The United States and the European Union are close to agreeing on a new $50 billion aid package for Ukraine, which will be financed by the proceeds of frozen Russian assets. In particular, the United States is ready to provide $20 billion if the EU implements changes to the sanctions regime against Russia, making them more stable. This is stated in a Bloomberg article, according to Komersant ukrainskyi
The plan stipulates that the Group of Seven (G7) countries will give Ukraine a $50bn loan. However, it will not be repaid by Ukraine – it will be funded by the profits from frozen Russian assets. After all, although they are frozen, they generate income for those states and organisations where these funds are located. These assets are currently estimated at $280 billion, and most of them are located in Europe.
However, the US has made it clear that its full participation is contingent on the EU being able to guarantee that these assets will remain frozen for a long time. The US is demanding that the sanctions, which currently require a review every six months, be changed to a three-year period.
Even without these changes, Washington will still contribute to the aid package, but it will be much smaller, the newspaper says. The European Commission has already prepared a proposal for sanctions reform to ensure US participation and plans to complete this process by the end of October 2024.
At the same time, if the United States does not participate in this project, the EU is ready to provide €35 billion from its budget. However, this is causing resistance among some EU member states, including Germany, France, and Italy.
Hungary, which has repeatedly blocked decisions to help Ukraine, proposes to postpone any changes to the sanctions regime until after the US presidential election in November 2024. The European Commission insists that while the US may join the initiative even after the election, the EU must complete the legislative changes by the end of October.
A meeting of EU leaders to discuss support for Ukraine will take place on 17-18 October 2024, and the G7 countries are to finalise their commitments at a ministerial meeting on 25 October.
The new aid scheme, which will start in early 2025, is to complement existing packages, including the EU’s €50 billion Ukraine Facility, which consists of grants and loans for the period 2024-2027.
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Ukraine Facility
In February 2024, the EU approved the Ukraine Facility, a €50 billion financing mechanism for Ukraine for the period 2024-2027. The programme consists of €17 billion in grants and €33 billion in loans. The mechanism provides not only for financing budgetary areas in Ukraine during the war, but also for programmes aimed at implementing the reforms on which Ukraine’s accession to the EU depends.
The resolution emphasises that EU support should be directed in three areas:
- Financial support for Ukraine to implement reforms and investments, and to maintain the country’s macro-financial stability, as envisaged in the Ukraine Plan to be developed by the Ukrainian government.
- Ukraine’s investment framework to mobilise investment and increase access to finance.
- Assistance towards European integration to mobilise technical expertise and build capacity.