EU Trade Committee Endorses €35 Billion Ukraine Aid Plan Using Frozen Russian Assets

Ukraine: Trade Committee Approves Financial Aid Utilizing Russian Assets

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Members of the European Parliament in the Trade Committee gave their approval on Monday for a financial loan up to €35 billion for Ukraine. This move is part of the European Union's role in the G7's assistance program.

The Trade Committee approved the Commission's suggestion to offer Ukraine a special Macro-Financial Assistance (MFA) loan of up to €35 billion, with 31 votes in favor, 4 against, and no abstentions. This financial aid is part of the EU's participation in the G7's plan to provide Ukraine with up to $50 billion (around €45 billion) to help meet its immediate financial demands due to Russia's aggressive military actions.

The repayment of this unique macro-financial assistance (MFA) loan, along with loans from other G7 nations, will be financed using the extraordinary income generated from the frozen assets of the Russian Central Bank. This process is facilitated by the Ukraine Loan Cooperation Mechanism, which was recently established based on the Commission's proposal.

Expected future earnings from frozen Russian assets, alongside potential funding from EU countries and other international contributors, will be directed to Ukraine through a specific mechanism. This initiative aims to help Ukraine repay the extraordinary Macro-Financial Assistance (MFA) loan and other qualifying loans from G7 partners, as recognized by the Commission. The allocated funds are designated solely for the servicing and repayment of these eligible loans, including the MFA loan.

The latest MFA loan comes without specific restrictions, giving Ukraine the flexibility to use the money according to its own priorities. The management and oversight procedures specified in the Ukraine Plan, alongside particular strategies to deter fraud and other irregular activities, will be applicable to this loan as well. These new MFA funds are expected to be accessible by the close of 2024 and will be distributed through the end of 2025. The provision of the loan is contingent on Ukraine's ongoing dedication to maintaining robust democratic processes, honoring human rights, and adhering to additional policy requirements that will be detailed in a memorandum of understanding.

Quotation

"The decision to utilize profits from frozen Russian assets communicates a strong message: the responsibility for Ukraine's reconstruction should lie with those accountable for its devastation, which is Russia. The new macro-financial support and loan collaboration framework aids Ukraine in sustaining essential societal functions. Holding Russia financially accountable is a crucial move. Ukraine's battle is not only for its survival and liberty but also for ours. This plan highlights the EU's steadfast dedication to upholding Ukraine's sovereignty and economic strength," stated Karin Karlsbro, rapporteur from the Renew group in Sweden.

Future Actions

Lawmakers are anticipated to cast their votes on the proposal between October 21 and 24. The Council gave its approval to the proposal last week and intends to finalize the adoption of the regulation through a written procedure once Parliament has voted. The regulation is projected to become effective the day following its release in the Official Journal of the European Union.

Context

In September, the European Commission revealed a €35 billion loan initiative for Ukraine, aligning with a strategy by G7 nations to extend loans totaling up to $50 billion (€45 billion). These loans are expected to be funded by future income generated from frozen Russian state assets. The EU has frozen around 210 billion euros in assets from Russia's Central Bank, following sanctions related to Russia's military actions in Ukraine starting February 2022. EU member states have agreed to allocate the exceptional revenues from these frozen assets to aid Ukraine's military operations and reconstruction efforts. The establishment of the Ukraine Loan Cooperation Mechanism highlights the EU's ongoing commitment to supporting Ukraine.

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Eszter ZALAN

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