As part of a G7 initiative to fund Kyiv’s defense against Russian aggression, EU countries approved a loan to Ukraine of up to €35bn before the year ends.
According to sources familiar with the issue, a majority of EU Ambassadors backed the issuance on Wednesday of a loan that would be guaranteed by the EU’s budget. After months of disagreements over how to structure the G7’s $50bn plan to support Ukraine, the decision was made.
Ursula von der Leyen announced the option to raise money from the EU budget when she visited Ukraine last month. This was to avoid objections by countries that were opposed to more aid for Kyiv.
According to the G7 plan the entire $50bn loan would be repaid from profits of Russian state assets that were frozen in the West in response Moscow’s full scale invasion of Ukraine. These assets, totalling more than €200bn, are frozen in the EU.
Uncertainty remains about whether the US can join the G7 and reduce the EU share of €35bn. The UK, Canada, and Japan also participate in the G7 fund-raising effort.
Washington’s participation in the G7 Loan was based on EU increasing the duration of its sanctions regime to 36 months, in order to ensure that Russian assets remain frozen and to put the repayment scheme in a more predictable position.
The US official stated that “the scale of our involvement depends on the EU’s assurances” that Russian reserves would remain immobilised until Moscow paid for the destruction in Ukraine.
Two people familiar with this decision said that Hungary and Slovakia blocked the change in the EU sanctions regime on Wednesday, which cast doubt on the participation of the US.
Leaders of Hungary and Slovakia expressed their support for Donald Trump, the Republican candidate and former US President. Trump said that, if he were to return to the White House as president, he would stop aiding Ukraine.
Malta abstained from the €35bn Loan, raising concerns about its neutrality. However, the decision was not required to be unanimous. The European Parliament will need to approve this loan as well later in the month.
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