US Offers $50 Billion Ukraine Loan Tied to Frozen Russian Assets, Pending EU Sanctions Extension

The Financial Times reports the US is contemplating extending a $50 billion loan to Ukraine using profits from frozen Russian assets. This proposal is contingent upon the European Union (EU) extending sanctions against Russia indefinitely, requiring unanimous approval from member states.

However, potential hurdles exist, notably the stance of Hungarian Prime Minister Viktor Orbán, who wields veto power over EU sanctions. Orbán’s approval is crucial for any changes to the EU’s sanctions regime.

The loan, potentially involving other G7 nations, aims to match estimated profits from frozen Russian assets in the West. While specifics are pending, the US aims to finalize terms before the June G7 summit, where Ukraine’s financial support is a focal point.

For the loan to proceed, the EU must allocate profits from Russian assets for repayment, keeping them frozen until Russia compensates Ukraine. Failure to secure repayment may shift financial responsibility to the US.

Alternatively, the EU and G7 may offer bilateral loans to Ukraine, using profits from frozen Russian assets. Total frozen assets in the EU, G7, and Australia amount to approximately €260 billion.

Earlier the EU Council approved the transfer of revenue generated from frozen Russian assets to Ukraine. This move comes after the EU reached an agreement to unlock frozen Russian assets for Ukraine.