Issuing a loan could bring tens of billions for Ukraine to finance its defence, according to the US.
ADVERTISEMENTA new US proposal suggests that Ukraine could have tens of billions of euros through issuing a bond or a loan, secured against frozen Russian assets held in the EU, reported the Financial Times.
The war is now in its third year without a clear end in sight. Kyiv is in need of an additional €34.45 billion to finance its defence in 2024.
While EU leaders have recently agreed on €50 billion of financial support for Ukraine until 2027, additional US and EU aid is getting increasingly hard to push through, therefore western officials are on the lookout for generating more funds for Ukraine, using the €260 billion worth of Russian assets that were frozen after the war broke out in February 2022.
US and EU policymakers don’t have the same approach on to how to use the frozen assets held in Europe to support Ukraine.
Washington was all for confiscating and handing over the funds to Kyiv to finance its defence and reconstruction but EU officials prefer to use the profits only generated by the Russian assets to leave no doubt about abiding international law and avoid risking any turmoil in the financial markets.
However, instead of transferring the interest from the Russian reserves, which could be €3.85 billion in profits since the start of the war, according to the FT, the US has a new proposal, on how these funds can generate more in the form of a loan to Ukraine.
“We’re at a point in which we should explore every possible avenue to maximise the value of the immobilised reserves for Ukraine,” cited the FT Daleep Singh, US deputy national security adviser for international economics, talking in Kyiv on Wednesday.
He added that the US proposal would involve bringing forward the “present value of the future interest stream of the immobilised assets, either through a bond or a loan”.
Issuing a bond or a loan against the future profits of the Russian assets could bring an estimated €30-40 billion over the next 10 years, highly depending on future interest rates.
The question remains, as EU officials also noted to FT, what would happen to a bond secured against 10 years of interest payments from impounded Russian assets if the war were to end sooner, and these assets were handed back to Moscow.
One solution could be that the G7 states backed the bond with a state guarantee, came another idea from unidentified officials, cited by the media outlet.
Meanwhile, Kyiv is facing talks to urgently restructure its $20 billion (€18.77 billion) debt owed to private investors.
The proposal is going to be on the table next week at the spring meetings of the World Bank and IMF in Washington next week and the US is expecting a decision at the G7 leaders’ annual summit in June.
