Ukraine’s accession needs a different EU budget deal

Ukraine’s EU accession presents major challenges, but also significant opportunities for both sides. Simply extending existing EU budget rules to Ukraine could put considerable pressure on agricultural and cohesion funding, while failing to harness Ukraine’s economic and strategic strengths and adequately address its reconstruction needs. This Policy Brief argues for a differentiated accession settlement that better serves the interests of Ukraine and existing EU Member States.

It proposes five priorities for an EU budget deal with Ukraine:

1. A differentiated agricultural settlement: Replace conventional area-based CAP payments with enhanced investment and capacity-building support. Conditional derogations from selected EU production requirements could help Ukraine preserve its competitiveness and regain access to traditional third-country export markets, while safeguards protect sensitive EU sectors. This could also strengthen Europe's role in global food security.

2. Phased-in cohesion funding focused on European added value: Gradually expand Ukraine's access to conventional cohesion funding as reconstruction needs diminish, initially prioritising projects delivering direct benefits to both Ukraine and other Member States, particularly cross-border infrastructure and connectivity.

3. Accelerated integration into competitiveness and security programmes: Deepen Ukraine's participation in EU programmes supporting innovation, industrial competitiveness and defence, harnessing its strengths to reinforce European capabilities and strategic value chains.

4. An investment-oriented reconstruction instrument: Establish an international reconstruction and investment vehicle through a coalition of willing partners, with an indicative initial financing capacity of €100 billion. Joint borrowing and risk-sharing could mobilise investment while enabling participating countries and their businesses to benefit from Ukraine's reconstruction and future economic growth.

5. A predictable and conditional accession financing settlement: Agree on clear obligations, financing commitments and review mechanisms, providing Ukraine with a credible accession pathway and existing Member States with greater certainty over the budgetary consequences of accession.

The objective is not simply to contain the costs of accession, but to turn it into an opportunity for both sides: reducing conflicts over the distribution of limited EU funding, harnessing Ukraine's strengths for the wider Union and catalysing a more investment-oriented EU budget focused on European added value.

Download the full policy brief here.

Philipp Lausberg is a Senior Policy Analyst in the European Political Economy Programme at the European Policy Centre and leads the EPC’s EU sanctions project.

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