European Union countries are set to contribute up to 60% of the $50 billion loan package pledged by the Group of Seven (G7) major democracies for Ukraine, using income from frozen Russian assets, Italy’s Economy Minister Giancarlo Giorgetti announced on Friday.
The loan initiative, designed to support Ukraine amidst its ongoing conflict with Russia, is planned to be backed by future revenues generated from approximately $300 billion in impounded Russian sovereign funds. A significant portion of these funds, blocked under sanctions following Russia’s 2022 invasion of Ukraine, are held within the European Union.
Giorgetti’s comments came during a meeting of European finance ministers in Luxembourg, where he clarified that EU states would likely provide between “50 and 60%” of the loan funds. This plan, he suggested, reflects a shift in the EU’s involvement compared to previous statements from Italian Prime Minister Giorgia Meloni, who had indicated at a recent G7 summit that European states would not immediately participate in the issuance of the $50 billion loan.
“We will start discussing the share for the U.S., Canada, Japan, and the UK,” Giorgetti added, emphasizing the collaborative nature of the funding plan.
Use of Frozen Russian Assets
The proposed loan relies on the frozen assets of the Russian central bank and other sovereign reserves, which were immobilized under G7 sanctions. These measures were part of the broader international response to Russia’s actions in Ukraine.
The bulk of these assets, around 190 billion euros, are held in Euroclear, a Belgium-based central securities depository, making the EU’s role crucial in the disbursement plan. The United States holds an additional $5 billion, contributing to the collective pool of impounded Russian funds.
Aligning International Efforts
The EU’s substantial contribution underscores its pivotal role in the international effort to financially support Ukraine. The funding strategy aims to provide Ukraine with much-needed economic stability and resources to address the immediate and long-term impacts of the conflict.
The G7’s approach reflects a multi-year commitment to aid Ukraine, with the planned loan leveraging the frozen Russian assets as a financial backbone. This method of utilizing impounded funds for the benefit of Ukraine marks a significant step in the international community’s response to the ongoing conflict.
Giorgetti’s remarks highlight the EU’s readiness to shoulder a significant portion of the financial burden, aligning with the broader goals of the G7 to support Ukraine through innovative funding mechanisms amidst the challenging geopolitical landscape.
