The European Parliament has approved a €35 billion loan to Ukraine, which will be partly funded by profits generated from frozen Russian assets. This decision, taken on 22nd October 2024, follows extensive debates in the parliament and comes as part of a larger G7 loan package valued at approximately €45 billion.
The European Parliament’s resolution was passed with a clear majority, with 518 members voting in favour and 56 opposing. The vote took place after several hours of discussion among the parliamentarians, focusing on the mechanism of using Russia’s frozen assets to help fund the loan. European Parliament President Roberta Metsola underscored the significance of this decision in sending a strong message to Moscow.
“This vote sends a powerful signal – we are using profits from frozen Russian assets to support Ukraine, and Russia, as the aggressor nation, will pay and must pay,” Metsola stated.
Breakdown of the Loan and Contributions
The final sum to be provided by the European Union may be subject to change, as it depends on contributions from other G7 members. The total loan package from the G7 is estimated at around €45 billion, with the EU committing to providing the €35 billion portion.
The UK, a key member of the G7, had earlier on the same day officially announced its contribution to the loan package, amounting to nearly $3 billion. The United States has also committed a significant share, with media reports suggesting that it is prepared to contribute up to $20 billion to the loan package. Initially, there were expectations that the US contribution would be lower, due to concerns over legal guarantees that Russia’s assets would remain frozen for at least three years.
Legal and Political Hurdles
The plan to use profits from frozen Russian assets has faced opposition from some EU member states, most notably Hungary. Hungary’s resistance has complicated the EU’s ability to provide assurances that Russia’s assets would remain frozen for a fixed period, a point that has been a key focus in negotiations. This legal uncertainty has caused some hesitation, particularly in Washington, which had been seeking additional guarantees before making a final pledge.
However, despite these hurdles, the decision was approved, marking a significant step in the EU’s ongoing support for Ukraine amid its conflict with Russia. The move comes in the broader context of economic and military support being offered by Western allies to Ukraine as it continues to defend itself against Russian aggression.
The Use of Russian Assets
The use of frozen Russian assets for supporting Ukraine has been a topic of extensive debate since the early days of the conflict. Russian assets, primarily state-owned or linked to Russian oligarchs, have been frozen in the EU and other Western countries as part of sanctions imposed following Russia’s invasion of Ukraine. These assets, initially frozen to exert economic pressure on Moscow, are now seen as a potential source of funding for Ukraine’s rebuilding efforts.
Legal mechanisms to unlock these funds, or the profits from them, are complex and have required significant negotiations both within the EU and among international partners. The recent decision to use the profits from these frozen assets signals a significant policy shift, demonstrating a willingness by the EU and the G7 to ensure that Russia bears some of the financial burden for the reconstruction of Ukraine.
Broader G7 Support for Ukraine
This loan is part of a larger international effort to provide financial support to Ukraine during its ongoing war with Russia. The G7 nations have been at the forefront of this effort, offering both military and economic assistance to Kyiv. The loan, intended to support Ukraine’s budget and provide much-needed economic stability, will be backed by a combination of governmental contributions and funds generated from sanctions-related measures, such as the frozen Russian assets.
The financial support comes at a crucial time for Ukraine, as the war continues to put immense pressure on the country’s economy. With much of the nation’s infrastructure damaged or destroyed, loans such as these are vital to keep essential services running and to fund the government’s immediate priorities.
