The United States has officially completed its $20 billion share of a long-anticipated $50 billion loan to Ukraine, which is supported by frozen Russian assets. The government announced that it plans to begin disbursing these funds for economic and military assistance by the end of the year.

U.S. Treasury Secretary Janet Yellen and Ukrainian Finance Minister Serhiy Marchenko formalized the agreement for the $20 billion loan commitment, which will complement a separate $20 billion commitment from the European Union and an additional $10 billion to be allocated among G7 partners, including Britain, Japan, and Canada.

The repayment of this loan will be sourced from the profits generated by over $300 billion in Russian sovereign assets that have been frozen since the onset of the invasion of Ukraine in February 2022, with the majority of these assets located in Europe. President Joe Biden emphasized that this arrangement allows Ukraine to access the necessary support without imposing a financial burden on taxpayers.

The Biden administration aims to allocate $10 billion of the loan for military assistance, a move that will require approval from the U.S. Congress, as indicated by officials from the White House National Security Council during a press briefing.

An official from the National Security Council stated that the remaining $10 billion can be made available by December without requiring Congressional approval. The official emphasized that the U.S. will contribute a total of $20 billion in support to Ukraine, which may be allocated between economic and military assistance or provided entirely as economic aid.

The U.S. funds designated for non-military aid will be directed to the World Bank Trust Fund, which has agreed to oversee the loan.

According to a source familiar with the arrangement, the World Bank will handle sovereign loan contributions from the U.S., Japan, and Canada similarly to its management of a climate loss and damage fund.

Ukrainian President Volodymyr Zelenskiy expressed gratitude to President Biden and Treasury Secretary Yellen in a post on X, describing the U.S. loan as a “significant step towards supporting Ukraine’s fight for freedom and holding Russia accountable.”

The Russian embassy in Washington criticized the agreement, asserting that it amounted to state-level theft. In a statement on Telegram, it remarked, “It is evident, even to an untrained observer, that the only aspect of significance in this matter is the elevation of theft to a state policy.”

BRITAIN, CANADA ANNOUNCE CONTRIBUTIONS

This week, G7 finance ministers and central bank governors were scheduled to convene during the International Monetary Fund and World Bank annual meetings in Washington. The G7 comprises the U.S., Japan, Germany, France, Britain, Italy, and Canada.

Britain announced a contribution of £2.26 billion ($2.94 billion) to the G7 loan, indicating that these funds would assist Ukraine in procuring weapons and repairing damaged infrastructure. Defense Minister John Healey stated that the funds from Britain would be exclusively allocated for Ukraine’s military efforts and could facilitate the development of drones with greater range than some long-range missiles.

When questioned about the possibility of Ukraine using the funds to purchase British-made Storm Shadow missiles for targeting deep within Russia, Healey responded, “They are significantly advancing the use of even longer-range drones. They will collaborate with us on how to utilize this funding and on the weaponry they require most.” Canada’s finance ministry announced on Wednesday that it would contribute C$5 billion ($3.7 billion) to the G7 loan initiative.

ELECTION TIMING

The loan initiative received support from G7 leaders in Italy in June; however, it faced delays due to U.S. officials demanding guarantees that Russian assets would remain frozen for an extended period to ensure a reliable source of repayment revenue.

Treasury Secretary Yellen aimed to prevent a scenario where U.S. or Ukrainian taxpayers would be liable for repaying the loans if the frozen assets were returned to Russia as part of a peace agreement. This situation would have necessitated the EU to extend the duration for reaffirming its sanctions, including the asset freeze, from every six months to every three years. However, Hungary opposed this adjustment, preferring to wait until after the U.S. presidential election on November 5.

Republican candidate Donald Trump has pledged to withdraw from the Ukraine conflict. Consequently, Yellen opted to proceed without further EU assurances. A source familiar with the situation indicated that the Treasury’s shift aimed to secure U.S. government approval for the $20 billion allocation to Ukraine, recognizing the importance of maximizing U.S. contributions.

Yellen expressed confidence to reporters on Tuesday that the assets would remain frozen, describing the loan as “secure.” This view was supported by an NSC official, who noted that the EU’s commitment to provide Ukraine with at least $20 billion creates incentives for European nations to keep the assets frozen until full repayment is achieved. On Tuesday, EU lawmakers approved the bloc’s strategy to utilize the frozen Russian assets for the loan.