US, EU fail to agree on $50bn loan for Ukraine
13 June 2024 09:54
The US and European governments are in serious disagreement over a plan to secure a large-scale loan for Ukraine, which could drag on after this week’s G7 summit and come close to the US election. This is stated in a Politico article, according to "Komersant Ukrainian"
The Europeans are irritated by Washington’s proposal that the US will receive a loan, Europe will assume all the risk, pay interest, and the funds will go to the US-Ukraine fund.
“We may be stupid, but we are not that stupid,”
– said one European diplomat.
France and Germany will reject the US proposal that Europe be the sole guarantor of the loan. There is anger in Europe over the US plan, which would make them responsible for repaying the loan in case of problems, while US companies would potentially benefit most from contracts to rebuild Ukraine.
The governments are in a hurry because of Ukraine’s urgent need for funds and uncertainty that the Trump administration will support the initiative if he is re-elected. The final agreement is postponed until autumn, and the US elections are due on 5 November.
G7 leaders will endorse the general idea of a loan to Ukraine, but are unlikely to agree on the details. The key question is who will be legally responsible for repaying the loan if Hungary blocks the extension of EU sanctions against Russia, the withdrawn Russian assets no longer generate income or are returned to Russia as part of a peace agreement.
The US proposes that European countries should bear the main financial risk in proportion to the frozen Russian assets they hold. But the EU does not want to risk taxpayers’ money.
The parties are also arguing over control of the loan and influence over the use of the money. The Europeans argue that if distributed by Washington or the World Bank, American companies would benefit the most.
Frustrated, the Europeans are now proposing their own €50bn loan to Ukraine against €200bn of Russian assets frozen in the EU, using the EU budget as a guarantee. But some capitals warn that this could undermine Western unity.
