Disagreements arose between the EU and the US on the issue of providing Ukraine with a $50 billion loan secured by profits from the frozen assets of the Russian Federation.
Points of attention
- Differences between the US and the EU regarding allocating a $50 billion loan to Ukraine lie in the distribution of risks and control over funds.
- European countries are rejecting the US offer because they are hesitant to bear the financial risk of project failure.
- The political and economic interests of the participating countries can undermine Ukraine's international support.
- The EU devised an alternative plan for allocating credit to Ukraine without the US's participation, which could intensify the competitive struggle between partners.
- The decision to allocate a loan to Ukraine is part of complex geopolitical processes and may have significant consequences for all parties.
What is wrong with the allocation of 50 billion dollars of credit from Western partners to Ukraine
According to the journalists of the publication, disagreements between the USA and the EU led to the fact that the discussion of this issue will continue after the summit of the leaders of the Big Seven.
It is noted that due to the EU countries' dissatisfaction with the US proposal, the White House's hopes for a demonstration of support for Ukraine within the framework of the G7 leaders' summit seem to have failed to meet expectations.
Washington offers: "We [the U.S.] take a loan, Europe takes all the risk, you [Europe] pay the interest, and we [the U.S.] use the money for a U.S.-Ukraine fund. We might be stupid but we’re not that stupid," says one of the European diplomats.
In the article, the publication emphasises high-ranking European diplomats and officials that the leaders of France, Emmanuel Macron, and Germany, Olaf Scholz, refuse the US offer.
There is palpable anger within European governments about the U.S. plan, which, they argue, would mean they would be on the hook to pay the loan back if anything goes wrong ― while American companies could potentially benefit the most from the Ukraine reconstruction contracts that would flow from it, the report said.
Also, the journalists emphasise that they are unsure whether Donald Trump will support this initiative if he wins the US elections.
At least three European officials told the publication's journalists that negotiations on this issue will be postponed until at least the fall.
While G7 leaders in Puglia are expected to support the general idea of lending to Ukraine, they are unlikely to agree on any details.
The publication's material recalls that the USA proposed allocating a 50 billion dollar loan to Ukraine, which would be paid out of profits from the Russian Federation's frozen assets.
The EU and the US agree in theory with the plan but differ on who will be on the hook if things go wrong.
The question of who will take legal responsibility for repaying the loan if the Russian-loyal Hungarian government vetoes this initiative is causing disagreement.
Other risks include the failure of Russian assets to generate sufficient income or their return to Russia as part of a peace settlement.
The US has proposed that European countries take on the main financial risk, with countries bearing responsibility in proportion to the amount of frozen Russian assets they hold.
In addition, EU and US officials have concerns about who will control these funds and how they will be spent.
According to European officials and diplomats, if Washington—or institutions with a large US stake, such as the World Bank—provides the money, American companies will have a profit advantage.
What is offered in the EU
The publication notes that EU representatives are currently proposing to provide Ukraine with its own loan secured by proceeds from the frozen assets of the Russian Federation without the participation of the United States and the G7 countries.
According to several diplomats, in this way, the EU is trying to put pressure on the US and force Washington to make concessions.
According to the alternative plan, the EU will provide Ukraine with a loan of 50 billion euros, which it will return at the expense of revenues from Russian assets frozen in the EU of about 200 billion euros.
The EU will use its seven-year budget of 1.2 trillion euros as collateral for the loan.
A high-ranking EU diplomat suggested that this option is gaining momentum because it does not require unanimity among EU countries.
