EU plans to provide Ukraine with €40 bln without US involvement – FT
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The European Union is actively developing a plan to provide financial assistance to Ukraine of up to 40 billion euros by the end of 2024, even without the participation of the United States.
The Financial Times reports this, citing its sources.
As mentioned in the article, the decision to allocate funds was made when the G7 nations' plan to use frozen Russian assets was not implemented.
There was concern in Brussels that Hungary, which has repeatedly blocked EU decisions on Ukraine, could prevent the United States from participating in the asset freeze scheme. The government of Viktor Orbán tried to postpone the decision-making until the presidential elections in the United States, which will be held on November 5.
Given such obstacles, the European Union decided to create an alternative mechanism for providing financial assistance. The European Union plans to attract "an unspecified number of billions of dollars" in loans for Ukraine by the end of 2024.
According to preliminary estimates, the aid may amount from 20 to 40 billion euros. After consulting with the member states, the European Commission will determine the final amount.
This step is crucial as both the International Monetary Fund and the Ukrainian government have predicted a potential financial shortfall of 38 billion dollars for the country by 2025. The current bailout is set to end by the end of 2024. Thus, preparations for a new assistance plan will commence in the upcoming weeks.
Even though the new aid package will be drawn up without the participation of the United States, they plan to use the proceeds from frozen Russian assets to repay the loans. These profits are expected to amount to 2.5 to 3 billion euros annually and will be channeled to Ukraine through the EU budget.
This initiative demonstrates that the European Union continues to be an essential partner of Ukraine, providing it with economic support. The EU also demonstrates its readiness to act independently, without waiting for the decisions of other global players, in particular the US, to ensure stability in Ukraine.
The decision could also reduce Hungary's decision-making influence, as only a majority vote in the European Parliament is needed to approve the plan, rather than a unanimous decision.
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On February 24, the Group of Seven (G7) countries released a statement confirming that they would keep Russian assets frozen in their jurisdictions until the end of Russia's full-scale war against Ukraine.
It should be noted that the European Union's countries will not currently participate directly in the $50 billion loan that the "Big Seven" group plans to provide to Ukraine.
It is worth adding that the United States is ready to lend Ukraine $50 billion, which will be repaid with profits from frozen Russian assets, provided that the European Union can extend sanctions against Moscow indefinitely.
According to open information, Euroclear currently has 192 billion euros of Russian Central Bank assets on its balance sheet. The EU is looking for legal mechanisms to deal further with these frozen resources and the interest accrued on them, which has reached €5 billion over the past two years.
