The US is ready to provide Ukraine with a $50 billion loan at the expense of profits from frozen Russian assets, if the European Union (EU) extends sanctions against Russia indefinitely.
This is written by the Financial Times with reference to a document that will be discussed today at an online meeting of EU finance ministers.
Washington wants the EU to extend sanctions against Russian state assets, which expire every six months, until the end of the war in Ukraine. This is necessary so that the United States does not remain solely responsible for payments on loans granted to Ukraine.
However, any changes in the sanctions regime of the European Union require the approval of the leaders of all member states, in particular the Prime Minister of Hungary Viktor Orbán, who sharply defends his right of veto over sanctions.
The main option under consideration is a US plan to give Ukraine a loan, possibly with other G7 countries, roughly equal to the estimated windfall profits from the hundreds of billions of dollars in frozen Russian assets held in the West. Diplomats say that this amount can reach $50 billion.
The US insists on reaching an agreement before the G7 summit, which will be held in Italy on June 13-15. It is expected that the main topic of the meeting will be the financial support of Ukraine, in particular at the expense of frozen Russian assets. At the same time, the details of the loan, including the repayment period, the interest rate, whether it will be provided directly or through an intermediary, for example, through the World Bank, have not yet been determined.
According to the publication, the United States can issue such a loan only if the European Union allocates for its repayment the profit from Russian assets stored in EU countries, and these assets themselves will remain frozen "until Russia agrees to pay for the damage caused to Ukraine."
Such collateral is of crucial importance, because most of the Russian assets are kept in the Belgian central depository Euroclear. These assets generate approximately €3 billion in revenue per year. If the profits are not enough to cover the required payments, or if the EU fails to agree on an extension of the sanctions, the responsibility will potentially fall on the US. Because of this, the governments of some EU countries fear the potential financial consequences of providing such a loan.
Another option involves the EU, along with the other G7 countries, effectively providing Ukraine with bilateral loans backed by profits from Russian assets frozen in their own jurisdictions.
- The value of frozen Russian sovereign assets in the EU is almost €211 billion. In total, the European Union, the G7 countries and Australia have frozen approximately €260 billion in securities and cash.