WASHINGTON (AP) — The leaders of the Group of Seven wealthy democracies have agreed to engineer $50 billion loan to help Ukraine In its struggle for survival. Interest earned on profits from frozen Central Bank of Russia assets will be used as collateral.
Details of the deal were unveiled by G7 leaders at a summit in Italy. The money could reach Kiev by the end of the year, according to US and French officials who confirmed the deal before the formal announcement.
Here’s how the program works:
Where will the money come from?
Most of the money will be in the form of debt, often guaranteed by the US government, backed by profits made on about $260 billion in immovable Russian assets. Most of that money is in EU countries.
A French official said the loan could be “topped up” with European money or contributions from other countries.
A U.S. official, who spoke on condition of anonymity to preview the agreement, said Friday’s official statement by G7 leaders could open the door to a full freeze on Russian assets.
Why not just give frozen assets to Ukraine?
It’s very difficult to do that.
For more than a year, authorities from several countries have debated the legality of confiscating money and sending it to Ukraine.
The US and its allies immediately froze all assets of the Russian central bank Moscow invaded Ukraine In 2022. It was essentially money in banks outside of Russia.
The assets are immovable and cannot be accessed by Moscow, but they still belong to Russia.
While governments can generally freeze assets or funds without difficulty, turning them into confiscated assets that can be used for Ukraine’s benefit requires an additional layer of jurisprudence, including a legal basis and a court ruling.
Instead there is the European Union Reserve the profit Generated by frozen assets. Accessing that money pot is easy.
Separately, the US this year passed a law called the REPO Act – for short Rebuilding Economic Prosperity and Opportunities for Ukrainians Act – It allows biton administration Seizure of $5 billion in Russian state assets Use them for the benefit of America and Kiev. Arrangements are in progress.
How can the loan be used and how soon?
Working through the details will be up to the technicians.
The U.S. official said Ukraine could spend the money on several sectors, including military, economic and humanitarian needs and reconstruction.
Jake Sullivan, national security adviser to President Joe Biden, said “the goal now is to provide Ukraine with the economic power and other resources it needs to have the resilience it needs to withstand continued Russian aggression.”
Another goal is to get money to Ukraine quickly.
The French official, who was not authorized to be named publicly in accordance with French presidential policy, said the details were “very quick and in any case, the $50 billion will be paid by the end of 2024.”
Beyond the costs of war, the needs are great.
of the World Bank Ukraine’s latest damage assessmentPublished in February, it estimates the country’s reconstruction and recovery costs will be $486 billion over the next 10 years.
The move to unlock Russia’s assets comes after a Long delay Military aid to Ukraine was approved by Congress in Washington.
At a preview event at the G7 summit, John Herbst, former US ambassador to Ukraine, said that “the most important additional reason to go that way is that US funding is not very reliable.”
Who will be on the hook in a default case?
If Russia regains control of its frozen assets or the frozen funds do not generate enough interest to repay the debt, “then the question of burden-sharing arises,” says the French official.
Max Bergmann, director of the Europe, Russia and Eurasia program at the Center for Strategic and International Studies, said last week there were concerns among European finance ministers that their countries would be “left holding the bag if Ukraine fails.”
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Associated Press writers Sylvie Corbett in Paris, Darlene Superville in Fasano, Italy, and Colin Long, aboard Air Force One en route to Italy, contributed to this report.
