This Wednesday, October 23, 2024, Washington announced a contribution of $20 billion in favor of Ukraine, a decision with serious consequences which is based on the use of frozen Russian assets. Indeed, this measure is part of a vast G7 program which aims to support the Ukrainian war effort and maintain economic pressure on Moscow. As the year 2025 approaches, the negotiations around these frozen funds reveal the complex issues of a conflict that is redefining international alliances and financial priorities.
Washington prepares to release 20 billion dollars for Ukraine
US Treasury Secretary Janet Yellen has confirmed that the United States is close to finalizing a $20 billion loan to Ukraine. This funding comes directly from interest generated by Russian assets frozen as part of sanctions imposed following the invasion of Ukraine. “We are very close to finalizing this agreement, just a few details remain to be worked out,” she said at a press conference during the IMF and World Bank meetings. This financial assistance is part of a broader G7 commitment that includes a total of $50 billion in support for Ukraine, expected before the end of the year.
Such a loan is based on an innovative mechanism where the interest generated by the 300 billion euros of frozen Russian assets will serve as guarantee. Around 3 billion euros per year are generated by these assets, which provides crucial liquidity to finance the Ukrainian war effort and prepare for the reconstruction of the country. This mechanism also provides relief to American taxpayers, as underlines Yellen: “The source of financing for these loans is not the American taxpayer, but the income from Russian sovereign assets mobilized in Europe.”
The G7 in search of strategic unity around aid to Ukraine
Beyond the American contribution, the other G7 countries play a key role in this international financial mobilization. At G7 meetings last June, leaders agreed to use Russian assets frozen in their respective jurisdictions to support Ukraine. In Europe, around 280 billion euros of Russian assets have been immobilized, mainly in Belgium, within the Euroclear depository. The European Parliament even approved an additional loan of 35 billion euros for Ukraine, financed by the profits generated by these frozen assets. Thus, “Russia must pay for the destruction of Ukraine,” said Swedish MEP Karin Karlsbro.
The economic sanctions do not stop there. Janet Yellen also announced a new round of tough sanctions to come, which target middlemen in third countries who supply Russia with equipment for its military. This strategy aims to strengthen Russia's economic isolation and limit its military capabilities.
As Ukraine continues to benefit from massive financial support from G7 countries, the question of the sustainability of these measures arises. The use of frozen Russian assets helps avoid tax pressure on citizens of donor countries, but this strategy could face legal and technical challenges in the long term. Furthermore, the intensification of sanctions against Russia could provoke unpredictable reactions from Moscow, which would further complicate the international situation. In addition, the use of cryptos, in this case Bitcoin, is one of the means used by Russia to circumvent sanctions.
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