US faces protracted battle over paying for Ukraine

World 14:55 21.04.2024

The House on Saturday approved $61 billion in aid to Ukraine, ending six months of squabbling over continued US funding of the war against Russia.

But the diplomatic battle over how to pay the rest of Ukraine’s bills is only getting started.

At the annual spring meetings of the International Monetary Fund and World Bank in Washington this past week, US officials pushed reluctant Europeans to use some of the $280 billion in Russian central bank reserves that the allies froze in the war’s opening hours, Ednews informs via the Washington Post.

Over the past few months, diplomats have considered various proposals, including seizing the assets and transferring them to Kyiv, or using profits from the Russian investments to back a loan or bond offering. A final decision on proposals to repurpose the Russian assets awaits a June summit meeting of President Biden and other Group of Seven leaders in Italy.

“They’ve had the arguments for a long time. It’s now a question of can you get it done?” said Clay Lowery, executive vice president of the Institute of International Finance and a former Treasury official.

The glacial pace of decision-making highlights an uncomfortable reality for Kyiv: Despite this week’s apparent breakthrough in Congress, Ukraine faces recurring battles to win financial help. The current bill for damages and reconstruction is $486 billion and rising, according to a joint estimate by the government, the World Bank and the European Commission. And its battered economy remains dependent on international support.

Events are moving more quickly on the battlefield, where the Kremlin has been grinding out gains. Russian forces in recent days made “relatively significant tactical advances” outside of Avdiivka in eastern Ukraine, according to the Institute for the Study of War, a nonprofit research group.

European officials have balked at confiscating the Russian assets, fearing it could breach international law, discourage investors from trusting the euro and invite Russian retaliation.

Christine Lagarde, head of the European Central Bank, said last week that proposals to tap the frozen Russian assets for Ukraine’s benefit risk “breaking the international legal order that you want to protect.”

European officials also bristle at American insistence on what they see as a risky course of action when they hold the vast majority of the assets and any Russian retaliation will probably fall on Europe, not the United States.

As of September, the frozen Russian assets total $280 billion, “the majority of which is held in the European Union,” according to the G-7 task force monitoring the funds.

About $210 billion of that amount is held by Euroclear, a Belgian financial services company. Only around $5 billion is believed to be in the United States.

At the IMF and World Bank meetings, Treasury Secretary Janet L. Yellen met with her European counterparts in hopes of hammering out a compromise.

French Finance Minister Bruno Le Maire told reporters Wednesday that officials were discussing the European Commission’s March proposal to transfer to Ukraine about 3 billion to 5 billion euros annually. That sum, representing interest earned on the immobilized assets, could narrow Kyiv’s budget deficit or help it acquire additional military hardware.

Amid Washington’s protracted debate, Ukraine has run short of shells, bullets and air defense systems. But the modest sums being discussed, measured against Ukraine’s daunting needs, have left some observers skeptical.

“That is not going to change the battlefield or the fate of the Ukrainian economy,” said Douglas Rediker, chairman of International Capital Strategies, a financial advisory firm.

European finance ministers also fear that confiscating the Russian central bank assets could trigger a flight of global capital from the continent, according to Eswar Prasad, a Cornell University professor who served as chief of the financial studies division at the IMF.

But Prasad defended the measure as an important step if it leads to additional transfers of Russian revenue to Ukraine over time.

“If they can find a sensible way to start using Russian resources to transfer money to Ukraine, even if modest amounts, the symbolic significance cannot be overstated,” Prasad said.

Even if European reluctance can be overcome, the details of utilizing Russian funds are vexing. The Belgian prime minister last month floated the idea of raising money for Ukraine by issuing bonds that would pay investors interest with profits from the Russian assets. The United States has pushed the idea of having the G-7 nations join to arrange a syndicated loan, which would be backed by Ukraine’s reparation claims against Russia. Each proposal involves complex legal and financial questions.

All involved agree that more needs to be done for Ukraine, but there is no consensus on specifics, one senior Treasury official said, speaking on the condition of anonymity to relay confidential discussions.

“We’re thinking of the Russian sovereign assets as a sustainable medium-to-long-term solution for this funding problem,” the Treasury official said.

Assuming House approval of the Ukraine aid bill, the Senate is expected to follow suit soon, leading to the president signing legislation granting the embattled country much-needed financial assistance.

