Washington — The US finalised its $20bn portion of a long-awaited $50bn (about R886bn) loan to Ukraine backed by frozen Russian assets on Wednesday, announcing plans to make funds available by year-end for economic and military aid.
Treasury secretary Janet Yellen and Ukrainian finance minister Serhiy Marchenko signed an agreement for a US loan commitment of $20bn that be placed alongside a separate $20bn EU commitment and $10bn to be split by Group of Seven (G7) allies Britain, Japan and Canada.
The loan will be repaid with the earnings from more than $300bn in sovereign Russian assets immobilised 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 $10bn of the loan funds available for military aid, a plan that would require the approval of Congress, White House National Security Council (NSC) officials said.
It doesn’t need Congress’s approval to make the remaining $10bn available by December, an NSC official said. “Either way, the US will provide $20bn in support to Ukraine through this effort, whether it’s split between economic and military support or provided entirely via economic assistance,” the official added.
US funds for non-military aid would be transferred to the World Bank Trust Fund, which has agreed to administer the loan, the official said.
A person familiar with that arrangement said the bank would manage sovereign loan contributions from the US, Japan and Canada in the same way it manages a climate loss and damage fund.
Ukrainian President Volodymyr Zelensky thanked Biden and Yellen in a post on X for making the 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 layperson, that the only thing ‘significant’ about this case is theft raised to the status of state policy,” it said in a statement on Telegram.
UK, Canada unveils contributions
G7 finance ministers and central bank governors were due to meet this week on the sidelines of IMF and World Bank annual meetings in Washington. The group comprises US, Japan, Germany, France, Britain, Italy and Canada.
Britain separately announced it would contribute £2.26bn (about R52bn) to the G7 loan, saying its funds would help Ukraine buy weapons and rebuild damaged infrastructure.
Defence minister John Healey said the money would be solely for Ukraine’s military and could be used to help develop drones capable of travelling further than some long-range missiles.
Asked if the UK would allow Ukraine to use the money to buy British-made Storm Shadow missiles to hit targets deep inside Russia, Healey said: “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$5bn (about R64bn) to the G7 loan package.
Election timing
The loan plan was endorsed by G7 leaders in Italy in June, but was delayed by US officials’ insistence on assurances the Russian assets would remain frozen over the long term to provide a certain stream of repayment revenue.
Yellen was keen to avoid a situation where US — or Ukrainian — taxpayers would be on the hook to repay the loans if the frozen assets were turned back over to Russia as part of a truce agreement.
That would have required the EU to lengthen the interval for reaffirming its sanctions programme, including the asset freeze, from every six months to every three years. Hungary refused to agree to that change, saying it wanted to wait until after the US presidential election on November 5.
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 US Treasury’s pivot to secure the government’s agreement on the $20bn for Ukraine recognised the need to push for as big a US contribution as possible.
Yellen said on Tuesday she was confident the assets would remain 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 $20bn, the Europeans have “incentives to keep the assets immobilised until we get fully repaid.”
EU legislators on Tuesday approved the bloc’s plan to use the frozen Russian assets for the loan.
Reuters
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