US close to agreement with EU on use of proceeds from frozen Russian assets to help Ukraine – Bloomberg

Bloomberg has reported that the US and the EU are said to be approaching an agreement on the specific terms of a US$50bn financial aid package for Ukraine using the proceeds from frozen Russian assets.

Source: European Pravda, citing Bloomberg

Details: The news agency reports that the United States intends to participate in the loan regardless, but the extent of its involvement will depend on whether the EU modifies its sanctions legislation to provide more guarantees that Russian assets will remain immobilised.

The US is said to be ready to provide US$20bn of the total amount if such changes to the sanctions regime are made.

If the EU fails to do so, the US will still join in, but the contribution amount will be smaller, sources familiar with the matter told Bloomberg.

The financial assistance in question totals US$50 billion, to be provided by the EU, the US, Canada, Japan, and the UK. The loan is set to be repaid using the proceeds from US$280 billion of frozen Russian assets, the majority of which are held in Europe.

The new €50bn from the G7 will complement the EU's existing €50bn macro-financial support package for Ukraine, which will be disbursed gradually over 2024-2027 and is tied to a reform plan.

The US and the EU initially agreed to contribute €20 billion each, but later, Washington began requesting safeguards from the EU to ensure greater predictability regarding the proceeds from Russian assets. This request arises because current EU sanctions require review and extension every six months.

Earlier media reports indicated that the EU was starting to develop a plan B, which would involve a larger share of the European contribution in the event that Washington does not participate in the scheme.

However, the EU's willingness to increase its share of the contribution reportedly faced dissatisfaction from key nations, including Germany, France, and Italy, during discussions at a meeting of EU ambassadors in Brussels on Wednesday.

The European Commission is of the opinion that it is best to extend the deadline for reviewing and extending sanctions and to guarantee the participation of the US. But Hungary continues to oppose any decisions, insisting that it must first wait for the results of the US elections.

The European Commission is said to have warned member states that the US could join the initiative even after the election but that the EU must complete all the paperwork by the end of October.

One source says the G7 is planning to finalise its intentions on the loan at a ministerial meeting on 25 October.

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