September 20th 2024.
On Friday, the European Union made a promise to provide Ukraine with a loan of up to €35 billion to assist with rebuilding their economy and damaged power grid. This loan was organized by the Group of Seven, a group of major industrial nations, who agreed in June to engineer a $US50 billion loan to support Ukraine in their fight for survival.
The interest earned on profits from Russia's frozen central bank assets would serve as collateral for the loan. However, the process of distributing these loans has been slow. European Commission President Ursula von der Leyen expressed her strong stance against Russia's actions, stating, "We should make Russia pay for the destruction it caused." She made this statement during a press conference in Kyiv alongside Ukrainian President Volodymyr Zelenskyy.
Von der Leyen also mentioned that the EU has already provided Ukraine with over €118 billion in military and economic aid since the war began in February 2022. However, with Russia's continued attacks, further support is necessary. She emphasized that the loan would go directly into Ukraine's national budget, providing much-needed fiscal space and allowing them to decide how best to use the funds.
The loan would be underwritten by the profits earned on almost $US300 billion in Russian assets, which have been frozen due to their invasion of Ukraine. The majority of these assets are held in EU nations, particularly Belgium. Von der Leyen expressed confidence in the EU's ability to deliver the loan quickly and hopes that other G7 countries will also provide loans to Ukraine.
Zelenskyy's main priorities include rebuilding the energy network, constructing more bomb shelters, improving schools, and purchasing more weapons and ammunition. With around half of Ukraine's energy infrastructure destroyed during the war, rolling blackouts are leaving parts of the country in darkness for four hours at a time. Von der Leyen described this as equivalent to all of Latvia, Lithuania, and Estonia losing electricity.
As winter approaches, the need to restore and reconnect the electricity grid and boost heating capacity becomes urgent. Von der Leyen arrived in Ukraine on Friday with a focus on providing aid in these areas. The EU has already sent over 10,000 generators and transformers and is also supplying smaller and more mobile gas turbines, which are harder to hit and easier to repair.
Winter in Ukraine lasts from late October through March, with January and February being the toughest months. The EU hopes to supply around 25% of the 17 gigawatts of power that the country will need this winter. One aim of this assistance is to incentivize people to stay in Ukraine, as around four million people have already fled since the war began in February 2022.
The EU is also providing support for those who do stay, such as short-term aid in finding housing, work, or education. However, the number of people leaving has been increasing, with the European Commission estimating that 10,000 more people are applying for help each week. If this trend continues, it could undermine European support for Ukraine.
To further assist Ukraine, the European Commission announced on Thursday that it would provide an additional €160 million to fortify their energy network. Of this amount, €100 million would come from the profits earned on the frozen Russian assets. Denmark is also leading the charge in using this money to purchase weapons and military equipment directly from Ukraine's defense industry.
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