Billions of euros for Ukraine. Russian assets frozen

The President of the European Commission, Ursula von der Leyen, announced in Kyiv that the European Union will grant Ukraine a loan of 35 billion euros. These funds, coming from EU funds, will be secured by Russian assets. It is worth emphasizing that Hungary will not be able to block this support. The total amount of support for Ukraine, together with contributions from other G7 countries, could amount to as much as 45 billion euros.

“Russia should be held accountable for the damage it has caused,” von der Leyen said during a joint press conference with Ukrainian President Volodymyr Zelensky. She added that the loan would go directly to the Ukrainian national budget, which would strengthen the country’s financial stability. Under this mechanism, Ukraine would be free to decide how to allocate the funds, which would relieve national funds that could then be directed to military needs. The first tranches of the loan should reach Kiev next year.

The European Union has frozen Russian assets worth around 200 billion euros, and the profits from their turnover have so far contributed 1.5 billion euros to the Ukrainian budget. Now, the frozen assets are to serve as collateral for new loans. Although they are not confiscated, this mechanism is causing some controversy among some countries, which fear a violation of the international legal order.

The new financial mechanism was created in cooperation with the G7 countries: the United States, Great Britain, Canada and Japan. During the June summit in Puglia, the leaders of these countries agreed on financial support for Ukraine. Contributions from the remaining G7 countries may amount to 10 billion euros, which will reduce the amount of the loan granted by the EU. In addition, other countries may also join this support mechanism.

Final approval of the new mechanism requires the consent of EU member states. However, according to information provided to the media, one country will not have a veto, meaning Hungary will not be able to block this aid, although it has so far blocked €6 billion from the European Peace Facility.

Decisions on macro-financial assistance to Ukraine are taken by qualified majority, meaning that the consent of 15 of the 27 member states is enough. In cases involving Russian assets frozen under sanctions, decisions must be taken unanimously. These sanctions were imposed after the Russian invasion of Ukraine in February 2022.

Two of the three key decisions needed to launch the new support mechanism will be taken by majority vote, while the consent of all countries will only be required to extend the sanctions from six months to three years. This is important from a legal perspective, but for the loan itself, the mechanism can operate independently.

During her visit to Kyiv, von der Leyen also stressed that the EU would provide Ukraine with energy support ahead of the upcoming winter season. Zelensky, during the conference, expressed gratitude for this support, which includes an additional €160 million, €100 million of which comes from profits from frozen Russian assets.

The talks also discussed the protection of key Ukrainian energy facilities, including the need to finance their protection. Zelensky indicated that Ukraine must be strengthened enough to host another peace summit later this year, which could end the ongoing war.