BRUSSELS, Oct 9 (Reuters) - EU envoys have reached an agreement to allocate up to 35 billion euros to Ukraine as part of a larger loan initiative from the Group of Seven (G7) nations, which is supported by frozen Russian central bank assets. This decision was announced by the current Hungarian presidency of the EU.
The G7 and European Union had previously committed to providing a $50 billion loan to assist Ukraine, with repayment sourced from profits generated by immobilized Russian assets in the West. Following Russia's full-scale invasion of Ukraine in February 2022, a significant portion of these assets—approximately 210 billion euros—has remained frozen, predominantly within the EU, with Belgium's Euroclear managing most of them.
The recent agreement allows the EU to utilize headroom in its budget as a guarantee, should the restrictions on the assets be lifted. It is crucial to note that all EU sanctions against Moscow require renewal every six months through a unanimous vote, which Hungary, known for its pro-Russian stance, has previously attempted to obstruct.
Hungary, which currently holds the six-month rotating presidency of the EU, has shown reluctance to discuss the potential extension of the asset-holding regime until after the upcoming U.S. elections in early November. Although the European Commission proposed extending the renewal period from six to 36 months, Hungary did not present this proposal during discussions among envoys.
The loan proposal still requires approval from the European Parliament due to its implications for the EU budget, with a vote expected on October 22. While the agreement addresses some concerns, it may not fully satisfy U.S. expectations, as Washington has expressed the need for guarantees that Russian assets will remain frozen for an extended period before proceeding with its planned $20 billion contribution.