“You should not take the passage of this bill as evidence that the US obligations to Ukraine are over. Ukraine has no certainty even for 2025,” said Hlib Vyshlinsky, executive director of the Center for Economic Strategy, a Ukrainian think tank. “It will need further support to prevail in this war.”

The House also is expected to pass the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act (REPO), which would give the president authority to seize any Russian assets under US jurisdiction.

“There will be an ongoing need for funding. If every version of that fight is as hard as this one has been, the outlook is challenging,” said Tobin Marcus, an analyst with Wolfe Research and an aide to Biden during his vice presidency.

IEPF issued a statement regarding Azerbaijani children at the UN Human Rights Council

News line

Lachin Rising: A Brotherhood of Steel Between Pakistan, Türkiye, and Azerbaijan
15:02 30.05.2025
"Türkiye welcomes Azerbaijan's efforts for peace in South Caucasus"
14:53 27.05.2025
Trump could exit Ukraine talks
13:56 27.05.2025
North Korea says US 'Golden Dome' risks 'space nuclear war'
12:01 27.05.2025
Hikmat Hajiyev meets with NATO Deputy Secretary General in Brussels
11:10 23.05.2025
Foreign diplomats visit Agdam Conference Center
21:35 21.05.2025
New Secondary School Opened in Gakh by Heydar Aliyev Foundation
21:22 21.05.2025
Azerbaijani and Turkish Presidents Meet One-on-One in Nakhchivan
21:03 21.05.2025
Opening ceremony of World Cup held in Baku
20:57 21.05.2025
Pashinyan, EU Envoys Discuss Armenia-Azerbaijan Peace
19:52 21.05.2025
New Deputy Appointed to Nakhchivan Education Minister
19:20 21.05.2025
Nakhchivan marks Türkiye’s National Sovereignty and Children’s Day
17:42 21.05.2025
F.Shafiyev: Azerbaijan-Türkiye unity is example of effective cooperation
17:35 21.05.2025
Azerbaijan to build circular power link in Karabakh
17:28 21.05.2025
Azerbaijan, Italy discuss prospects for defense cooperation
17:19 21.05.2025
Ilham Aliyev addresses conference on Western Azerbaijan in Ankara
17:14 21.05.2025
Ilham Aliyev: Azerbaijan and Türkiye uphold international law for regional stability
17:03 21.05.2025
President of Cuba congratulates President Ilham Aliyev
16:58 21.05.2025
Azerbaijani President: Digitalization of the Middle Corridor is a priority
16:53 21.05.2025
Erdogan: Ilham Aliyev will be remembered as a peacemaker
16:48 21.05.2025
TDT: Azerbaijan is very important for the development of the Turkic world
16:43 21.05.2025
Georgian minister discusses cooperation with Azerbaijani ambassador
16:35 21.05.2025
Azerbaijan, Türkiye mull prospects for development of military cooperation
16:29 21.05.2025
Azerbaijan and Croatia hold political consultations
16:24 21.05.2025
GlobE Network work plan for 2025 approved in Baku
16:18 21.05.2025
Talks between Azerbaijan and Armenia may be held at level of heads of state
12:21 19.05.2025
A Meeting of Nobles exhibition to open in Shusha
12:15 19.05.2025
Azerbaijan increases construction by over 2026
12:09 19.05.2025
How does space "sound"? -NASA created "music" from the sounds of black hole
12:03 19.05.2025
Azerbaijan joins Fez Festival of World Sacred Music
11:57 19.05.2025
Azerbaijan’s parliamentary delegation starts official visit to Spain
11:53 19.05.2025
EU countries agree on big defence fund with Azerbaijan- Diplomat Says
11:48 19.05.2025
Azerbaijan,Türkiye Hold Talks on Education Sector Cooperation
11:42 19.05.2025
Azerbaijani delegation attends Russia-Islamic World: Kazan Forum 2025
11:36 19.05.2025
The official opening of the Azerbaijani carpet exhibition took place in Chisinau
11:31 19.05.2025
Press review of I.Aliyev's participation in the 6th Summit of the "European Political Union"
11:25 19.05.2025
Azerbaijani delegation participated in the International Economic Forum
11:21 19.05.2025
Azerbaijan to be represented at Astana International Forum
11:16 19.05.2025
New agreement between Azerbaijan and Pakistan in the field of plant safety
11:14 19.05.2025
Ilham Aliyev: Azerbaijani healthcare has made significant steps along a long way of development
11:08 19.05.2025
Hamısı