Last step: West says loan to Kiev agreed from profits from frozen Russian assets
The European Union has guaranteed a $50bn loan to Ukraine, US Secretary of State Anthony Blinken has said that Kiev will receive the first tranches in the next few weeks. Meanwhile, it is still unclear exactly how and in what form Ukraine will receive the money, and whether it will receive it at all. "Izvestia" has studied the issue.
Guarantees and prospects
For the last month and a half, the G7 countries have been working on agreeing on the amount of the loan. According to news agencies, an agreement in principle to provide Kiev with funds was reached at the G7 meeting in mid-June (although, for example, the Japanese government claimed that there was no compromise on this issue). Six months later, the G7 leaders issued a joint statement committing to "harming Russia through sanctions, export controls and other measures."
In late October, the U.S. said its contribution of the total would be $20 billion, with the rest to be divided among Japan, Britain, Canada and the European Union.
A month later, it was announced that the European Union had signed a memorandum on an €18 billion loan to Kiev, to be repaid, among other things, with profits from frozen Russian assets.
The UK's share will be $2.9bn (or £2.26bn). "The loan <...> allows the Ukrainians to invest in key equipment <...> such as air defense, artillery," the kingdom's government said in a statement.
Some nuances
Thus, in almost all cases, military aid is primarily involved. For example, half ($10 billion) of the above-mentioned U.S. aid will be used to purchase arms from U.S. and European defense companies and will most likely reach Ukraine in material form.
A certain share of the $18 billion of the European part of the loan will also be used for military purposes. It is obvious that it has already been decided which companies will use these funds, but it has not been announced yet. On November 26, now former French Defense Minister Sebastien Lecornu reported after talks with colleagues from Germany, Britain, Italy, and Poland that "French taxpayers will be pleased to learn about new financing options" for supporting Ukraine. "In the next weeks, we will take measures in this direction, in particular, we will supply Kiev with Mistral air defense missiles, as well as other armaments, including jointly with Italy, from the proceeds of frozen Russian assets," he said.
Meanwhile, the fact that the amount that will be seen on the Bankova will differ from the stated amount is not the only caveat.
For example, the first tranches "in the coming weeks," which Blinken is talking about, look on paper like monthly tranches until December 31, 2027. As stated by EU Council President António Costa, they will amount to $1.5 billion.
A small conditionality
Another point is Ukraine's commitments. In a recent statement, Blinken was quite specific about one of them. "Mobilization. This is very important because even with money, ammunition, there must be people on the front lines to counter Russian aggression," he said at a press conference in Brussels. Given the pace and effectiveness of the current mobilization in Ukraine, the talk is about lowering the minimum age of those mobilized by seven years - from the current 25 to 18.
Kiev is currently saying that it has no plans to resort to this kind of change. However, it should be noted again that the deal being talked about in Brussels and Washington is stretched in time, which means that Ukraine's allies have plenty of room to increase political pressure.
AFU soldiers
In addition, the state of the Ukrainian economy is such that the question of guarantees for creditors arises without regard to the development of the geopolitical situation. Obviously, it will not be Vladimir Zelensky or the current generation of European politicians who will answer this question, if such guarantees exist at all.
Make it to Trump
At the same time, the outgoing White House administration is making a last-ditch effort to have time to initiate new loans for Ukraine. The "frontal" attack on Congress that the White House went into this week has expectedly failed. Biden sent a request to the House of Representatives for $24 billion in additional aid to Kiev. It is noteworthy that only one-third of this amount was supposed to be used to purchase weapons for the AFU. The remaining $16 billion would also have gone to American defense giants, but their products were supposed to make up for the army arsenals that had shrunk for more than two years.
According to the New York Post, Republican reaction to the president's initiative was often profane. Speaker of the House of Representatives Mike Johnson directly stated that the country now has a new commander-in-chief and the Biden administration's project will not even be put to a vote.
Thus, in reality, the situation with the use of frozen Russian assets is still in limbo. The resolution of this issue directly depends on the ongoing changes in the political conjuncture. The West is assessing the long-term and quite specific consequences and is not yet going for the "last step", as Vladimir Putin called the expropriation of Russian assets.
U.S. President Joe Biden
Economist Alexei Bobrovsky notes that the US is gradually shifting the responsibility for the Ukrainian crisis onto the G7 countries.
- The proposed scheme of the loan is such that its repayment through profits from Russian assets will take a very long time. Hence, a natural question arises: what will happen if Russian assets are unfrozen before the expiration of this period? Thus, either a long confrontation with Russia is implied, or Europe finds itself in a very difficult position: it is lending against something that does not belong to it. At the same time, we see how Europeans still have a self-preservation instinct: they manipulate not the assets, but the profits from them," the expert summarizes.
