The contribution will be repaid using profits generated by Moscow’s frozen assets, the paper reports
The US is poised to contribute up to $20 billion to a G7 loan for Ukraine, which will be repaid using proceeds generated from the Russian assets frozen by the West as part of sanctions related to the Ukraine conflict, according to reports from the Financial Times, citing sources.
Ukraine’s supporters have been expediting negotiations regarding the loan to secure funding before the end of the year. There are growing concerns that Washington’s aid to Ukraine could be curtailed if Donald Trump wins the upcoming US election, as the former US president has repeatedly stated that he would reduce assistance to Kiev if elected.
The US and its allies have frozen an estimated $300 billion in assets belonging to the Russian state since the start of the Ukraine conflict in 2022. The majority of these funds, amounting to nearly €197 billion ($214 billion), are held by Euroclear, a clearinghouse based in Brussels. These frozen assets have generated €3.4 billion ($3.7 billion) in interest as of mid-July, according to the depository.
Moscow has condemned the freeze as “theft” and stated that any seizure of its funds would be illegal and further erode global trust in the Western financial system.
In June, G7 members reached an agreement to provide a $50 billion loan to Kiev, financed by the interest earned on the frozen Russian assets. Initially, the US and the EU were expected to contribute $20 billion each, while Canada, Japan, and the UK were set to jointly provide the remaining portion of the substantial loan.
To assure allies that the bloc’s sanctions regime on the funds is not being lifted, Brussels proposed a three-year extension of the EU’s mandate to freeze Russian assets. EU lawmakers have been renewing these sanctions every six months through unanimous decisions, meaning that each vote could potentially lead to a break in the restrictions. Hungary opposed the proposal and announced plans to postpone the decision until the US presidential elections on November 5.
Last week, the EU approved its own contribution of up to €35 billion to the G7 loan. However, the bloc would need to contribute less if Washington provided the full $20 billion, as reported by Reuters last week. The funds, which will be managed by the World Bank, will be allocated to various purposes, including defense and humanitarian needs.
Despite this, US senior officials have informed the Financial Times that Washington will provide the full agreed-upon $20 billion, even if the EU fails to persuade Hungarian Prime Minister Viktor Orban to drop his veto on extending EU sanctions. According to two sources cited by the paper, G7 finance ministers will issue a statement on the distribution and structure of the loan on the sidelines of the IMF and World Bank meetings on October 25.