Ukraine is set to receive $50 billion in loans, backed by frozen Russian assets, from its Group of Seven (G7) allies, according to an announcement by the White House on Wednesday. The distribution of these funds is expected to start by the end of the year. Of the total amount, $20 billion will come from the United States, according to American officials.
Earlier this year, leaders of the world’s major democracies agreed to structure this substantial loan to aid Ukraine in its fight for survival following Russia’s invasion. The loan will be secured by profits generated from Russia’s frozen central bank assets.
Loans from immobilized Russian sovereign assets
President Joe Biden expressed that Ukraine would now receive the necessary assistance without burdening taxpayers, stating that the loans will help Ukraine in both defending and rebuilding its nation. He also emphasized that this move ensures that the perpetrators of such aggression will face consequences for the destruction they cause.
During a ceremony in Washington on Wednesday, Treasury Secretary Janet Yellen and Ukraine’s finance minister, Sergii Marchenko, formalized the agreement, ensuring that the U.S. loan will be financed through proceeds from immobilized Russian sovereign assets rather than through American taxpayers.
Yellen highlighted that allowing Ukraine to fall would embolden Russian President Vladimir Putin and put the security of NATO allies in Europe at risk, which the U.S. is bound by treaty to protect.
The remaining $30 billion of the loan will come from the European Union, the United Kingdom, Canada, Japan, and other countries.
Support for Ukraine economy and military efforts
The Biden administration plans to divide the $20 billion U.S. contribution between supporting Ukraine’s economy and military efforts. Military aid will require approval from Congress, and Defense Secretary Lloyd Austin acknowledged that it could take weeks or even months for promised weapons and equipment to reach Ukraine.
Initially, the idea of using Russia’s frozen assets to support Ukraine faced opposition from European officials who were concerned about legal and financial risks. However, after more than a year of negotiations, and following Biden’s signing of legislation in April to seize approximately $5 billion in Russian state assets held in the U.S., the plan gained traction.
In June, the G7 announced that most of the loan would be backed by profits generated from about $260 billion in frozen Russian assets, most of which are held in EU countries.
Frozen Russian central bank assets
The U.S. and its allies froze Russian central bank assets accessible to them immediately following Moscow’s invasion of Ukraine in 2022.
Questions have been raised about the timing of the loan’s release, which comes just two weeks before the U.S. presidential election between Republican Donald Trump and Democrat Kamala Harris, who hold opposing views on the Russian threat.
Defense Secretary Lloyd Austin dismissed concerns that any new administration might reverse the Biden administration’s military aid to Ukraine. He expressed confidence that the assistance would continue as planned, adding that it would be delivered according to the established timeline.
Ukraine needs $486 billion over next decade
Austin also reiterated that the Biden administration remains opposed to giving Ukraine the authority to use U.S.-provided ATACMS missiles for attacks deep inside Russia. However, the latest $800 million aid package will support Ukraine in developing drones with greater range than the ATACMS, which can strike up to 300 kilometers (185 miles).
A February report by the World Bank estimated that Ukraine will need $486 billion over the next decade for reconstruction and recovery efforts.
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