The European Union has announced a groundbreaking plan to provide Ukraine with a €35 billion loan to help the country recover from the devastation caused by Russia’s invasion. The loan will be backed by Russia’s frozen assets, which are estimated to generate windfall profits of €2.5 to €3 billion annually. This new initiative aims to make Russia pay for the damage it has caused in Ukraine and to provide the country with much-needed financial support for reconstruction and defense efforts.
The EU’s share of the loan, which is larger than originally planned, is seen as a way to encourage other Western allies to contribute quickly to the effort. The scheme is part of a larger $50 billion pledge made by the G7 in June to support Ukraine’s recovery. The loan will be disbursed gradually throughout 2025, with repayments funded by the windfall profits generated by Russia’s frozen assets.
The European Commission is working to expedite the approval process for the loan to ensure it can be raised before the end of the year. The funds will be transferred to Ukraine once a set of policy conditions have been met, and the country will have the autonomy to allocate the money as needed, including for defense purposes. The loan will not be subject to individual vetoes, but questions remain about Hungary’s potential veto on the extension of the renewal period for Russia’s frozen assets.
Overall, the EU’s innovative approach to using Russia’s frozen assets to support Ukraine demonstrates a new way of leveraging financial resources to address conflicts and promote stability in the region.
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