European Union envoys have agreed to provide Ukraine with up to 35 billion euros as part of the bloc’s share of a bigger planned loan from the Group of Seven nations (G7) guaranteed by frozen Russian central bank assets, according to a Council of the EU statement.
In June, the G7 and the European Union pledged a $50 billion loan to Ukraine, which would be repaid with revenues from Russian assets immobilised in the West.
These assets were blocked shortly after Russia began a full-fledged invasion of Ukraine in February 2022.
More than two-thirds of the assets, approximately 210 billion euros, remain in the 27-nation EU, with the majority kept by Belgium’s depository Euroclear.
With the agreement, the EU may rely on budgetary headroom as a safety net in case asset restrictions are repealed.
The EU’s sanctions against Moscow must be extended every six months by a unanimous vote. However, Hungary, with its pro-Russia posture, has frequently attempted to oppose sanctions and assistance measures for Ukraine, which might delay a renewal.
Hungary which holds the six-month rotating EU presidency does not want to discuss any possible extension for the regime holding the assets until after the US election in early November.
The European Commission proposed extending the renewal period from six to 36 months but Hungary did not table the proposal during envoy discussions, EU diplomats said.
The Commission’s loan proposal must also be approved by the European Parliament because it affects the bloc’s budget. Diplomats expect EU parliamentarians to vote on the deal on October 22.
The deal helps to overcome Hungary’s rejection to prolong the renewal time. The loan, dubbed “exceptional macro-financial assistance (MFA),” was approved quickly because the legislation only required a qualified majority vote, not unanimity.
However, the agreement will not be sufficient to reassure the United States. Washington initially agreed to donate $20 billion, but does not want to proceed without assurances that Russian assets will be frozen for an extended period of time.
