site.btaEuropean Parliament Approves EUR 35 Bln Loan for Ukraine

With 518 votes in favour, 56 against and 61 abstentions, the European Parliament endorsed the new macro-financial assistance (MFA) to help Ukraine against Russia’s war of aggression. This loan is the EU’s part of a G7 package agreed last June, to provide up to USD 50 billion (approximately EUR 45 billion) in financial support to Ukraine, backed by Russian assets.

European Parliament President Roberta Metsola said from the parliamentary podium that frozen Russian Central Bank assets located in the EU will be used, emphasizing that the aggressor must be held accountable for the destruction caused to Ukraine. She concluded her remarks by saying "Glory to Ukraine."

Earlier in the day, a lively debate took place in the plenary hall, with various opinions being expressed.

The European Parliament rapporteur on this file, Swedish MEP Karin Karlsbro, said after the vote that this loan would contribute to the establishment of the Ukraine Loan Cooperation Mechanism (ULCM) of  EUR 45 billion (USD 50 billion. In his words, this new mechanism, drawn up at G7 level, is exceptional in that the loans from the EU and other G7 contributors will not be repaid by Ukraine but by windfall profits coming from the frozen assets of Russia. Karlsbro noted that the European Commission's proposal was swiftly approved without any changes, enabling Ukraine to receive this aid by the end of 2024.

In a press release sent to BTA immediately after the vote, Renew Europe said that the G7 support for the successful implementation of this mechanism depends on the prolongation of the sanctions against Russia and extending the immobilisation of Russian assets. "In this regard, Renew Europe deplores once again the obstruction of Hungarian Prime Minister Viktor Orban, who opposed the proposal to renew the freeze on Russia's EUR 210 billion sovereign assets for a period of 36 months, instead of 6 months. This option, also supported by the United States, would have provided Ukraine with the stable assistance it needs to counter Russian aggression. Once again, Orban's regime is showing who its true allies are," the press release reads.

The Ukraine Loan Cooperation Mechanism, a newly established framework, will make future revenues from the frozen Russian Central Bank assets located in the EU available to Ukraine. These funds will help Ukraine service and repay the EU’s MFA loan as well as loans from other G7 partners. While the mechanism’s funds can be used to service and repay loans, Kyiv may allocate the MFA funds as it sees fit.

The new MFA funds will be disbursed until the end of 2025. The loan is conditional upon Ukraine’s continued commitment to uphold effective democratic mechanisms, respect human rights, and further policy conditions to be set out in a memorandum of understanding. Additionally, the management and control systems outlined in the Ukraine Plan, along with specific measures to prevent fraud and other irregularities, will apply to the MFA loan.