EU approves new $38 billion financial aid for Ukraine

On Tuesday, the European Parliament approved a loan of up to 35 billion euros ($38 billion) for war-torn Ukraine, funded by profits from frozen Russian assets.

Ukraine urgently needs financial support to stabilize its economy, equip its military, and maintain its electricity grid during the winter amid ongoing heavy bombardments by Russian forces.

The EU loan, which passed with strong support from lawmakers, is part of a larger $50 billion aid package agreed upon by G7 countries in June. The EU is the first among the G7 nations to disclose its contribution, while other members, including the United States, have yet to finalize their commitments.

EU Justice Commissioner Didier Reynders indicated that additional contributions from other G7 nations would likely be announced during a meeting in Washington on Friday.

While the EU loan could be as high as 35 billion euros, the amount may be adjusted depending on the contributions from other countries.

Since Russia’s invasion of Ukraine in 2022, the EU has frozen around $235 billion in Russian central bank assets, representing the majority of frozen Russian assets worldwide. Approximately 90% of these funds are held by Euroclear, an international depositary in Belgium.

The G7 plan aims to leverage the interest generated from these frozen assets to provide more funding to Ukraine, replacing an earlier EU initiative that sent $1.7 billion to Kyiv in July.

The loan’s implementation had been delayed as the U.S. sought assurances from the EU that Russian assets would remain frozen. Currently, EU members must renew the asset freeze every six months, with Hungary having opposed a proposal to extend the period to 36 months, preferring to wait until after the U.S. presidential election in November.

This latest loan adds to the approximately 120 billion euros in support provided by the EU and its member states to Ukraine since the start of Russia’s invasion.