Fresh from a bruising European election last weekend, French President Emmanuel Macron and German Chancellor Olaf Scholz will tell President Joe Biden they reject the American proposal for Europe to act as sole guarantors for the loan, according to conversations with six senior diplomats and officials.
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.
Governments are in a race against time, not just because Ukraine desperately needs the money, but because there’s no certainty that a Donald Trump presidency would back the initiative. A final agreement will now be delayed until at least the fall, according to three officials. The U.S. goes to the polls on Nov. 5.
While G7 leaders in Puglia are expected to endorse the broad idea for the loan to Ukraine, they are unlikely to agree on any of the details.
Who bears the risk for the loan
As Ukraine struggles to pay for its war effort, the U.S. has been lobbying European allies to look into ways to secure cash for Kyiv amid fears that Trump’s potential reelection to the U.S. presidency could halt Western support to Ukraine.
To front-load that aid, Washington suggested taking a $50 billion loan for Ukraine, which would be paid back each year with the profits generated by immobilized Russian assets. The EU and U.S. both agree on that plan in theory — but they disagree on who’s on the hook if anything goes wrong.
