The European Commission welcomed a consensus reached by G7 countries and EU on their contributions towards a loan of 45 billion euros (50 million dollars) for Ukraine, to be repaid with proceeds from frozen Russian assets. The EU’s contribution is estimated at 18 billion euros.
This financing mechanism ensures that Ukraine will continue to receive immediate support. It also creates a framework whereby Russian assets frozen in the country can be used to indirectly fund Ukraine’s rebuilding. This could mark a shift in how international communities can use sanctioned funds to support nations facing aggression.
According to the press service of European Commission, the loan can be used for budgetary, military, and reconstruction assistance to Ukraine.
“This confirms the EU and its partners in the G7 are fulfilling the promises they made during the Leaders’ Summit in Puglia, in June …. This achievement highlights the unwavering commitment by the EU and G7 to support Ukraine’s struggle for freedom, reconstruction and recovery,” said the statement.
The communique stated that “given the confirmed contributions from the G7 partners proportional to their size of economies, the EU will provide a macrofinancial lending of around EUR18 billion.”
The procedures to trigger the assistance will be finalized at the end of this year, and funds can begin flowing as early as 2025.
In October, the European Parliament backed the proposal of the European Commission to create a special Ukraine Loan Cooperation mechanism, which would allow proceeds from frozen Russian assets, as well as voluntary contributions from members states or third countries, to be used to pay back the loan to Ukraine. The EU Council then approved the decision.
The EU’s contribution towards the total amount of G7 loan may be as high as 35 billion euros but it will likely be less. The 35 billion figure was chosen because there was initial uncertainty regarding the size of contributions from other partners, especially the United States.
The United States confirmed in October that they would provide 20 billion dollars as a loan. This was the maximum amount expected. Until recently, this amount had been in doubt due to the EU’s failure to implement a safety net against a sudden lifting of sanctions. Washington wanted it, but Hungary had refused to do so.
The new loan will be in addition to the 50 billion euro multi-year EU financial aid program for Ukraine, approved last winter (Ukraine Facility), that Ukraine receives in installments as part of the obligation to implement its approved reform plan.
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