The European Union (EU) is poised to contribute more than half of the $50 billion loan pledged to Ukraine by the G7 nations.
This news comes from a statement by Italian Economy Minister Giancarlo Giorgetti, following a meeting of European finance ministers in Luxembourg.
Giorgetti, citing Reuters, indicated the EU’s share would fall between 50% and 60% of the total loan amount. The remaining portion would be financed by the other G7 members: Canada, France, Germany, Japan, the United Kingdom, and the United States. Discussions on the specific contributions from these countries are expected to begin soon.
This loan for Ukraine is secured by the projected income generated from frozen Russian assets. The G7 leaders, during their recent summit in Italy, reached a “political agreement” to utilize these frozen assets as collateral for the Ukrainian loan.
Loan Secured by Frozen Assets
The $50 billion loan will be guaranteed by the interest earned on approximately €300 billion (around $330 billion) worth of Russian assets frozen by the EU and G7 nations in response to the Ukraine invasion. The EU holds the lion’s share of these frozen assets, with an estimated €200 billion (around $220 billion) primarily deposited as securities and cash in Belgium.
EU Plans for Frozen Assets
Last month, the EU agreed to utilize the income from these frozen assets to finance military aid for Ukraine. This decision has been met with strong criticism from Russia, who view it as “theft” and “banditry.” Additionally, Russia warns it could lead to protracted legal battles and undermine the EU’s reputation as a secure investment destination.
President Biden has been a strong advocate for this initiative, working closely with G7 allies to ensure a unified response to Russian aggression. This move aims to provide Ukraine with the necessary financial resources without further burdening taxpayers in G7 countries, addressing both military and economic needs.
Western nations, including Ukraine, have expressed interest in directly confiscating frozen Russian assets to support reconstruction efforts and further military aid. However, legal, geopolitical, and financial hurdles currently stand in the way. Potential disruptions to international financial markets and currency devaluation within Western countries are some of the concerns surrounding such a move.
