The US and the other large G7 economies agreed on Thursday on a plan to give Ukraine a $50 billion loan to help it buy weapons and begin to rebuild damaged infrastructure at a crucial moment in the war, when Russia has the momentum on the battlefield.
The loan is expected to be repaid using interest earned on $300 billion in frozen Russian assets, which are mostly in European banks. Announced at a G7 summit in southern Italy, the loan will be underwritten by the US, but American officials say they expect their allies, including members of the European Union, to provide some of the funds. The promise of much-needed financial support comes as Ukraine has been forced to sell some state assets.
The president of the European Commission, Ursula von der Leyen, said that all the G7 member countries would participate, including the EU itself, but the extent of each country’s participation was being worked out by finance ministers and other technical experts. The EU might contribute up to half the money, a senior European official said, speaking anonymously, while American officials said that Washington would make up any remaining difference.
The issue is complicated because if the Russian assets are unfrozen or if interest rates drop significantly, then the interest and profits may not cover the loan, requiring a burden-sharing arrangement with other countries to guarantee repayment. The idea of a loan using the assets is an American one, given the need to get money to Ukraine quickly and before the Nov US election that could return Donald Trump, who has been more critical of aid to Ukraine, to the presidency.
Russia regards attempts by the West to take income from its frozen assets as criminal, foreign ministry spokeswoman Maria Zakharova said Thursday, adding that Moscow’s response would be very painful for the European Union.
Many of the G7 heads of state are struggling at home but determined to make a difference on the world stage as they also seek to counter China’s economic ambitions. “There is a lot of work to be done…,” Italian PM Giorgia Meloni told her G7 guests as their talks started in a luxury hotel resort in Puglia region.
The loan is expected to be repaid using interest earned on $300 billion in frozen Russian assets, which are mostly in European banks. Announced at a G7 summit in southern Italy, the loan will be underwritten by the US, but American officials say they expect their allies, including members of the European Union, to provide some of the funds. The promise of much-needed financial support comes as Ukraine has been forced to sell some state assets.
The president of the European Commission, Ursula von der Leyen, said that all the G7 member countries would participate, including the EU itself, but the extent of each country’s participation was being worked out by finance ministers and other technical experts. The EU might contribute up to half the money, a senior European official said, speaking anonymously, while American officials said that Washington would make up any remaining difference.
The issue is complicated because if the Russian assets are unfrozen or if interest rates drop significantly, then the interest and profits may not cover the loan, requiring a burden-sharing arrangement with other countries to guarantee repayment. The idea of a loan using the assets is an American one, given the need to get money to Ukraine quickly and before the Nov US election that could return Donald Trump, who has been more critical of aid to Ukraine, to the presidency.
Russia regards attempts by the West to take income from its frozen assets as criminal, foreign ministry spokeswoman Maria Zakharova said Thursday, adding that Moscow’s response would be very painful for the European Union.
Many of the G7 heads of state are struggling at home but determined to make a difference on the world stage as they also seek to counter China’s economic ambitions. “There is a lot of work to be done…,” Italian PM Giorgia Meloni told her G7 guests as their talks started in a luxury hotel resort in Puglia region.