Topline
The leaders of the Group of Seven (G7) nations reportedly agreed to a deal Thursday to give Ukraine $50 billion in loans backed by frozen Russian central bank assets, signaling continued support for Kyiv as Russia’s invasion shows no signs of abating.
The leaders of the G7 have gathered in Italy for their annual conference where the Ukraine war ... [+]
Key Facts
According to the Associated Press, the money lent to Ukraine will be repaid using the profits generated from the estimated $280 billion worth of frozen Russian central bank assets, the majority of which is held in the European Union.
The loans will be provided separately by the U.S., European Union and other G7 members using their own procedures, although an unnamed French official cited by the Associated Press said most of it will come from the U.S.
The individual loans are a workaround to allow the use of Russian assets to fund Ukraine aid, as the process of simply confiscating the money and handing it to Kyiv may face legal hurdles.
The loan will help Ukraine cover its financial needs until 2025 and beyond, Bloomberg reported.
The deal will be officially announced later today when Zelenskyy joins the other G7 leaders at the conference.
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Big Number
$3.2 billion to $5.4 billion (€3 billion to €5 billion). That is the estimated “windfall profits” Russia’s frozen assets generate each year in Europe, according to the EU.
Crucial Quote
Speaking to reporters on board Air Force One on Wednesday night, National Security Advisor Jake Sullivan discussed support for Ukraine: “We want to demonstrate that the U.S. supports the people of Ukraine…By signing this, we’ll also be sending Russia a signal of our resolve…If Vladimir Putin thinks that he can outlast the coalition supporting Ukraine, he’s wrong.”
What To Watch For
The timeline for when the funds will become available to Ukraine is not yet clear, but a draft statement of the G7 seen by the Financial Times says it should happen “by the end of the year.” The French official cited by AP also said the “$50 billion will be disbursed before the end of 2024.”
What We Don’t Know
What happens if there is a default on the loan repayment. The EU countries will need to hold on to the frozen Russian assets for several years to ensure they generate enough windfall profits to cover the repayments. It is unclear what happens in the event of a peace deal where Russia regains access to the funds, however, U.S. and other G7 officials have said any deal would require Russia to pay for rebuilding Ukraine.
Tangent
On Wednesday, the Washington Post reported President Joe Biden and his Ukrainian counterpart Volodymyr Zelenskyy will announce a 10-year security agreement between the two countries. Under the agreement, Washington will agree to provide military assistance to Ukraine for the next ten years. The longevity of such a deal, however, will likely rest heavily on the 2024 presidential election as Republican candidate and former President Donald Trump may scrap it if he is elected. While the leaders of the G7 nations have expressed strong support for Ukraine, the surge of far-right parties in the recent European Union elections could also put the bloc’s future support for Kyiv under jeopardy.
Further Reading
Biden and Zelenskyy will sign a security deal, as G7 leaders agree to use Russian cash to help Kyiv (Associated Press)
G7 strikes ‘provisional’ deal on $50bn loan to Ukraine (Financial Times)
