the benefits and obligations of potential Union membership, while addressing disinformation, foreign information manipulation and interference. Visibility of the Union funding ▌also needs to be ensured.

(96) The Commission should ensure clear monitoring and evaluation mechanisms are in place in order to provide effective accountability and transparency in implementing the Union budget, and to ensure effective assessment of progress towards the achievement of this Regulation’s objectives.

(97) The Commission should assess each year the implementation of support under the Ukraine Facility. It should allow the Committee established by this Regulation to have adequate information to assist the Commission. This information should also be made available to the European Parliament and the Council. For the effective monitoring of implementation, Ukraine should report once a year in an annual progress report on the implementation. Such reports prepared by the government should be appropriately reflected in the Ukraine Plan. Proportionate reporting requirements should be imposed on recipients of Union funding implemented under the second and third pillars of the Facility.

(98) In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council .

(99) The Commission will duly take into account Council decision 2010/427/EU and the role of the EEAS where appropriate, and in particular when monitoring the fulfilment of the precondition for Union support, in its assessment of the Ukraine plan and while gathering advice on the Ukraine investment framework.

(100) Since the objectives of this Regulation cannot be sufficiently achieved by the Member States but can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives.

(101) In order to ensure continuity in providing support in the relevant policy area, this Regulation should enter into force as a matter of urgency on the day following that of its publication in the Official Journal of the European Union,

HAVE ADOPTED THIS REGULATION:

General provisions

1. This Regulation establishes the Ukraine Facility (the ‘Facility’).

It lays down the objectives of the Facility, its financing, the budget for the period 2024-2027, the forms of Union funding under it and the rules for providing such funding.

2. The Facility shall provide assistance to Ukraine under the following three pillars:

(a) Pillar I: financial support to be provided to Ukraine for the delivery of reforms and investments to implement the Ukraine Plan as well as to maintain macro-financial stability of the country, as set out in Chapter III;

(b) Pillar II: a specific Ukraine Investment Framework to support investments and provide access to finance as set out in Chapter IV;

(c) Pillar III: technical assistance and related support to Ukraine to design and implement EU accession-related reforms and to foster Ukraine’s administrative capacity, as well as other relevant activities, as set out in Chapter V.

For the purposes of this Regulation, the following definitions apply:

1. ‘Framework agreement’ means an arrangement concluded between the Commission and Ukraine laying down the principles of the financial cooperation between Ukraine and the Commission under this Regulation.

2. ‘Measures’ means reforms and investments under the Ukraine Plan set out in Chapter III.

3. ‘Conditions’ means qualitative or quantitative steps relating to ensuring the maintenance of economic and financial stability or relating to the implementation of the reforms and investments set out in the Ukraine Plan set out in Chapter III.

4. ‘Blending operation’ means an operation supported by the Union budget that combines non-repayable forms of support or repayable forms of support or both, from the Union budget with repayable forms of support from development or other public finance institutions, or from commercial finance institutions and investors.

1. The general objectives of the Facility shall be to support Ukraine to:

(a) address the social, economic and environmental and psychological consequences of Russia's war of aggression, thereby contributing to the recovery, reconstruction, restoration and modernisation of the country and to the post-war recovery of Ukrainian society;

(b) foster democratic, social, economic and environmental and territorial cohesion and resilience and progressive integration into the Union and global economy and markets and upward economic, social and environmental convergence towards EU standards;

(ba) improve access to capital, including through advancing the institutional banking and insurance framework, to strengthen entrepreneurial activity and advanced research and development;

(c) provide additional support for Ukraine in adopting and implementing the political, institutional, legal, administrative, social and economic reforms required, to progressively align to Union rules, values, standards, policies and practices (‘acquis’) with a view to future Union membership, thereby contributing to mutual stability, security, peace, prosperity and sustainability.

