Ursula von der Leyen, pictured with Mr Zelensky, EU Council President Charles Michel and G7 leaders, said the size of each member's payments had not yet been decided Source: Massimiliano De Giorgi/UPI/Shutterstock
European leaders have bowed to American pressure and agreed to a $50 billion loan deal for Ukraine using proceeds from frozen Russian assets.
G7 leaders in Italy announced on Thursday that Ukraine would receive significant financial support by the end of the year as Western countries try to appease Vladimir Zelensky ahead of a NATO summit next month.
The deal would see proceeds from the Russian central bank's frozen assets in $320 billion will be used to secure a $50 billion loan that can be used by Ukraine for its military or economic recovery.
Diplomatic sources told The Telegraph that the UK and US had successfully quelled concerns about the plan from Germany, which feared it would set a legal precedent for countries using frozen assets.
Joe Biden called the loan deal a “significant result” ”, which will be “forced to work” for the benefit of Ukraine in the coming months.
“We are not retreating. In fact, we are standing together against this illegal aggression,” the US President said at a joint press conference with Zelensky, adding that the war was a “test for peace” that the West faced.
The President of Ukraine welcomed a “historic day” that will provide his country with sustained support to win the war.
Prime Minister Minister Rishi Sunak said the loan would be a “game changer” for Ukraine's ability to fend off Russian attacks.
“This is fantastic news and something that I personally and the UK have been leading and championing for some time,” said he.
The deal was struck despite initial objections from Germany and Belgium, which had legal concerns about setting a precedent by using frozen assets for loans.
Some Western officials have accused Berlin of blocking support for Ukraine in recent months amid a row among politicians in the country's ruling coalition over spending public money on the war.
The Telegraph understands that Berlin was concerned that the seizure of the money could lead to new claims seeking reparations for Nazi crimes in World War II.
A Belgian securities depository holds about $220 billion in frozen Russian assets. , Euroclear. Brussels opposed any intervention with the amount for fear of undermining the banking sector.
The loan is the result of months of negotiations among the G7 countries on how to use Russian assets frozen at the start of the war, most of which are in Europe.
Initially, the US offered to send the full amount of $320. billion directly to Kyiv, but this was blocked by EU leaders due to fears of legal repercussions from the Kremlin.
The second version of the plan proposed by the EU involved transferring $5 billion in annual interest earned on assets to Ukraine, leaving the main capital intact.
The compromise reached Thursday would use profits to secure a loan that would eventually be guaranteed by the U.S. Treasury, officials said.
Ursula von Der Leyen, president of the European Commission, said all G7 members will contribute to the loan, but the extent of each country's participation is yet to be determined.
'Lean Forward'
A Foreign Office source said: “It has always been the case that we and the US were very forward-thinking and needed convincing others.”
US officials hope the loan plan will avoid a “hysteria” from Zelensky at next month's NATO summit in Washington, D.C., where Ukraine is not expected to be offered a specific timetable for joining the alliance.
At last year's NATO summit in Lithuania, NATO allies agreed to “extend an invitation to Ukraine to join the alliance when the allies agree and the conditions are met.” Mr. Zelensky called the lack of a schedule “unprecedented and absurd.”
In Washington, Ukraine will be shown a “well-lit bridge” to membership, but there will be no further guarantees about when its request to join the alliance will be granted.
The loan announcement came as Britain announced new sanctions in regarding a “shadow fleet” of Russian tankers that was being used to circumvent UK and G7 restrictions on oil exports.
It followed months of concern over funding to Ukraine, which was suspended by the US Congress until April despite objections Republicans.
Mr Zelensky has warned that without a major cash injection from the West, he will not be able to fend off Russian missile attacks on civilians in cities this summer or retake territory lost after Vladimir Putin's invasion.
Congress eventually approved a $61 billion package, but Western leaders are exploring additional funding options that could be used if Donald Trump wins the presidential election this year.
Trump has made clear he is against spending U.S. tax dollars on Ukraine and has told voters he would end the war “in one day” by pushing talks between Kiev and Moscow.
The loan agreed on Thursday is expected to fund Ukraine's military efforts in 2025. Biden and Zelensky separately agreed to a 10-year funding guarantee for Ukraine aimed at securing future U.S. support.
Mr. Biden skipped the G7 dinner hosted by Italian President Sergio Mattarella Thursday evening. Officials cited his busy schedule, which included two trips to Europe in as many weeks.
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