Russian asset proceeds fund new $20 billion US loan to Ukraine

The US Department of Treasury announced on 10 December the disbursement of $20 billion in loan assistance to Ukraine, as part of a broader $50 billion Group of Seven (G7) initiative backed by proceeds from frozen Russian assets.

The loan package is part of the G7’s Extraordinary Revenue Acceleration (ERA) Loans initiative amid the ongoing Russo-Ukrainian war. The disbursement comes prior to US President-elect Donald Trump’s inauguration in January, aimed at protecting the funds from being clawed back by his administration. Trump has previously complained about the level of US aid to Ukraine and promised to end the war quickly, without specifying how. Under the agreed mechanism, the US, EU, and other G7 nations will each provide a loan to Kyiv that will be repaid with profits generated by approximately $280 billion of frozen funds, most of which are held in Europe. The European Union has frozen roughly $235 billion in funds from Russia’s central bank, with around 90% held by the Belgium-based international deposit organization Euroclear.

Treasury Secretary Janet L. Yellen said in a statement:

“These funds – paid for by the windfall proceeds earned from Russia’s own immobilized assets – will provide Ukraine a critical infusion of support as it defends its country against an unprovoked war of aggression.”

According to the Treasury Department, the funds have been transferred to the World Bank’s Facilitation of Resources to Invest in Strengthening Ukraine Financial Intermediary Fund (F.O.R.T.I.S. Ukraine FIF), through which they will be made available to Ukraine.

A Treasury Department official told Reuters that Yellen personally oversaw staff executing the wire transfer of the $20 billion to the World Bank fund.

The Treasury Department emphasized that the funds will help ensure Ukraine has resources for emergency services, hospitals, and other foundations of its resistance.

“Right now, Putin is engaging our coalition in a contest of wills, counting on us to tire and ultimately retreat,” Yellen stated, adding that through “creative policymaking and the unity of the G7, we are sending an unmistakable message of resolve by making Russia increasingly bear the costs of its illegal war.”

The EU has already committed around $19 billion in loans backed by frozen Russian assets, while the United Kingdom, Canada, and Japan have also pledged contributions, AFP noted. Reuters says that according to a G7 loan term sheet, the EU will provide 18.115 billion euros, Canada C$5 billion, Britain 2.258 billion pounds, and Japan 471.9 billion yen.

The Treasury Department said in its statement that the frozen Russian assets will remain immobilized until Russia ends its aggression and pays for the damage it has caused to Ukraine.

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