2. The specific objectives of the Facility shall include:

(a) help maintain the macro-financial stability of the country and ease Ukraine’s external and internal financing constraints, in particular by providing temporary payment support, including for recurring expenses, as part of macro-economic assistance to ensure fiscal stability and the continued functioning of the Ukrainian State;

(b) rebuild and modernise infrastructure damaged by the war, such as energy infrastructure, water systems, internal and cross-border transport networks including rail, roads and bridges and border crossing points, educational and cultural infrastructure, and foster modern, improved and resilient infrastructures; restore food production capacities; help address social and health challenges and, improve and strengthen the social care systems and their accessibility, including with regard to psychological and psychosocial rehabilitation, in particular for specific groups affected by the war, such as veterans, Internally Displaced Persons, single parents, war widows and widowers, orphans, children, especially those without parental care, including children in or from institutions, persons with disabilities, people with long-term health conditions inflicted by the war, minorities, young and elderly people, and other persons at-risk;

(ba) strengthen cyber security and defence as well as resilience against disinformation, foreign information manipulation and interference; contribute to the demining and decontamination effort as enablers of recovery and reconstruction work;

(c) foster the transition to a sustainable , climate neutral and inclusive economy and a stable investment environment; support the integration of Ukraine into the Union’s Single Market; repair, rebuild and improve social infrastructure, such as housing, social, sports, youth and healthcare facilities, with a specific emphasis on trauma care, schools and higher education institutions considering local security requirements and research infrastructure; strengthen economic and social development and inclusion, with particular attention to women and girls, as well as youth, including through quality education, training, reskilling and upskilling, exchange programmes for students, researchers and public servants, and employment policies, including for researchers;

(ca) support culture and cultural heritage; strengthen strategic economic sectors; foster an institutional framework for investment and competition to enable private citizens, micro-businesses, start-ups, and small and medium-sized business to develop modern and competitive products and services, increasing Ukraine’s capacity to sustainably process its natural resources and market value-add products; support for sustainable agriculture and rural development, aquaculture and fisheries; restructure Ukraine’s financial markets, including banking sector and capital markets, improving the access to loans and insurance coverage; increase domestic revenue mobilisation; strengthen Ukraine’s ability to trade; take steps into reorienting the economy of Ukraine from a resource-centric model to a competitive framework akin to Member States’ model, diversifying and transitioning away from a heavy reliance on natural resources;

(d) further strengthen the rule of law, democracy, the respect of human rights and fundamental freedoms, including through strengthening democratic institutions, in particular the Verkhovna Rada, as well as regional and municipal representative bodies, and their powers of oversight and inquiry over the distribution of and access to public funds; promote an independent judiciary, reinforced security and strengthen the fight against fraud, corruption, and high level corruption, organised crime, favouritism, oligarchic structures and money laundering, aggressive tax planning, tax avoidance, tax evasion and tax fraud, and illicit firearms trafficking; fully abide by the principles of a free market economy characterized by free and undistorted competition that bars all anti-competitive practices; strengthen compliance with international law; strengthen freedom and independence of media and academic freedom as well as an enabling environment for civil society; foster social dialogue and civil society involvement; promote non-discrimination and tolerance, to ensure and strengthen respect for the rights of persons belonging to all minorities such as ethnic, religious, LGBTI, and the promotion of gender equality, gender mainstreaming and the overall empowerment of women and girls, as well as, the rights of children and persons with disabilities; reinforce the effectiveness of public administration, ensure access to information and the participation of civil society and youth in decision making processes and public scrutiny, and support transparency, structural reforms and good governance at all levels, including in the areas of public financial management and public procurement and State aid; support initiatives and bodies and organisations involved in supporting and enforcing democracy, international justice and anti-corruption efforts in Ukraine;

(da) create the conditions for Ukrainian Internally Displaced Persons and persons under temporary protection to come back home and get reintegration into the social and economic life of the country; create conditions for the reintegration of children and youth, including through the educational programmes supported by the Union so as to fill where necessary the educational gap resulting from the war circumstances; address the needs of young war veterans by providing opportunities for social integration and tackling war-caused traumas;

(e) develop and strengthen a sustainable green transition in all economic sectors, including Ukraine’s transition towards climate neutrality, in accordance with the Paris Agreement; improve the awareness of and fight against environmental crime through the full implementation of the Kyiv Protocol on Pollutant Release and Transfer Registers and ensuring compliance with nature protection laws; promote the digital transformation as an enabler for sustainable development and inclusive growth; ensure ecological rehabilitation following the environmental damages inflicted by military operations and contribute to decontamination, the demining effort and clearance of other explosive remnants of war as well as oil or chemical pollution caused by military activity; contribute to the efforts to document, map and measure the damage and related consequences;

(f) support political and administrative decentralisation and local development, especially by ensuring meaningful consultation and a level playing field for all levels of government when accessing funds via open, fair, neutral, and transparent procedures;

(fa) support cross-border cooperation with the Member States bordering with Ukraine in the areas such as trade, environment protection and fight against international crime.

