EU approves €35b loan for Ukraine, secured by frozen Russian assets

EU states on Wednesday approved a plan to loan Ukraine up to 35 billion euros ($38 billion) backed by frozen Russian assets, diplomats said.

Kyiv is desperate for funds as it seeks to prop up its economy, equip its military and keep its electricity grid functioning this winter after ferocious bombardments by Moscow's forces.

The EU's loan -- which was signed off by a majority of ambassadors at a meeting in Brussels -- is part of a bigger $50 billion initiative agreed by G7 powers in June.

The EU is the first of the G7 powers to announce how much it is putting forward as its share of the plan and is still waiting for others, including the United States and Britain, to do their part.

EU officials said the size of the bloc's loan was up to 35 billion euros, but could decrease if other G7 members decided to contribute more.

The EU has frozen roughly $235 billion of Russian central bank funds since the Kremlin launched its invasion of Ukraine in 2022, the vast bulk of immobilised Russian assets worldwide.

About 90 percent of the funds in the EU are held by international deposit organisation Euroclear, based in Belgium.

The G7 plan seeks to leverage the interest earned on the assets to get more funds to Ukraine and will replace an EU scheme currently in place that funnelled $1.7 billion to Kyiv in July.

There has been a delay in implementing the G7 loan as the United States had sought guarantees from the EU that the Russian assets would remain frozen.

Currently, EU member states have to agree every six months to extend the asset freeze.

Hungary rejected a proposal to extend that period to 36 months, arguing it wants to wait until after the US presidential election in November.

The European Parliament is now expected to approve the loan at a sitting later in October, enabling it to be paid out next year.