London (Parliament Politics Magazine) – The UK is to lend Ukraine an extra £2.26bn and permit Kyiv to spend the money on weapons to fight off the Russian invasion as part of a broader $50bn (£38.5bn) loan programme expected to be approved by G7 members later this week.
The loans will be compensated using interest forged by the $300bn of frozen Russian assets held in the West, with the extra funds pledged as the US heads towards a presidential election where backing for Ukraine is a divisive issue. Rachel Reeves stated: “The profits being made on those assets aren’t being kept for Russia to use in the future. They’re now being used to fund Ukraine.”
Britain has already dedicated to donating £3bn a year in military aid to Ukraine. The UK loan would be further to that and likely to be spent by Kyiv on badly required munitions, Healey stated, once enabling legislation passed through parliament.
“What we’re not doing is confiscating these assets to fund this loan,” Reeves stated. “We’re using the extraordinary profits on the assets, and that’s how we’re confident that we can do this within all the right legal frameworks.”
What are the implications of US political dynamics?
The US is anticipated to contribute $20bn, with other G7 members securing their share of commitments. Reeves highlighted the UK announcement was timed before this week’s IMF and World Bank annual conferences in Washington DC, a fortnight before the US presidential election. “We hope the other parts of the jigsaw fall into place at the end of this week,” the chancellor expressed.
Donald Trump, the Republican presidential candidate, has voiced scepticism about continuing future funding for Ukraine, increasing questions about Ukraine’s capacity to fight the war given the US has so far been Kyiv’s biggest donor. Washington has delivered $64bn in military aid since Russia undertook its full-scale invasion in February 2022. Some of the $50bn loans may be utilised to buy weapons made by the US, with diplomats noticing that as a possible alternative if Trump were to stop the flow of donations from US stockpiles. But it would be up to Ukraine to decide what it wanted to use the money for, in dialogue with each G7 country providing a loan.