G7 allies moving ahead with $50b loan for Ukraine

WASHINGTON (AP):

Ukraine will receive $50 billion in loans, backed by frozen Russian assets, from Group of Seven (G7) allies, the White House said Wednesday. Distribution of the money will begin by year’s end, according to American officials who said the United States is providing US$20 billion of the total.

Leaders of the wealthy democracies agreed earlier this year to engineer the mammoth loan to help Ukraine in its fight for survival after Russia’s invasion. Interest earned on profits from Russia’s frozen central bank assets would be used as collateral.

President Joe Biden said in a statement: “Ukraine can receive the assistance it needs now, without burdening taxpayers. These loans will support the people of Ukraine as they defend and rebuild their country. And our efforts make it clear: tyrants will be responsible for the damages they cause.”

At a ceremony Wednesday in Washington, Treasury Secretary Janet Yellen and Ukraine’s finance minister, Sergii Marchenko, put into writing assurances that the US loan will be paid for by the windfall proceeds of the immobilised Russian sovereign assets, not by American taxpayer dollars.

“Letting Ukraine fall would invite further aggression by (Russian President Vladimir) Putin and jeopardise the safety of our NATO allies in Europe, who we are committed by treaty to defend,” Yellen said.

The additional US$30 billion will come from the European Union, the United Kingdom, Canada and Japan, among others.

“To be clear, nothing like this has ever been done before,” said Daleep Singh, the deputy national security adviser on international economics. “Never before has a multilateral coalition frozen the assets of an aggressor country and then harnessed the value of those assets to fund the defence of the aggrieved party, all while respecting the rule of law and maintaining solidarity.”

Singh said the Biden administration intends to divide the US share of US$20 billion between aiding Ukraine’s economy and military. It will require congressional action to send military aid, and Defense Secretary Lloyd Austin said that weapons and equipment being promised now can take weeks or months to get to Ukraine.

The idea of using Russia’s frozen assets to help Ukraine faced resistance at first from European officials who cited legal and financial stability concerns. The move gained momentum after more than a year of negotiations between finance officials and after Biden in April signed legislation that allowed the government to seize the roughly US$5 billion in Russian state assets in the US.