The European Union’s top official said on a trip to Ukraine on Friday that Europe would offer a loan of 35 billion euros (about $39 million) to Ukraine, backed by frozen Russian assets but initially without contributions from the United States, after talks between American and European officials stalled in recent days.
The official, Ursula von der Leyen, the president of the European Commission, met with President Volodymyr Zelensky of Ukraine on Friday to reiterate Europe’s continued support for his country. Her trip came days before Mr. Zelensky is expected to travel to New York for the United Nations General Assembly, where he will present President Biden a proposal to bring about the end of Ukraine’s war with Russia.
The loan, which would provide Ukraine a needed infusion of funds without increasing direct aid from the budgets of European countries, is significantly smaller than the $50 billion that the United States and the other large Group of 7 economies had agreed to provide in June. The United States had intended to contribute $20 billion to $25 billion to the loan, but only under conditions that would have barred an E.U. review of sanctions against Russia for three years.
Still, the resolution reached on Friday will be a relief to Kyiv, which is running out of money for weapons and rebuilding damaged energy infrastructure as it heads into another winter at war.
Ms. von der Leyen had said earlier on Friday that the European Union would play its full part in the $50 billion in loans that were pledged to Ukraine in June, using Russian central bank assets that were frozen in 2022. The loans would be repaid using interest earned from $300 billion in seized Russian funds, though there is a risk that falling rates could decrease the value of the returns on those assets.
The loan would provide Ukraine a much-needed infusion of funds without increasing direct aid from the budgets of European countries, and be a relief to Kyiv, which is running out of money for weapons and for rebuilding damaged energy infrastructure.
But European and American officials had struggled to secure an agreement because of legal questions. A sticking point is the requirement by the European Union, where two-thirds of Russia’s central bank assets are held, to renew the sanctions that have frozen the assets every six months. Because this comes with a certain degree of risk, given that any member of the bloc could vote against renewal, the United States has said that it will only move forward with its part of the loan if Brussels agrees to extend the sanctions review period to 36 months.
Any change to extend the review period requires the approval of all 27 E.U. member states, but Hungary, which has cultivated close ties with Russia, objected. Some countries also expressed concerns about legal issues associated with using the assets.
To resolve the impasse, E.U. officials decided to move forward with a smaller loan that does not include contributions from Washington, although Ms. Von der Leyen said was confident that the United States would still contribute.
Ukraine faces enormous energy challenges as it heads into the third winter of the war. Russian attacks on power plants and heat plants have intensified in recent months, and in late August, after Ukraine invaded the Kursk region of Russia, Moscow fired more than 200 missiles and drones on Ukraine that targeted its energy infrastructure.
Even before those attacks, Ukraine’s power generation was about a third of its prewar capacity, with much of its energy infrastructure destroyed, damaged or occupied by Russian forces.
“This winter will be, by far, its sternest test yet,” Fatih Birol, the head of the International Energy Agency, said on Thursday.
In a report published on Thursday, the energy agency urged Ukraine and the international community to focus on increasing the security of critical infrastructure and its capacity to import electricity and gas from the European Union. The agency also called on Ukraine to decentralize its power supply, since large energy assets were more vulnerable to attack.
Ms. von der Leyen’s visit to Kyiv comes as Ukrainian troops on the ground are in a precarious position. On the eastern front, they have been gradually retreating for months in the face of persistent Russian advances, and they are now grappling with Russian counterattacks in the small portion of the Kursk region that they captured last month.
Mr. Zelensky emphasized Thursday evening that Ukraine’s offensive into the Kursk region had help “diminish” Russia’s potential to attack in eastern Ukraine, claiming that Russia had diverted nearly 40,000 troops to respond to his country’s offensive.
But Western officials and military experts have offered a more skeptical view. They said that Russia had been able to retain the bulk of its forces in Ukraine, pressing ahead with assaults.
Vincent Tourret, an analyst with the French Foundation for Strategic Research, described the Kursk offensive as “a major political feat,” lifting morale and demonstrating Kyiv’s ability to take the initiative. But he warned that Ukraine’s limited resources in troops and matériel were being stretched by the offensive, weakening its ability to sustain the war.
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