EU plans to raise up to €40B in loans for Ukraine without US

The EU is preparing to provide up to 40 billion euros in new loans for Ukraine by the end of the year regardless of US participation, after a G7 plan to use frozen Russian assets to aid Kyiv faltered, Report informs referring to the Financial Times.

The unilateral push comes amid concern in Brussels that Hungary will prevent the bloc from delivering safeguards that the US needs for it to participate in the frozen asset scheme, according to three people involved in the talks. The government of Viktor Orbán, the EU’s most pro-Russia leader, has sought to delay a decision on the frozen assets scheme until after the US presidential election on November 5.

But Brussels must start work on any alternative within the next few weeks since such a move would rely on powers that expire at the end of the year. The funds are intended to aid the financial stability of Ukraine, which faces a $38 billion financing gap in 2025, according to Kyiv and the IMF. The country relies on foreign aid to keep functioning as Russia steps up attacks on its infrastructure.

According to a draft legal proposal seen by the FT, the EU will raise an unspecified number of billions in loans to Ukraine by the end of 2024. Such a move, expanding an existing aid programme, would need just majority support rather than unanimity, removing Budapest’s veto power. The final figure could range between €20bn and €40bn and would be set by the European Commission after consulting member states, the officials said.

“We could always go on our own,” said an EU official. While the original scheme — involving US participation — remains the commission’s plan A, officials argue they need an alternative if Budapest keeps its veto in place until the US election.