Dombrovskis: Russian assets to serve as collateral in EC’s new loan to Ukraine

Russian assets frozen in European countries will serve as collateral to some extent to the planned European Commission (EC) loan of up to EUR 35 billion to Ukraine, Executive Vice-President of the European Commission Valdis Dombrovskis told TV3 programme 900 seconds.
It is also planned to change the order that the extension of the freezing of Russian assets is decided once every six months. According to Dombrovskis, this could happen much less frequently, once every three years, provided that member states can agree on such a change of order. For now, it looks like it could be opposed by Hungary, so discussions are expected, the politician said.
In this context, Dombrovskis pointed to the G7 summit’s decision that Russian assets should remain frozen until Russia pays reparations to Ukraine. “So both Russian reparations, if any, and this cash flow from frozen Russian assets, which we will also direct to Ukraine, can be used for this repayment,” said the Executive Vice-President of the European Commission.
Asked how he assesses the possibilities of obtaining Hungarian support for these ideas, Dombrovskis replied that the proposal for an EC loan to Ukraine as a whole is still fresh, and at the moment discussions on it have just begun, so it is still quite too early to predict how the negotiations will progress and how exactly Hungary will position itself on this issue.

When asked how Ukraine would be allowed to spend up to EUR 35 billion in loans, Dombrovskis said Ukraine would be able to cover its general budgetary needs with this money.

It is not intended to set any very specific objectives for which Ukraine will be able to spend the loan.
Ukrainian Prime Minister Denys Shmyhal has recently said that in order to fully cover Ukraine’s entire budget deficit, it is necessary to finally use Russian assets frozen in the west. Dombrovskis explained that the EC-led proposal for a loan to Ukraine will also largely help to cover Ukraine’s budget deficit, as it will effectively speed up the availability of frozen Russian assets to Ukraine. “If the original idea was that the frozen Russian assets generate some kind of income and this income gradually comes into the possession of Ukraine, then at the moment, on the basis of these assets as collateral, we are issuing a loan, and Ukraine immediately has access to voluminous financial resources,” Dombrovskis explained the plan.
When asked about the total volume of Russian assets frozen in Europe, the politician said it may exceed EUR 200 billion.
EC President Ursula von der Leyen announced in Kyiv last week that the EC would grant Ukraine a new loan of up to EUR 35 billion.