Western allies near deal to fund Ukraine with Russian assets

The US and its European allies are nearing an agreement on using profits from frozen Russian assets to secure billions for Ukraine’s war effort, with officials hoping to have a deal by the Group of Seven summit later this month.

“We’re waist deep in the sausage making of trying to strike a deal,” Daleep Singh, the White House deputy national security adviser for international economics, told a gathering at the Center for a New American Security on Thursday. “What I can say at this moment is there’s a shared understanding of how dire the situation is on the ground.”

A Treasury official separately told Semafor that “it’s fair to say that there’s a lot of forward progress and movement right now” towards an agreement.

White House national security adviser Jake Sullivan also indicated during a meeting with Baltic officials earlier this week that a deal was close, according to a European official briefed on the discussion.

The idea pushed by the US would involve using the interest from the frozen Russian assets to jointly secure a $50 billion loan to help Ukraine as it beats back the Russian invasion.

“Everyone in the G7 is on the same page about two things: one, we have to do more … and two, we have a relatively narrow window to act because Ukraine has a critical funding gap,” the Treasury official said.

The official noted that while the US and EU approved packages to assist Ukraine earlier this year, those packages “don’t address Ukraine’s funding gap in 2025 and beyond.”

“Part of the appeal of this plan is that you could get this money online and to Ukraine relatively quickly,” the official said, noting that while there is not a specific timeline it could be done this year.

The loan would guarantee more support for Ukraine amid a fractured political environment and doubts about the ability to pass future funding, particularly following Washington’s prolonged fight over $60 billion in aid that finally passed in April.

Singh said the G7 leaders “have the chance to send an unmistakable signal that [Russian President Vladimir] Putin cannot outlast us, that we’re not going to fatigue no matter what happens in the elections here or anywhere else.”

The issue is expected to come up during President Joe Biden’s state visit over the weekend with French President Emmanuel Macron in Paris. Biden separately is scheduled to meet in Normandy on Friday with Ukrainian President Volodymyr Zelenskyy, who has been urging Western countries to do more to support Ukraine and provide the weapons it needs to fight the Russians.

The G7, taking place in Apulia, Italy, in mid-June, will gather the leaders of the US, France, the UK, Germany, Canada, Italy, and Japan.

The idea of commandeering Russian assets to assist Ukraine has been popular in the US, where Congress passed legislation earlier this year allowing the Biden administration to seize some $6 billion for Ukraine for reconstruction. But most of the $280 billion in assets frozen by G7 countries are held in Europe — specifically by Belgium-based Euroclear — where the idea of seizing them has raised complicated legal questions and concerns.

The EU earlier this year moved to seize the windfall profits of the Russian assets to arm Ukraine. Using them to secure a loan would be the next step, though Singh said Thursday the US would reserve the right to seize the assets themselves down the line.

“That option will not be foreclosed. So think of this as a down payment,” he said.

While an agreement looks likely, it isn’t guaranteed. “I wish I could say the deal is done, but we don’t yet have full consensus,” Singh said.

The European Commission has also floated using its own budget as collateral for securing the loan with the profits from Russian assets, meaning the EU would be acting independently of the US, Politico reported earlier this week.