Finance ministers of the G7 group, which brings together the world’s largest economies (Canada, France, Germany, Italy, Japan, the U.K., the U.S. with the EU as a ‘non-enumerated member’) will convene in Washington on October 25, at the sidelines of IMF and World Bank meetings.
They are expected to announce the $50 billion loan distribution and structure, two sources familiar with the subject told FT, although another source said that a definitive agreement is yet to be reached, with Biden’s administration still consulting the U.S. Congress and Kyiv on how the loan is to be repaid.
The structure of the loan has been subject to negotiations between the G7 members since June. However, the looming U.S. presidential elections and the uncertainty regarding the White House policy toward maintaining support for Kyiv in case of a Trump victory have galvanized Western leaders to secure funding for Ukraine before the year runs out.
The idea is to have the loan covered by profits from frozen Russian assets, including the assets of Russia’s central bank, the bulk of which is held in the EU. Those alone can generate about €3 billion ($3.25 billion) in profit annually.
However, the EU was unable to guarantee that the Russian assets would remain frozen for at least three years, due to Hungarian resistance to prolong the sanctions on Russia.
Lack of such a guarantee has in turn made the U.S. reluctant to contribute the initially promised $20 billion toward the loan and forced the EU to
promise to shore up up to €35 billion ($38 billion) to make up for the smaller U.S. contribution, with Canada, Japan, and the U.K. set to provide the rest of the money.
“I think it is important that everyone does their fair share,” said French President Emmanuel Macron on Thursday, after Kyiv’s allies in the bloc failed to persuade Hungary’s prime minister, Viktor Orbán, to drop his veto on sanctions against Russia.
But on Friday, U.S. officials indicated to their G7 partners that their country would provide the originally promised $20 billion toward the loan, meaning that the EU can significantly reduce its own contribution.
Under Orbán, Hungary, which relies heavily on cheap Russian energy resources, has repeatedly advocated against Brussels applying sanctions against Russia or providing meaningful assistance to Ukraine, earning the country a reputation as the Kremlin’s ‘Trojan Horse’ in the EU.
