The United States and other large Western economies have agreed to issue About $50 billion in loans Russia will repay Ukraine’s debt with interest and profits from nearly $300 billion in assets frozen by the West.
As Ukraine is forced to sell weapons and equipment and begin rebuilding damaged infrastructure, the government has pledged much-needed financial support Some state-owned assets As the momentum of the war on its territory turned in favor of its enemy Russia, Russia’s military launched a full-scale invasion in 2022.
President Biden has agreed to have the United States shoulder the entire loan, but U.S. officials have said they want allies, including European Union members, to provide some upfront funding.
The loan would eventually be repaid through interest and profits earned from frozen Russian assets used as collateral.
At a press conference in Italy with Ukrainian President Volodymyr Zelensky on Thursday, G7 SummitBiden said the agreement was another reminder to Russian President Vladimir Putin: “We are not backing down. In fact, we are standing united against this illegal aggression.”
Treasury Secretary Janet L. Yellen, one of the architects of the plan, said in New York on Thursday that profits from Russian assets would provide additional aid to Ukraine in the future, making it harder for Mr. Putin to wait out a Western exit.
“This is the first payment, and there will be more if necessary,” Yellen said. “In a sense, we are asking Russia to help pay for the damage it has done.”
European Commission President Ursula von der Leyen said on Thursday that all members of the Group of Seven – the world’s wealthiest democracies – would take part, including the EU itself, but the level of involvement of each member state was being determined by finance ministers and other technical experts.
A senior European official, speaking on condition of anonymity in accordance with normal diplomatic ground rules, said the EU might provide up to half of the funding, while U.S. officials said Washington would make up the remaining difference.
The problem is complicated because if Russian assets are unfrozen or interest rates fall sharply, the interest and profits may not be enough to repay the loans, and a burden-sharing agreement with other countries will be needed to guarantee repayment.
The idea of using the assets for lending came from the United States because of the need to get the money to Ukraine quickly and before the November election, which could return Donald J. Trump, who has been critical of aid to Ukraine, to the presidency.
The EU has agreed to use Annual profit and interest on assets only — about $3 billion — to aid Ukraine, but once the question of who would guarantee the loan appeared to be resolved, China accepted the essence of the U.S. plan.
EU officials said the money is expected to be disbursed through various channels rather than directly to Ukraine, and will be used for Ukraine’s urgent military, budgetary and reconstruction needs.
Ellen Rappeport and Tim Bowker Contributed reporting.
