The United States and Europe are working on a plan to provide Ukraine with a multibillion-dollar lifeline by using interest earned on frozen Russian central bank assets. This move comes as Russia’s war effort intensifies and Ukraine’s need for military and economic assistance grows.
Treasury Secretary Janet L. Yellen revealed that the most promising idea is for Group of 7 nations to issue a loan to Ukraine backed by profits and interest income earned on Russian assets held in Europe. Finance ministers from the Group of 7 will be meeting in Italy to finalize the plan before presenting it to heads of state.
The urgency to provide more financial support to Ukraine has been mounting as the country struggles to fend off Russia. Western allies have been debating how to use the Russian central bank assets, with the United States believing it would be legal to confiscate the money and give it to Ukraine. However, European countries have been cautious about the lawfulness and precedent of such a move.
European Union nations have agreed in principle to use 90 percent of the profits to buy arms for Ukraine through the European Peace Facility, with the remaining 10 percent going towards reconstruction and nonlethal purchases. About 190 billion euros of Russian central bank assets held by Belgium’s central securities depository, Euroclear, are generating significant interest that could be transferred to Ukraine.
Using the interest as the basis for a loan could provide Ukraine with a much larger amount of money upfront, potentially up to $50 billion. The method for delivering the money and repayment details still need to be worked out, with discussions expected among finance ministers this week.
Ms. Yellen emphasized the importance of providing support to Ukraine to show Russia that Western allies are committed to helping Ukraine. The plan aims to demonstrate that the international community stands with Ukraine and will not back down in the face of Russian aggression.
