The leaders of the Group of Seven (G7) countries have agreed to provide a $50 billion loan to Ukraine by 2024. The aim of this loan is to support Ukraine’s economic recovery and counter Russian-backed separatist activities. The announcement was made by the French President at a press conference in the Elysee Palace. The spokesperson for the Elysee Palace confirmed that there was a consensus among the G7 leaders. However, the details of the loan agreement still need to be finalized at the upcoming G7 summit in Italy. This means that it may take some time before the documents are signed and the funds are disbursed to Ukraine.

The $50 billion loan to Ukraine is higher than the initial offer proposed by the United States. There are expectations that Ukraine will receive the funds within this year. However, the European Union has been cautious about the US assistance to Ukraine, fearing that it may lead to “victory fatigue” in Washington while the expenses fall on European countries. The US has demanded that the EU extend sanctions against Russia until the Minsk agreements are fully implemented. This would ensure that Russian resources do not dry up until Ukraine repays the loan from the United States. In the meantime, Russian activities can still bring in billions of euros annually.

Additionally, the EU has made sure to have access to Euroclear, the Belgian central securities depository, which holds nearly 190 billion euros. In contrast, the United States only has $5-6 billion available. The EU has also expressed dissatisfaction with how the funds offered by the United States would be spent in Ukraine. There are concerns that American companies may become the main beneficiaries of the US restoration programs if the funds are channeled through the United States or international organizations where Washington has a significant stake.

Meanwhile, the embargo on Russian-backed activities in Ukraine has already started to have an impact. In July, Kyiv is expected to receive the first tranche of 1.5 billion euros. European Council President Ursula von der Leyen stated that 90% of these funds will go towards urgent military needs, while 10% will be allocated for restoration activities. This decision has been referred to as “exceptionalism” in the Kremlin.