Leaders of the Group of Seven wealthy democracies have agreed to engineer a $50 billion loan to support Ukraine in its fight for survival. The loan will use interest earned on profits from Russia’s frozen central bank assets as collateral.
Details of the deal are still being finalized as G7 leaders gather for a summit in Italy, but the funds could reach Kyiv before the end of the year. A French official confirmed the agreement on Wednesday ahead of a formal announcement at the summit. Here’s how the plan is set to work:
Where Would the Money Come From?
Most of the money will be provided in the form of a loan from the U.S. government, backed by windfall profits earned on roughly $300 billion in immobilized Russian assets, primarily held in European Union nations. While the loan will be mostly U.S.-guaranteed, it could be supplemented with European or other national contributions, according to a French official.
Why Not Just Give Ukraine the Frozen Assets?
Confiscating the assets and sending them to Ukraine is legally complex. Since the invasion of Ukraine in 2022, officials from multiple countries have debated the legality of confiscating the assets, which are currently immobilized and inaccessible to Moscow. Although governments can freeze property or funds with relative ease, turning them into forfeited assets for Ukraine’s benefit requires additional judicial procedures, including a legal basis and court adjudication.
Instead, the European Union has set aside the windfall profits generated by these frozen assets, which are easier to access. Separately, the U.S. passed the REPO Act (Rebuilding Economic Prosperity and Opportunity for Ukrainians Act) earlier this year, allowing the Biden administration to seize $5 billion in Russian state assets in the U.S. and use them for Ukraine. This arrangement is still being worked out.
How Could the Loan Be Used — and How Soon?
Technical experts will need to work out the details. U.S. National Security Adviser Jake Sullivan stated that the goal is “to provide the necessary resources to Ukraine now for its economic, energy, and other needs, so that it’s capable of withstanding Russia’s continuing aggression.” Another aim is to disburse the funds to Ukraine quickly.
The French official, who spoke anonymously in line with French presidential policy, mentioned that the details could be resolved “very quickly and in any case, the $50 billion will be disbursed before the end of 2024.”
Beyond the costs of the war, Ukraine’s needs are substantial. The World Bank’s latest damage assessment, released in February, estimates that the cost for Ukraine’s reconstruction and recovery will be $486 billion over the next decade. This financial move follows delays by the U.S. Congress in approving military aid for Ukraine.
At an Atlantic Council event previewing the G7 summit, former U.S. Ambassador to Ukraine John Herbst noted, “The fact that American funding is not quite reliable is a very important additional reason to go that route.”
Who Would Be on the Hook in Case of a Default?
If Russia regains control of its frozen assets or if the immobilized funds don’t generate enough interest to repay the loan, “the question of burden-sharing arises,” according to the French official. Who would shoulder this burden is still being determined.
Max Bergmann, director of the Europe, Russia, and Eurasia Program at the Center for Strategic and International Studies, mentioned concerns among European finance ministers that their countries “will be left holding the bag if Ukraine defaults.”
