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Good Use for Russia's Seized Money
In October, the White House announced an historic decision: the United States, along with the other members of the G7, (a group comprised of the world’s advanced industrial democracies), will loan Ukraine $50 billion, backed by the profits of immobilized Russian sovereign assets.
Some $260 billion in Russian assets were frozen by the U.S. and its allies after Russia’s full-on invasion of Ukraine in 2022. Interest earned on profits from those seized assets will be used for collateral for the loan.
In a briefing to reporters, Deputy National Security Advisor for International Economics Daleep Singh said, “Ukraine will now receive an economic lifeline as it prepares for a third winter of war. The G-7 deal will produce immediate benefits for Ukraine to close its near-term budget gap, to sustain its IMF [International Monetary Fund] program, and to fund its defense.”
“It’s a demonstration of why multilateralism is a force multiplier in foreign policy. No single country could have delivered this deal by itself. Every G7 country will contribute to the loan. And together we’re delivering a unified signal that the leading democracies of the world won’t fatigue in standing behind Ukraine’s fight for freedom,” he said.
The deal sends an “unmistakable signal to Putin,” said Deputy National Security Advisor Singh, “that time is not on his side.”
“One of the reasons why the United States pushed for the G7 to immobilize Russia’s central bank assets only two days after Putin’s invasion began in 2022 was that we knew it would come as a surprise in terms of the severity of the action, the unity with which we’d act, and our collective speed. In doing so, we believed our collective resolve could help change Putin’s calculus about the costs of prosecuting a senseless war. The deal announced last week to unlock $50 billion from the Russian assets we froze more than two years ago is a demonstration that these costs will continue to rise so long as the war continues.”
The U.S. contribution to the loan will be $20 billion; the additional $30 billion will come from the European Union, the United Kingdom, Canada and Japan, among others.
President Joe Biden declared in a statement, “These loans will support the people of Ukraine as they defend and rebuild their country. And our efforts make it clear: tyrants will be responsible for the damages they cause.”