Deal is US portion of $50 bln loan backed by frozen Russian assets

24/10/2024 6:12

        The U.S. on Wednesday
        finalized its $20 billion portion of a long-awaited $50 billion
        loan to Ukraine backed by frozen Russian assets, announcing
        plans to start making funds available by year-end for economic
        and military aid.
        
        U.S. Treasury Secretary Janet Yellen and Ukrainian Finance
        Minister Serhiy Marchenko signed an agreement for a U.S. loan
        commitment of $20 billion, which would be placed alongside a
        separate $20 billion European Union commitment and $10 billion
        to be split by G7 allies Britain, Japan and Canada.
        
        The loan will be repaid with the earnings from the over $300
        billion in sovereign Russian assets that have been immobilized
        since Moscow's armies invaded Ukraine in February 2022. The
        funds are mostly held in Europe.
        
        "In other words, Ukraine can receive the assistance it needs
        now, without burdening taxpayers," President Joe Biden said in a
        statement.
        
        The Biden administration wants to make $10 billion of
        the loan funds
        
        available for military aid
        
        , a plan that would require the approval of the U.S.
        Congress, White House National Security Council officials told
        reporters.
        
        It does not need Congress' approval to make available
        the remaining $10 billion by December, an NSC official said,
        adding: "Either way, the U.S. will provide $20 billion in
        support to Ukraine through this effort, whether it's split
        between economic and military support or provided entirely via
        economic assistance."
        
        The official said the U.S. funds for non-military aid would
        be transferred to the World Bank Trust Fund, which has agreed to
        administer the loan.
        
        A person familiar with that arrangement said that the bank
        would manage sovereign loan contributions from the U.S., Japan
        and Canada in the same way that it manages a climate loss and
        damage fund.
        
        Ukrainian President Volodymyr Zelenskiy, in an X social
        media post, thanked Biden and Yellen for making the U.S. loan
        happen, calling it a "significant step towards supporting
        Ukraine's fight for freedom and holding Russia accountable."
        
        
        
        BRITAIN, CANADA ANNOUNCE CONTRIBUTIONS
        
        G7 finance ministers and central bank governors were due
        to meet this week on the sidelines of International Monetary
        Fund and World Bank annual meetings in Washington. The group
        includes the U.S., Japan, Germany, France, Britain, Italy and
        Canada.
        
        Britain
        
        separately announced
        
        that it would contribute $2.26 billion pounds ($2.94
        billion) into the G7 loan, saying its funds would help Ukraine
        buy weapons and rebuild damaged infrastructure.
        
        Defense minister John Healey said the money provided by
        Britain would be solely for Ukraine's military and could be used
        to help develop drones capable of traveling further than some
        long-range missiles.
        
        Asked if Britain would allow Ukraine to use the money to buy
        British-made Storm Shadow missiles to hit targets deep inside
        Russia, Healey told reporters: "They are developing very heavily
        the use of even longer-range drones. They will work with us over
        how they use this money, and on the weapons they most need."
        
        Canada's finance ministry said on Wednesday it would provide
        a C$5 billion ($3.7 billion) to the G7 loan package.
        
        
        
        ELECTION TIMING
        
        The loan plan was endorsed by G7 leaders in Italy in
        June, but was delayed by U.S. officials' insistence on
        assurances that the Russian assets would stay frozen long-term
        to provide a certain stream of repayment revenues.
        
        Yellen was keen to avoid a situation where U.S. - or
        Ukrainian - taxpayers would be on the hook to pay back the loans
        if the frozen assets were turned back over to Russia as part of
        a truce agreement.
        
        This would have required the EU to lengthen the interval
        for reaffirming its sanctions programs, including the asset
        freeze, from every six months to every three years. But
        
        Hungary refused
        
        to go along with this change, saying it wanted to wait
        until after the Nov. 5 U.S. presidential election.
        
        Republican presidential candidate Donald Trump has vowed
        to "get out" of the Ukraine war. So rather than wait, Yellen
        chose to move ahead without additional EU assurances.
        
        A source familiar with the matter said that the Treasury
        pivot to secure U.S. government agreement on the $20 billion for
        Ukraine recognized the need to push for as large a U.S.
        contribution as possible.
        
        Yellen told reporters on Tuesday that she felt confident
        that the assets would stay frozen and that it was a "secure
        loan."
        
        Those sentiments were echoed by the NSC official, who said
        that because of the EU commitment to lend Ukraine at least $20
        billion, the Europeans have "incentives to keep the assets
        immobilized until we get fully repaid." EU lawmakers on Tuesday
        approved the bloc's plan to use the frozen Russian assets for
        the loan.