New EU loan to Ukraine worth 35 billion euros: frozen Russian assets will be exploited

New EU loan to Ukraine worth 35 billion euros: frozen Russian assets will be exploited

New aid destined for Ukraine from the European Union. This time the European Parliament has approved the 35 billion euro macro-financial assistance (AMF) plan which plans to use the frozen assets of the Russian central bank to lend them to Kiev. The majority was very large. Those who opposed it were above all the MEPs among the ranks of the ultra-right Patriots for Europe, the group founded by Viktor Orban, which Matteo Salvini’s League also belongs to. The plan was proposed by European Commission President Ursula von der Leyen to satisfy, at least in part, the urgent requests for help from Ukrainian President Volodymyr Zelensky.

The European Parliament voted with 518 votes in favor, 56 against and 61 abstentions for the loan intended for Kiev. The plan was agreed in October by the governments of the European bloc, but approval from the European Chamber was needed to proceed. The G7 plans to provide a total loan of $50 billion to help Ukraine, financed by profits generated by Russian assets tied up in the West. These assets were frozen shortly after Russia launched a full-scale invasion of Ukraine in February 2022.

More than two-thirds of the assets, around 210 billion euros, are blocked in the European Union, mostly with the Belgian company Euroclear, which handles the custody of the assets. “Russia’s frozen assets must be confiscated and used to arm Ukraine. Russia must be held accountable and pay directly for its aggression and crimes against Ukraine,” the People’s Party MEP said European Sandra Kalniete during the debate on financial support for Ukraine during the plenary in Strasbourg.

How the frozen assets of the Russian Central Bank will be used

The Ukrainian Lending Cooperation Mechanism, a newly established framework, will make available to Ukraine future revenues from the Russian Central Bank’s frozen assets located in the EU. In plans, these funds will help Ukraine repay the loan from the EU and other G7 partners. While funds from the mechanism can be used for the servicing and repayment of loans, Kiev can allocate Macro-Financial Assistance funds as it sees fit.

The new AMF funds will be disbursed until the end of 2025. The loan is conditional on Ukraine’s continued commitment to supporting effective democratic mechanisms, respecting human rights and other political conditions that will be defined in a memorandum of understanding. The management and control systems outlined in the Plan for Ukraine, together with specific measures to prevent fraud and other irregularities, will apply to AMF lending. “Russia must pay for attacking Ukrainians and brutally destroying the country’s infrastructure, cities, villages and homes. The burden of rebuilding Ukraine will be borne by those responsible for its destruction, namely Russia,” said rapporteur Karin Karlsbro of the liberal Renew group.

Ultra-right against new funds for Ukraine

So far, 118.3 billion have been allocated by the EU and its member states in the form of grants and loans that have supported the Ukrainian war effort and the country’s economy. As part of the sanctions imposed by the EU on Russia, Moscow Central Bank assets held by financial institutions within the bloc have been frozen since February 2022. The interest accrued from these fixed funds will serve as collateral for loans to Kiev: the estimate is a sum between 2.5 and 3 billion per year.

The EU plan for Ukraine: 35 billion in loans thanks to the funds confiscated from Putin

In the chamber, the most critical voices regarding this new tranche of loans came from the exponents of the ultra-right Patriots for Europe group, which includes the parties of Viktor Orban, Marine Le Pen and Matteo Salvini. The MEP of the Rassemblement national Angéline Furet, during her speech in the chamber, spoke of “economic bleeding” for the European Union in aid to Kiev, underlining that “the texts never speak of an end to the conflict, no funding foresees as pre – conditions the peace negotiations”.

Ten million fewer people in Ukraine since the war began

The governments of the 27 EU member states have already approved the proposal passed today in Parliament. The Council plans to formally adopt the regulation by written procedure after the European Chamber vote. The regulation will enter into force the day following its publication in the Official Journal of the EU.

Simultaneously with the MEPs’ vote, the United Nations Population Fund (UNFPA) announced that the population in Ukraine has decreased by more than 10 million people since Russia’s invasion in February 2022, citing data from the Ukrainian authorities. The decline, underlined the regional director of the UNFPA, Florence Bauer, is due to a “combination of factors”. According to an estimate from the International Monetary Fund’s World Economic Outlook, the country currently has around 33.3 million inhabitants.