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Ukrainian foreign relations

EU Provides Ukraine with £9 Billion in Loans, Financed by Frozen Russian Assets

Strategic Insights

— 1 min read

The European Union has made another significant move to support Ukraine by providing £9 billion ($10.5 billion) in loans, sourced from the profits generated by frozen Russian central bank assets. This move is part of a broader effort by Western nations to utilize the approximately $300 billion in Russian reserves that have been immobilized since Moscow's 2022 invasion of Ukraine. The EU has pledged a total of £21 billion in loans, with the G7 also backing a plan to raise $50 billion for Kyiv, to be repaid using the income from Russia's frozen reserves.

Key Takeaways:

  • The European Union has provided Ukraine with £9 billion ($10.5 billion) in loans, which are financed by profits generated from frozen Russian central bank assets.
  • The funds are part of a wider Western effort to utilize the approximately $300 billion in Russian reserves immobilized since Moscow's 2022 invasion of Ukraine.
  • About £200 billion of these assets are held by Euroclear, a Brussels-based clearinghouse, where they have accrued billions in interest.
  • The EU has pledged a total of £21 billion in loans, while the G7 has backed a plan to raise $50 billion for Kyiv.
  • Russia has denounced the scheme as unlawful and warned it undermines trust in the global financial system.
  • Economists and institutions, including the IMF and Euroclear, have cautioned that tapping the funds without clear legal grounds could erode confidence in Western financial institutions.
  • Maksim Oreshkin, deputy head of Putin's administration, stated in June that the situation is a major blow to the Western financial system and Western countries.
  • Nicolas Veron, a French economist at the Brussels-based Bruegel think tank, emphasized that central banks must be able to trust that their reserves abroad are safe.

Statistics:

  • The EU disbursement of £1 billion marks the seventh tranche this year.
  • The total amount of Russian reserves immobilized is approximately $300 billion.
  • About £200 billion of these assets are held by Euroclear, a Brussels-based clearinghouse.
  • The frozen assets have accrued billions in interest.
  • The EU has pledged £21 billion in loans.
  • The G7 has backed a plan to raise $50 billion for Kyiv.

Sources:

  • European Commission: "Data released on Friday"
  • Die Welt: "Nicolas Veron, French economist at the Brussels-based Bruegel think tank"
  • Maksim Oreshkin, deputy head of Putin's administration: June statement

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