The U.S. on Wednesday finalized its $20 billion portion of a long-awaited $50 billion loan to Ukraine backed by frozen Russian assets, announcing plans to start making funds available by year-end for economic and military aid.
U.S. Treasury Secretary Janet Yellen and Ukrainian Finance Minister Serhiy Marchenko signed an agreement for a U.S. loan commitment of $20 billion, which would be placed alongside a separate $20 billion European Union commitment and $10 billion to be split by G7 allies Britain, Japan and Canada.
The loan will be repaid with the earnings from the over $300 billion in sovereign Russian assets that have been immobilized since Moscow’s armies invaded Ukraine in February 2022. The funds are mostly held in Europe.
“In other words, Ukraine can receive the assistance it needs now, without burdening taxpayers,” President Joe Biden said in a statement.
The Biden administration wants to make $10 billion of the loan funds available for military aid, a plan that would require the approval of the U.S. Congress, White House National Security Council officials told reporters.
It does not need Congress’ approval to make available the remaining $10 billion by December, an NSC official said, adding: “Either way, the U.S. will provide $20 billion in support to Ukraine through this effort, whether it’s split between economic and military support or provided entirely via economic assistance.”
The official said the U.S. funds for non-military aid would be transferred to the World Bank Trust Fund, which has agreed to administer the loan.
A person familiar with that arrangement said the bank would manage sovereign loan contributions from the U.S., Japan and Canada in the same way that it manages a climate loss and damage fund.
Ukrainian President Volodymyr Zelenskiy, in an X social media post, thanked Biden and Yellen for making the U.S. loan happen, calling it a “significant step towards supporting Ukraine’s fight for freedom and holding Russia accountable.”
The Russian embassy in Washington denounced the agreement, saying it was tantamount to theft at a state level.
“It is clear, even to a layman, that the only thing ‘significant’ about this case is theft raised to the status of state policy,” it said in a statement on Telegram.
BRITAIN, CANADA ANNOUNCE CONTRIBUTIONS
G7 finance ministers and central bank governors were due to meet this week on the sidelines of International Monetary Fund and World Bank annual meetings in Washington. The group includes the U.S., Japan, Germany, France, Britain, Italy and Canada.
Britain separately announced it would contribute $2.26 billion pounds ($2.94 billion) into the G7 loan, saying its funds would help Ukraine buy weapons and rebuild damaged infrastructure.
Defense minister John Healey said the money provided by Britain would be solely for Ukraine’s military and could be used to help develop drones capable of traveling further than some long-range missiles.
Asked if Britain would allow Ukraine to use the money to buy British-made Storm Shadow missiles to hit targets deep inside Russia, Healey told reporters: “They are developing very heavily the use of even longer-range drones. They will work with us over how they use this money, and on the weapons they most need.”
Canada’s finance ministry said on Wednesday it would provide a C$5 billion ($3.7 billion) to the G7 loan package.
ELECTION TIMING
The loan plan was endorsed by G7 leaders in Italy in June, but was delayed by U.S. officials’ insistence on assurances that the Russian assets would stay frozen long-term to provide a certain stream of repayment revenues.
Yellen was keen to avoid a situation where U.S. – or Ukrainian – taxpayers would be on the hook to pay back the loans if the frozen assets were turned back over to Russia as part of a truce agreement.
This would have required the EU to lengthen the interval for reaffirming its sanctions programs, including the asset freeze, from every six months to every three years. But Hungary refused to go along with this change, saying it wanted to wait until after the Nov. 5 U.S. presidential election.
Republican presidential candidate Donald Trump has vowed to “get out” of the Ukraine war. So rather than wait, Yellen chose to move ahead without additional EU assurances.
A source familiar with the matter said that the Treasury pivot to secure U.S. government agreement on the $20 billion for Ukraine recognized the need to push for as large a U.S. contribution as possible.
Yellen told reporters on Tuesday she felt confident that the assets would stay frozen and that it was a “secure loan.”
Those sentiments were echoed by the NSC official, who said that because of the EU commitment to lend Ukraine at least $20 billion, the Europeans have “incentives to keep the assets immobilized until we get fully repaid.” EU lawmakers on Tuesday approved the bloc’s plan to use the frozen Russian assets for the loan.
(Reuters)