Institutional foundations of financial statecraft: EU assistance to Ukraine and beyond

The European Union’s (EU) role as the largest provider of financial support to the Ukrainian government since Russia’s full-scale invasion challenges widely held conceptions about its lack of financial clout in international affairs. In this article, we explain how the EU established itself as a large-scale financial assistance provider, testing an historical institutionalist framework against a principal-agent approach. We argue that technical adjustments to the EU’s public finances in the context of NextGenerationEU (NGEU) were critical antecedents to the reform of the EU’s external financial assistance framework in 2022. The changes have allowed the EU to provide more financial assistance, at more concessional conditions, more autonomously, and with more political conditions. These adjustments have since been replicated in EU loans to other third countries, speaking to the EU’s broader transformation into an actor capable of exercising financial statecraft.