G7 Agrees to Give Ukraine $50 Billion Loan Amid War vs. Russia

By Jose Resurreccion

Jun 14, 2024 02:22 AM EDT

G7 Agrees to Give Ukraine $50 Billion Loan Amid War vs. Russia
European Council President Charles Michel, German Chancellor Olaf Scholz, Canadian Prime Minister Justin Trudeau, French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni, U.S. President Joe Biden, Japanese Prime Minister Fumio Kishida, British Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen gather to watch a parachute drop at San Domenico Golf Club during day one of the 50th G7 summit on June 13, 2024 in Fasano, Italy.
(Photo : Christopher Furlong/Getty Images)

The leaders of the Group of Seven (G7), the world's wealthiest nations, have agreed Thursday (June 13) to create a $50 billion loan to help Ukraine in its fight to survive Russia's onslaught, with interest earned on profits from Russia's frozen central bank assets used as collateral.

The Associated Press reported that the deal was made while the leaders of the United States, United Kingdom, Canada, Germany, France, Japan, and host nation Italy were in a summit. 

US and French officials spoke about the matter, on the condition of anonymity, that the loan could reach Kyiv before the end of the year.

US President Joe Biden told reporters at a news conference that the move was part of a "historic agreement," while his Ukrainian counterpart, Volodymyr Zelenskiy, said that the loan coming from Russia's frozen assets was a "vital step forward" in providing sustainable support for his country in winning the war. 

Loan from Frozen Russian Assets

The New York Times reported that most of the money would be underwritten by the US government, backed by profits being earned on an estimated amount of $260 billion in immobilized Russian assets, a majority of it held by European Union nations. 

A French official said that the loan could be "topped up" with European money or donations from other countries.

The US official, on the other hand, added that the G7 leaders would issue an official statement on Friday (June 14), which would leave the door open to trying to confiscate entire swaths of Russian assets. 

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Complications on Giving Ukraine the Loan

However, giving the loan to Ukraine is not easy. 

Officials from several countries have debated on the legality of confiscating Russian assets and sending it to Ukraine.

The US and its allies immediately froze all Russian assets they could access when the Kremlin decided to invade Ukraine in February 2022. While they still belong to Russia despite being immobilized, it could not be accessed. 

While governments could easily freeze property or funds, turning them into forfeited assets that could be used for Ukraine's benefit would require more legal processes.

How Ukraine Could Use the Loan

The unnamed US official said that, once in possession of the loan, the Ukrainian government could spend it in several areas of its national life, from military, economic, and humanitarian needs to reconstruction.

According to the World Bank, its latest estimates for the cost for Ukraine's reconstruction and recovery is at $486 billion over the next 10 years. 

Contingencies if Russia's Assets Fail

On the other hand, if Russia regained control of its frozen assets, or if the immobilized funds were not generating enough interest to pay back the loan, the French official said that "burden-sharing" would become the issue that would be discussed. 

Center for Strategic and International Studies' Europe, Russia, and Eurasia Program director Max Bergmann said last week that there were worries among European finance ministers that their countries would have to pick up the slack if Ukraine defaults. 

Meanwhile, the Chinese Embassy in Washington's spokesperson Liu Pengyu told the AP that the US was "fueling the fight and inciting confrontation."

READ MORE: Ukraine to Receive Mirage 2000 Fighter Jets from France, Macron Confirms

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