EU Lawmakers Approve $38 Billion Loan to Ukraine
In a crucial step to support Ukraine, the European Parliament approved a significant loan of up to 35 billion euros ($38 billion) on Tuesday. This financial package is part of a broader initiative designed to provide Ukraine with much-needed resources to maintain its war effort and stabilize its economy as it continues to grapple with the devastating impacts of Russia's invasion.
The loan, which will be backed by profits from frozen Russian assets, is vital for Kyiv. The Ukrainian government is facing immense financial pressure as it works to keep its economy afloat, rebuild its military, and prepare its infrastructure for the harsh winter months. Russian forces have relentlessly bombarded key sectors, including Ukraine's electricity grid, adding to the urgency of securing funds to repair and protect critical infrastructure. The electricity grid, essential to the nation’s survival during winter, has been a repeated target, forcing the need for quick, substantial financial aid.
This latest loan is part of a larger $50 billion initiative that was agreed upon by the G7 countries in June. So far, the European Union has been the first to announce its contribution, stepping forward as a leader in this effort, while the world watches to see how much other G7 members, particularly the United States, will pledge. The EU's loan is a significant part of this plan, but the final amount could decrease depending on contributions from other countries. EU officials anticipate more details from G7 nations, as they convene in Washington later this week to finalize their commitments.
At the heart of this financial support is the use of Russian assets frozen by the EU since the invasion began in 2022. Approximately $235 billion of Russia’s central bank funds have been immobilized worldwide, with a substantial portion—around 90 percent—held in Belgium by the international depositary Euroclear. The G7 plan is designed to leverage the interest earned on these frozen assets to increase available funds for Ukraine. This innovative approach would replace an existing EU scheme that sent $1.7 billion to Kyiv earlier this year.
However, this new loan plan has faced challenges. The U.S. sought assurances that these frozen Russian assets would remain inaccessible, prolonging discussions. EU members are required to agree every six months to extend the asset freeze, and internal disputes have complicated the process. Hungary, in particular, rejected a proposal to extend the freeze period to 36 months, preferring to wait until after the upcoming U.S. presidential election to finalize any long-term agreements.
In the broader context, the EU's commitment to Ukraine is immense. This loan adds to an already staggering 120 billion euros in support that the EU and its member states have provided to Ukraine since the beginning of Russia’s invasion. The newly approved loan represents another layer of financial assistance, underscoring the EU's resolve to stand with Ukraine during this crisis.
As Ukraine heads into another challenging winter, the importance of sustained international support is clear. The country's military and economic survival depends on continued assistance from its allies, and the EU's latest loan shows that it remains committed to helping Ukraine weather this storm. How the rest of the G7 responds, particularly the U.S., will be crucial in determining whether Ukraine gets the resources it needs to face an increasingly difficult future.
