{"id":73049,"date":"2024-06-14T14:38:09","date_gmt":"2024-06-14T14:38:09","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/06\/14\/g7-agrees-to-50-billion-ukraine-loan-backed-by-russian-assets-how-will-it-work\/"},"modified":"2024-06-14T14:38:09","modified_gmt":"2024-06-14T14:38:09","slug":"g7-agrees-to-50-billion-ukraine-loan-backed-by-russian-assets-how-will-it-work","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/06\/14\/g7-agrees-to-50-billion-ukraine-loan-backed-by-russian-assets-how-will-it-work\/","title":{"rendered":"G7 Agrees to $50 Billion Ukraine Loan Backed by Russian Assets. How Will It Work?"},"content":{"rendered":"<div style=\"text-align:center\"><img loading=\"lazy\" decoding=\"async\" width=\"1050\" height=\"550\" src=\"https:\/\/i3.wp.com\/static01.nyt.com\/images\/2024\/06\/14\/multimedia\/14g7-ukraine-explainer-01-vcfw\/14g7-ukraine-explainer-01-vcfw-facebookJumbo.jpg?fit=1050,550&amp;ssl=1\" class=\"attachment-post-thumbnail size-post-thumbnail wp-post-image\" alt=\"G7 Agrees to  Billion Ukraine Loan Backed by Russian Assets. How Will It Work?\" title=\"G7 Agrees to  Billion Ukraine Loan Backed by Russian Assets. How Will It Work?\" \/><\/div><p> <br \/>\n<\/p>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">The United States and the other large Group of 7 economies agreed on Thursday on a plan to give Ukraine a $50 billion loan to help it buy weapons and begin to rebuild damaged infrastructure. The move comes at a crucial moment in the war, when Russia has the momentum on the battlefield.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The details are not fully worked out, but this is what we know.<\/p>\n<h2 class=\"css-13o6u42 eoo0vm40\" id=\"link-7ac977a1\">Where will the money come from?<\/h2>\n<p class=\"css-at9mc1 evys1bk0\">The upfront money for the loan will come from the United States, the European Union and other G7 countries, though the details on how much each entity contributes is being worked out.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The idea is to use the nearly $300 billion in Russian assets in the West, frozen after Moscow\u2019s invasion of Ukraine in February 2022, as the basis for the loan. The money will be repaid over time with the profits earned from those Russian assets, about two-thirds of which are in Europe.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Many of the assets are in bonds that have matured, creating interest of, depending on the interest rate, $3 billion to $4 billion a year.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Rather than just providing Ukraine that yearly sum, which is relatively small given the war\u2019s demands, the G7 countries agreed on the loan, which could be provided to Ukraine by the end of the year.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Ukraine\u2019s current financial and military needs are estimated at about $100 million a year.<\/p>\n<h2 class=\"css-13o6u42 eoo0vm40\" id=\"link-bdb878d\">Which countries will contribute?<\/h2>\n<p class=\"css-at9mc1 evys1bk0\">The G7 countries have agreed at the leadership level to put up the money for the loan.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The Americans have said that they will put up the entire sum but would like others to participate. A senior European official, who requested anonymity to discuss behind-closed-doors financial deliberations, said Friday morning that all this was still a matter for discussion but that at the moment, the European Union was prepared to put up half, about $25 billion to $30 billion, with the Americans and others putting up the rest. The money would come from the European Union\u2019s financial aid budget.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">The leaders of the E.U. states will have to sign off on any commitment by the bloc, the official said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Since most of the assets are in Europe, the Europeans want to ensure that, as the proceeds are spent, European companies get a fair share, especially European arms manufacturers.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Britain, Canada and Japan, all G7 countries, have also said that they are willing to participate.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Ukraine will be the beneficiary of the profits from the Russian assets, and will not be responsible for repaying the loan.<\/p>\n<h2 class=\"css-13o6u42 eoo0vm40\" id=\"link-7c433fd1\">What happens if interest rates fall?<\/h2>\n<p class=\"css-at9mc1 evys1bk0\">One of the key issues is who takes responsibility for the loan if interest rates drop or if there is suddenly a peace deal that unfreezes the Russian assets.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">It seems unlikely that the assets would be unfrozen, since the G7 had agreed previously that they would be used to finance Ukraine\u2019s reconstruction after the war. Since the amount of money that will be needed to rebuild the country is at least twice the size of the frozen assets and grows as the war continues, it is unlikely that Russia will ever get those assets back.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Even so, who will guarantee the loan is vague \u2014 the liability is expected to be shared among the countries that issue it, according to two European officials close to the talks.<\/p>\n<h2 class=\"css-13o6u42 eoo0vm40\" id=\"link-727b96ed\">What will the money be used for?<\/h2>\n<p class=\"css-at9mc1 evys1bk0\">The loan will go to Ukraine in various disbursements by the end of the year and will be earmarked for three main purposes, the officials said: to support Ukraine militarily, including helping it establish arms factories on its territory; to help cover the country\u2019s budgetary deficit; and to help with the urgent reconstruction of infrastructure.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Disbursement is supposed to depend in part on Ukraine\u2019s ability to use the money to good effect.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But how it will be disbursed and through which agencies is still being discussed, the officials said. The World Bank is one possibility, they say. Nigel Gould-Davies, a senior fellow at the International Institute for Strategic Studies who has been researching the issue, said that another question was whether Ukraine would get to decide for itself how to use the money. \u201cOr,\u201d as he put it, \u201cwill that be decided for Ukraine?\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThere is a great deal of detail we don\u2019t yet know,\u201d Mr. Gould-Davies said, noting that he would have preferred a direct seizure of the assets, which would have been simpler. But some countries and central bankers, including Christine Lagarde, head of the European Central Bank, ruled that approach out for now because it would have set a dangerous precedent.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Mr. Gould-Davies said the current plan was \u201csuboptimal compared to full seizure.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cIt\u2019s more complicated and requires an elaborate financial engineering that seizure would not require,\u201d he added.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But, he acknowledged, \u201cGiven where we were a few days ago, this outcome is at the upper end of expectations.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Ursula von der Leyen, president of the European Commission, the executive arm of the European Union, said the agreement was \u201ca very strong message to Putin that Putin cannot outlast us, and we will stand by Ukraine as long as it takes.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">In a nod to Europeans already anxious about the cost of the war, she added,<span class=\"css-8l6xbc evw5hdy0\">  <\/span>\u201cIt is not European taxpayers that are paying for the Russian damage, but it is Russia.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.nytimes.com\/2024\/06\/14\/world\/europe\/ukraine-g7-ukraine-aid-russia.html\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The United States and the other large Group of 7 economies agreed on Thursday on a plan to give Ukraine a $50 billion loan to help it buy weapons and begin to rebuild damaged infrastructure. The move comes at a crucial moment in the war, when Russia has the momentum on the battlefield. The details [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":73050,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","fifu_image_url":"https:\/\/static01.nyt.com\/images\/2024\/06\/14\/multimedia\/14g7-ukraine-explainer-01-vcfw\/14g7-ukraine-explainer-01-vcfw-facebookJumbo.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[5254,4252,7222,1289,2070,1461,1130,1396],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/73049"}],"collection":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/comments?post=73049"}],"version-history":[{"count":1,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/73049\/revisions"}],"predecessor-version":[{"id":73051,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/73049\/revisions\/73051"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media\/73050"}],"wp:attachment":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media?parent=73049"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/categories?post=73049"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/tags?post=73049"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}