1. Cooperation under the Facility shall be based on and shall promote the development effectiveness principles, where applicable, across all modalities, namely ownership of development priorities by Ukraine, a focus on results, inclusive development partnerships, transparency and mutual accountability. The cooperation shall be needs-based and based on the effective and efficient allocation of resources and use of those resources. The Facility shall avoid the excessive sectoral or geographical concentration of resource allocation and use of resources and ensure an appropriate geographical balance of projects.

2. Support from the Facility shall be additional to the support provided under other Union programmes and instruments. Activities eligible for funding under this Regulation may receive support from other Union programmes and instruments provided that such support does not cover the same cost.

3. In order to promote the complementarity and efficiency of their action and initiative, the Commission and the Member States shall cooperate and shall strive to avoid duplication between assistance under this Regulation and other assistance provided by the Union, the Member States, third countries, multilateral and regional organisations and entities, such as international organisations and the relevant International Financial Institutions, agencies and non-Union donors, in line with the established principles for strengthening operational coordination in the field of external assistance, including through enhanced coordination with Member States at local level and through the harmonisation of policies and procedures, in particular the international principles on development effectiveness.

4. Activities under the Facility shall comply, to the extent possible in a war-torn country, with the climate and environmental standards of the Union. Those activities shall mainstream climate change mitigation and adaptation, environmental protection, and conservation, human rights, democracy, gender equality and, where relevant, disaster risk reduction and energy infrastructure safety, and shall support progress towards the Sustainable Development Goals, promoting integrated actions that can create co-benefits and meet multiple objectives in a coherent way. They shall avoid stranded assets, be compatible with the principles of ‘do no harm’, to the extent possible, as well as with the sustainability mainstreaming approach underpinning the European Green Deal and shall be also guided by the ‘leaving no one behind” principle. The Commission shall be empowered to adopt a delegated act to develop a guidance for each of those principles and a methodology for supporting Ukraine in the preparation of the Ukraine Plan.

5. The Facility shall not support activities or measures which are incompatible with Ukraine’s National Energy and Climate Plan, if available, with Ukraine’s Nationally Determined Contribution under the Paris Agreement, or that promote investments in fossil fuels, or that cause significant adverse effects on the environment or the climate or biodiversity, taking into account the need to rebuild and modernise infrastructure and rehabilitate nature damaged by the war in a resilient way, and they are accompanied, where relevant, by appropriate measures to avoid, prevent or reduce and, if possible, offset these effects.

6. In line with the EU partnership Principle and EU Code of Conduct, the Commission shall guarantee that relevant stakeholders, including the Verkhovna Rada, local and regional authorities, social partners and civil society organisations, are duly and fairly consulted and have timely access to relevant information to allow them to meaningfully participate in shaping the design, implementation of activities eligible for funding under this Facility, and in the related monitoring, scrutiny and evaluation processes. Such involvement shall seek to represent the pluralism of the Ukrainian society and business community and ensure the inclusiveness of different communities in Ukraine.

The Commission shall give specific attention to the participation of women in consultations, as well as the inclusion of vulnerable groups, such as war veterans and persons with disabilities, in such consultations. The Commission shall in particular promote the involvement of the Verkhovna Rada, as well as regional or local representative bodies and public authorities, in accordance with the multi-level governance principle and taking into account a bottom-up approach. The Commission shall ensure that the Verkhovna Rada is meaningfully consulted on the entirety of the Ukraine Plan before its submission to the Commission and is able to fully fulfil sufficient inquiry and monitoring duties during and after the duration of the Facility.

The Commission shall continuously assess the degree to which the involvement of stakeholders is fair and representative of the pluralism of interests in Ukrainian society and business communities, in particular by assessing whether stakeholders of different sizes and with differing or opposing interests have been appropriately consulted. The Commission shall encourage coordination among the relevant stakeholders. The Commission shall ensure that civil society in Ukraine is able to directly report any irregularities they may detect to the Commission via appropriate standing channels and platforms.

7. The Commission, in cooperation with the Member States and Ukraine, shall ensure the implementation of Union commitments to increased transparency and accountability in the delivery of assistance, including by promoting the full implementation of the Aarhus Convention and the implementation and reinforcement of internal control systems and anti-fraud policies. The Commission shall make information on the volume and allocation of assistance publicly available through a single webportal, and shall ensure that data are up-to-date, easily accessible, available in machine-readable format and comparable. The names or legal identities of the 2 000 largest final beneficiaries and all final beneficiaries that received cumulative amounts higher than EUR 100 000 shall be published.