Biden announces $50bn G7 loan to Ukraine backed by frozen Russian assets

US Treasury Secretary Yellen says Russia will be ‘bear the costs of its illegal war, instead of taxpayers’ in the West.

Washington, DC – The White House has announced that the Group of Seven (G7) will offer Ukraine a $50bn loan backed by interests accrued on Russian government assets frozen by the political and economic group of wealthy nations.

President Joe Biden said on Wednesday that the United States will cover $20bn of the loan, which “will be paid back by the interest earned from immobilized Russian sovereign assets”.

“In other words, Ukraine can receive the assistance it needs now, without burdening taxpayers,” Biden said in a statement.

“These loans will support the people of Ukraine as they defend and rebuild their country. And our efforts make it clear: tyrants will be responsible for the damages they cause,” he added.

Countries in the G7 – Canada, France, Germany, Italy, Japan, the United Kingdom, and the US – imposed heavy sanctions on Russia over its invasion of Ukraine in 2022, cutting off Moscow’s access to its own funds in their financial system.

Russia has rejected efforts to confiscate its assets, describing them as “21st-century piracy”.

The loan could help ease domestic pressures that the US is facing for its continuing military and budgetary aid to Ukraine.

Foreign donors have pledged 60 billion euros ($66bn) for Ukraine over a multiyear period to help the country rebuild.

While the Biden administration has committed to supporting Kyiv, earlier this year funds appropriated for Ukraine nearly ran out amid a standoff in Congress, with some Republicans growing sceptical of the aid, if not opposing it altogether.

In April, Congress – which is tasked with appropriating money under US laws – passed a $61bn aid package for Ukraine that also included billions of dollars in military assistance to Israel and Taiwan.

Ukraine’s supporters have also been concerned that Republican candidate and former President Donald Trump may reconsider Washington’s assistance to Kyiv, should he win the US presidential election next month.

On Wednesday, US Treasury Secretary Janet Yellen said the loan, which will be available by the end of the year, will further penalise Russia for its invasion.

According to Yellen, G7 countries have frozen about $280bn of Russian sovereign assets held in their financial institutions.

“As we look ahead, Russia will increasingly be forced to bear the costs of its illegal war, instead of taxpayers in the US and Europe,” she told reporters.

Speaking alongside her Ukrainian counterpart Sergii Marchenko, Yellen added that the move will also send a message to Russian President Vladimir Putin that “waiting out” Western support for Ukraine is a losing strategy.

“Supporting Ukraine is essential to upholding the rules-based international order that has supported peace and prosperity for America and the world since the end of World War II,” Yellen said.

Despite its emphasis on the “rules-based order” when addressing Russia and China, the Biden administration has faced mounting criticism for its unconditional support for Israel, despite the US ally’s well-documented abuses across the Middle East.

On Wednesday, Ukraine’s Marchenko hailed the loan as a “tremendous decision”, saying that the next step should be the outright seizure of Russian assets.

He credited the US for helping secure the funds. “I am very grateful to you, madam secretary,” Marchenko told Yellen.