US Urges EU to Extend Sanctions on Russia Indefinitely to Fund $50 Billion Loan to Ukraine

The United States has urged the European Union to extend sanctions on Russia indefinitely, as a condition for a proposed $50 billion loan to Ukraine.

This loan would be repaid using profits from frozen Russian assets. This proposal was detailed in an internal EU document seen by the Financial Times.

Washington’s offer is contingent on the Russian Central Bank’s assets in the EU remaining frozen “until Russia agrees to pay for the damages caused to Ukraine” during the ongoing conflict, according to the document.

The specific terms of the loan, including the repayment period, interest rate, and whether it would be issued directly or through an intermediary such as the World Bank, have yet to be determined.

Currently, EU sanctions against Russia are renewed every six months. However, any changes to the sanctions regime would require the unanimous approval of all European leaders, including Hungarian Prime Minister Viktor Orbán, who has previously vetoed EU decisions regarding Ukraine.

Another option being considered is for G7 countries and the EU to provide bilateral loans to Ukraine, “backed by profits from frozen Russian assets” held in their jurisdictions. This would require the EU to use its collective budget, which must be unanimously agreed upon by all member states.

“The time required to provide such guarantees, along with legal and operational constraints, would not facilitate the swift implementation of this option,” the EU document notes.

Following the Russian invasion of Ukraine in February 2022, the EU and G7 countries froze approximately $280 billion of the Russian Central Bank’s assets, including cash and securities.

The Russian Ministry of Finance estimated the total value of blocked assets to be around $300 billion. Most of these assets are held in the Belgian depository Euroclear.

Last year, Euroclear earned €4.4 billion in revenue from these frozen assets, and an additional €1.6 billion since the beginning of this year. According to Financial Times sources, total profits could reach €20 billion by 2027.

In late May, EU countries approved the transfer of income from frozen Russian assets to Ukraine. This year alone, Kyiv could receive €3 billion.

The Kremlin has condemned the freezing of Russian assets as “theft” and a violation of international law. The potential confiscation of these assets would be “a significant nail in the future coffin of the entire Western economic system,” and could lead to “legal disputes,” according to Kremlin statements.

Meanwhile, Ukraine continues to grapple with the devastating impact of the ongoing conflict. Russian missile strikes have caused significant destruction, with residential areas such as the one in Kharkiv being severely affected. The images of the damage highlight the urgent need for reconstruction and financial support for Ukraine.

Image: https://uavarta.org

Read also:

G7 Ministers Progress Towards Utilising Russian Assets to Aid Ukraine

Click here for more News & Current Affairs at EU Today

____________________________________________________________________________________________________________