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Monday, November 11, 2024

U.S. Official Reports Allies Advancing in Utilizing Russian Assets for Ukraine

A senior U.S. Treasury official said that the United States and its G7 partners are progressing in efforts to provide urgently needed funds to Ukraine by leveraging profits from frozen Russian assets.

Brent Neiman, Assistant Secretary for International Finance, highlighted a recent European Union decision to use the annual profits from immobilized Russian assets. This move could potentially channel billions of dollars per year to support Ukraine against Russia’s military invasion.

Neiman mentioned that the U.S. and its Group of Seven partners are advancing discussions on delivering even more funds to Ukraine in the short term.

“One possibility is to lend a significant amount upfront to help Ukraine immediately and link repayment of that loan to future windfall profits,” he said. This approach would provide an immediate financial boost to Ukraine and signal to Russian President Vladimir Putin that he “cannot simply outlast Ukraine and its partners,” Neiman noted, following his recent visit to Ukraine.

The U.S. has been advocating for its G7 partners—Britain, Canada, France, Germany, Italy, and Japan—to support a loan backed by income from the frozen assets. This loan could offer Kyiv up to $50 billion in near-term funding. This proposal has emerged as the preferred option since G7 countries remain divided over outright asset seizure.

A Treasury official acknowledged the presence of technical issues to resolve and noted that other options were still under consideration but declined to provide further details.

U.S. Treasury Secretary Janet Yellen stated that the profits from these assets amount to about $3 billion to $5 billion annually. She indicated that the U.S. proposal has significant support.

Also Read: China Denies Fueling Russia-Ukraine War Tensions, Affirms Commitment to Peace

“We’re hopeful that this can be developed into a proposal for the upcoming G7 meeting,” Yellen said.

The White House emphasized that any solution for monetizing approximately $300 billion in frozen Russian assets would require collaboration with allies and other countries. White House spokesperson John Kirby mentioned that President Joe Biden would likely discuss this issue during his visit to France this week and at the G7 summit in Italy next week, though he did not confirm if any deal was imminent.

Kirby stressed that any solution must involve allies and partners globally since the assets are held worldwide. “We can’t do this unilaterally. We need participation and assistance from our allies and partners, or it won’t work,” Kirby said.

DEBT DEAL

Neiman expressed hope that Ukraine and its bondholders would soon reach an agreement on a debt restructuring that ensures Ukraine’s debt sustainability and respects the comparability of treatment for the country’s creditors.

He anticipated that Ukraine would soon regain the ability to issue debt to private investors in international markets but did not provide details on how this would be achieved.

Ukraine is seeking a debt restructuring before a two-year payment freeze on its $20 billion of outstanding international bonds ends in August. The full-scale invasion by Russia in February 2022 devastated Ukraine’s economy and finances, leading to a debt freeze to prevent a sovereign default.

Ukraine has international bonds with a face value of $19.7 billion across 11 dollar-denominated and two euro-denominated securities, maturing between 2024 and 2035. Including past-due interest, Ukraine owes $23.6 billion on these bonds, according to JPMorgan’s calculations.

Additionally, Ukraine owes $2.6 billion from a previous pledge linked to GDP growth targets, created during its 2015 debt restructuring following Russia’s annexation of Crimea. This instrument is also under consideration for restructuring.

John Collins
John Collins
John is an esteemed journalist and author renowned for their incisive reporting and deep insights into global affairs. As a prominent contributor to City Telegraph, John brings over 5 years of experience covering diverse geopolitical landscapes, from the corridors of power in major capitals to the frontlines of conflict zones.

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