The Group of Seven (G7) countries want to reach a political agreement on the $50 billion loan for Ukraine by the end of October for the cash to be able to available before the end of this year, a senior European Commission official said on Monday.
The G7 are the United States, Canada, Japan, Britain, France, Germany and Italy. The EU as a whole, represented by its institutions, is also part of the group.
“The G7 presidency is now aiming for political commitment on participation in this … loans initiative around the end of October, which would allow all G7 lenders sufficient time to operationalize loans by the end of this year,” European Commission Executive Vice President Valdis Dombrovskis told the European Parliament.
The loan for Ukraine is to be serviced from profits generated by Russian assets immobilised in the West. More than two thirds of the assets, some €210 billion, are in the EU.
The EU would therefore provide the bulk – up to €35 billion ($39 billion) – of the loan. “There are already clear commitments from Canada, UK and Japan to come on board,” Dombrovskis said.
He said the United States was holding back because it needed assurances from Europe that money generated by the frozen assets would be available to repay the loan as long as needed.
The snag is that the EU decision to freeze Russia’s money has to be renewed every six months by unanimity in the 27-nation bloc. That creates legal uncertainty because one country – like the Russia-friendly Hungary – could stop the renewal.
To address Washington’s concern, the EU wants to extend the renewal period from six to 36 months in a vote by unanimity in October, Dombrovskis said, adding success was likely but not certain.
“In absence of such a change, the US can still join the initiative, but with a much lower amount,” he said.
The EU part of the loan had to be legally ready this year, he said, because the EU would borrow the money against the security of the EU budget, an option only available until the end of 2024.
