US, G7 Allies to Provide $50 Billion Loan to Ukraine From Frozen Russian Assets

U.S. President Joe Biden meets with Ukrainian President Volodymyr Zelenskyy at the Oval Office of the White House in Washington on Sept. 26, 2024. Saul Loeb/AFP via Getty Images

The United States and its Group of Seven (G7) allies will provide Ukraine with $50 billion in loans funded by frozen Russian assets, the White House announced on Oct. 23.

Daleep Singh, the White House deputy national security adviser on international economics, confirmed that the United States will extend a $20 billion loan. The administration will seek congressional authorization and divide America’s share between supporting Kyiv’s economy and its military.

“Either way, the U.S. will provide $20 billion in support for Ukraine through this effort, whether it’s split between economic and military support or provided entirely via economic assistance,” Singh said.

The economic support could be dedicated to Ukraine’s infrastructure and energy projects.

Canada, the European Union, the UK, and Japan will contribute the remaining $30 billion.

“Nothing like this has ever been done before,” the White House official told reporters. “Never before has a multilateral coalition frozen the assets of an aggressor country and then harnessed the value of those assets to fund the defense of the agreed party, all while respecting the rule of law and maintaining solidarity.

“And as a result, Ukraine will receive the assistance it needs now without burdening our taxpayers.”

After the United States signs loan agreements with Ukraine, at least half of the $20 billion loan will begin being dispersed through the World Bank’s financial intermediary fund in December. Officials say the investment vehicle will be subject to robust accountability and transparency measures.

Interest income generated from frozen Russian assets will be used to repay these loans.

Singh noted that revenues used to finance these loans do not belong to Russia, “but rather the custody in Belgium.”

“So we don’t view this as a seizure of Russia’s assets,” he said.

Further lending details will be confirmed at the G7 meeting of development ministers in Pescara, Italy, held Oct. 24 to 25.

Debating the Confiscation of Russian Assets

U.S. Secretary of the Treasury Janet Yellen revealed ahead of the International Monetary Fund (IMF) and World Bank annual meetings that the United States and its G7 allies were close to finalizing the lending plan for Ukraine.

The European Parliament overwhelmingly approved financial support for Ukraine on Oct. 22. EU governments gave the green light earlier this year to set aside profits from these assets for Ukraine.

In June, G7 nations established a tentative deal to extend as much as $50 billion in new loans to Ukraine. The money relied on using Moscow’s assets as collateral.

At the onset of the military conflict, the United States and its allies froze about $300 billion in Russian central bank assets. While virtually all of the money is situated in Europe, the Russian Elites, Proxies, and Oligarchs Task Force identified about $5 billion in Russian central bank assets inside the U.S. banking system.

U.S. Treasury Secretary Janet Yellen attends a press conference at the U.S. Ambassador's residence in Beijing on April 8, 2024. Pedro Pardo/AFP via Getty Images

This year, officials started considering appropriating assets to fund Ukraine’s military operations and postwar reconstruction and using them as collateral to borrow from global capital markets.

“Being able to use these Russian sovereign assets to help rebuild Ukraine is critical,” U.S. Secretary of State Antony Blinken said in April. “And it’s also something that one way or another, one day or another, is going to happen.”

The Senate Foreign Relations Committee approved the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, which allows the United States to confiscate the Russian central bank’s assets.

At the IMF–World Bank annual meetings in February, Yellen told reporters that “there is a strong international law, economic, and moral case for moving forward” with appropriating Moscow’s funds.

Others have expressed caution.

IMF First Deputy Managing Director Gita Gopinath urged these nations to ensure they have sufficient legal support to avoid future challenges.

“While this is for relevant courts and jurisdictions to determine, for the IMF, it is important that any action has sufficient legal underpinnings and does not undermine the functioning of the international monetary system,” Gopinath stated at a Stanford Institute for Economic Policy Research event in May.

European Central Bank President Christine Lagarde recommended restraint before freezing and confiscating assets because “it would start breaking the international legal order.”

“Moving from freezing the assets to confiscating the assets, disposing of them, is something that needs to be looked at very carefully,” Lagarde said during a Council on Foreign Relations discussion in April.

The Kremlin has said it will retaliate.

In September 2022, the World Bank projected that Ukraine would need $349 billion to rebuild its economy and social services after the war.

The latest funding measure signals to President Vladimir Putin that “Russia will not prevail in this conflict,” President Joe Biden said in a statement.

“The people of Ukraine will prevail,” Biden said. “This is another reminder to Vladimir Putin that the world has rallied behind Ukraine—and the United States and our G7 partners will continue to stand with them every step of the way.”