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European Commission president Ursula von der Leyen travelled to Kyiv on Friday where she announced a €35bn EU loan for Ukraine as part of a G7 plan to raise $50bn on the back of future profits from frozen Russian state assets.
Other G7 members will pay up the difference to the $50bn which was agreed earlier this year but has been marred by delays. The Financial Times on Friday was first to report on the EU’s €35bn loan.
“We are now confident we can deliver to Ukraine very quickly, a loan that is backed by the windfall profits from the Russian assets,” von der Leyen said speaking next to Ukrainian President Volodymyr Zelenskyy.
She said it was up to Ukrainian authorities to decide how to “best use the funds”, which “will give you additional resources to strengthen your military capabilities and repel Russian aggression”, two and half years after Moscow’s full-scale invasion of Ukraine.
“We are doing our share with €35bn and I am absolutely confident the others will do their share,” von der Leyen said.
The loan announcement comes at a time of additional and urgent need of aid for Ukraine due to Russia’s repeated attacks on its energy infrastructure.
Zelenskyy said it was paramount for the funds to be disbursed without any further delays, “because this would have an impact on our ability to defend ourselves”.
G7 leaders agreed in June to make $50bn available in loans to Ukraine and divide that according to their relative economic weight, which would have resulted in the EU and US covering $20bn each, with Canada, Japan and the UK making up the rest.
But the US conditioned its participation on legal reassurances that the assets would stay frozen for longer. The EU, where nearly €200bn of Russian state assets are immobilised, has been unable to guarantee that due to Hungary’s opposition to extending the sanctions regime against Russia.
To make up for the American no-show and bypass Budapest’s veto, the commission sought to increase its share of the loan to up to €40bn, guaranteed against the bloc’s common budget. But EU capitals baulked at the figure, pressuring Brussels to get the UK, Canada and Japan to increase their share.
The final amount of €35bn comes as a compromise allowing the US to come in at a later date and thus decrease EU exposure.
A majority of EU countries and the European parliament need to approve the EU loan before year’s end.