What is holding back the €35B EU loan for Ukraine?

The European Commission’s initiative to provide Ukraine with a €35B loan, which will be repaid with income from frozen Russian assets, is not supported by some key EU countries. The loan is intended to be part of a $50B package from the G7, but Germany, France, and Italy rejected the proposal last week.

In turn, the US is ready to provide $20B from the overall package agreed on by the G7 if the EU modifies its Russian sanctions to make them more predictable. If not, the US will lower its contribution. Therefore, the EU is trying to decide how to restructure its package of sanctions.

The G7 countries are expected to discuss their commitments at a ministerial meeting on October 25. Support for Ukraine will also be discussed at the meeting of EU leaders scheduled for October 17-18.

When the new mechanism is operational, the EU will stop using revenue from Russian assets. The new loan will be paid in tranches starting in 2025, in addition to other aid packages.