With or without US: EU set to give Ukraine €40bn in new loans - FT
Date: 2024-09-17 Author: Кирило Загоруйко Categories: WORLD'S HELP
The European Union is preparing to give Ukraine up to €40bn in new loans by the end of the year, with or without US involvement, after a G7 plan to use frozen Russian assets to help Kyiv failed, the Financial Times reports.
The unilateral move comes as Brussels worries that Hungary will prevent the bloc from providing the guarantees the US needs to participate in the frozen asset scheme, according to three people involved in the talks. The government of Viktor Orban, the EU's most pro-Russian leader, has sought to delay a decision on the frozen asset scheme until after the US presidential election on November 5.
But Brussels must begin working on any alternative in the next few weeks, as such a move would rely on powers that expire at the end of the year. The funds would be used to support Ukraine's financial stability, which Kyiv and the IMF say faces a $38 billion funding gap in 2025.
According to a draft legislative proposal seen by the FT, the EU would provide "an unspecified number of billions of dollars in loans" to Ukraine until the end of 2024.
"Such a move, which would expand the existing aid program, would require majority support rather than unanimity, eliminating Budapest's veto power. The final amount could be between €20 billion and €40 billion and would be set by the European Commission after consultation with member states, officials said," the report said.
While the original US-led bailout remains the Commission's Plan A, officials say they need an alternative if Budapest maintains its veto power until after the US election.
The publication recalled that in June, the G7 leaders agreed to provide Ukraine with a $50 billion loan, which will be repaid using future revenues from frozen Russian currency reserves worth about €260 billion. Most of them are stored in Euroclear, a Belgian central depository.
According to this plan, the EU and the US will provide $20 billion each, and the remaining $10 billion will be provided by the UK, Japan and Canada.
But in order to ensure a stable income stream to service the loan, the US demanded guarantees that would ensure the freezing of Russian assets, most of which are in Europe.
The Commission, in turn, proposed extending the bloc's sanctions freezing Russian assets from 6 to 36 months to provide greater legal certainty. Other proposed options include extending the sanctions for five years.
But Hungarian Prime Minister Viktor Orban, who has vetoed EU support for Ukraine in the past, is now blocking such an extension, the sources said. A Hungarian government spokesman told EU ambassadors in Brussels that the issue would be considered after the US elections.
