(Bloomberg) --

The European Union’s lending arm reversed a four-year ban on providing financing to Turkey, pledging €500 million ($536 million) for reconstruction and recovery efforts in the country and Syria after last month’s deadly earthquakes. 

The funding is part of a €7 billion package pledged by the EU and international donors to help counter the disaster, which killed over 55,000 people. The EIB had stopped lending activities to Turkey in 2019 over its drilling off the coast of Mediterranean. 

The European Commission, which has said it will contribute €1 billion, collected the pledges at a donors’ conference of member states, international organizations and other countries in Brussels on Monday. 

About €4.3 billion will be lent to Turkey as affordable loans while €1.7 billion are grants, Turkish Foreign Minister Mevlut Cavusoglu told reporters after the event. He asked for immediate dispatch of the grants, highlighting the urgent need for shelter among other services.

Individual EU countries also announced financial aid to both countries, led by Germany which said it would double its support to €238 million.  

“It is impossible for a country, regardless of its economic situation, to cope with the magnitude of such a disaster,” Turkish President Recep Tayyip Erdogan told the conference in a video message.

Turkey’s Treasury and Finance Ministry has put the preliminary economic toll of the quakes at over $100 billion. 

Turkey Puts Economic Toll From Earthquakes at About $104 Billion

Turkey’s main fiscal office, the United Nations Development Programme and the World Bank presented their joint damage assessment at Monday’s conference. 

“You will see the Turkish government working with the World Bank, where Turkey is essentially borrowing money at concessional rates in order to finance reconstruction,” UN Development Programme Administrator Achim Steiner, who spoke at the event, told Bloomberg in an interview.

“I don’t think we can come close to meeting the needs of what has been estimated today,” he said. “There needs to be some thought given to a subsequent conference for a group of broader partners would be encouraged to step further.”

The World Bank has already pledged $1.78 billion in financial assistance, while the European Bank for Reconstruction and Development allocated as much as €1.5 billion over the next two years.

Swedish Role

The conference also brought together officials from Turkey and Sweden, which co-hosted the conference. The government in Stockholm is waiting for a green light from Ankara to join the North Atlantic Treaty Organization alongside Finland, having applied after Russia’s invasion of Ukraine last year. 

Turkey has opposed Sweden’s membership bid on grounds that the country has not addressed security concerns over Kurdish militants’ presence in the country. 

Cavusoglu said Monday Sweden’s amendment to its terrorism laws in the constitution was “a positive step but not enough.” 

NATO Edges Closer to Expansion as Finland Wins Over Holdouts 

--With assistance from Niclas Rolander.

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