(Bloomberg) -- European Union member states reviewed three proposals to tweak the bloc’s sanction regime in order to assuage American concerns and unlock a plan to deliver $50 billion in aid to Ukraine backed by the profits of frozen Russian central bank assets.
The EU sanctions that keep the Russian assets immobilized need to be renewed by unanimous vote every six months. The US has sought assurances that the assets will remain frozen since their profits will be used to repay the aid package.
One of the options proposed by the European Commission, the bloc’s executive arm, on Friday was to extend the renewal period for the asset freeze to 36 months, according to people familiar with the talks.
Another proposal would prolong the renewal period for five years, said the people, who spoke on the condition of anonymity. The final offer would extend both sectoral sanctions and the central-bank asset freeze for 36 months.
The EU, the US and other Group of Seven allies have been working to provide Ukraine the loans by the end of the year. The package is instrumental for Kyiv to continue receiving aid from the International Monetary Fund’s $15.6 billion assistance program for the war-battered country.
Ukraine on Tuesday passed an IMF staff review to unlock $1.1 billion in aid. It happened after the Fund had received assurances from the US and EU that the frozen-asset funds will be forthcoming, according to officials familiar with the talks.
A majority of the EU ambassadors during the meeting were open to the options proposed by the commission, with extending the renewal period for the sanctions covering the assets to 36 months seen as the most feasible, said the people.
Hungary, which has delayed the sanction renewal process in the past and is seen as the most Russia-friendly of the EU countries, didn’t take a stance, since it holds the bloc’s rotating presidency, according to the people.
The commission may offer more details on how to change the sanction regime as soon as Monday, as member states want to see more information.
EU leaders tried to reassured US officials in a joint statement after their June summit, saying that “Russia’s assets should remain immobilized until Russia ceases its war of aggression against Ukraine and compensates it for the damage caused by this war.” European officials have also pointed to the fact that sanctions against Russia have been in place since 2014.
The agreement reached at the G-7 summit would see the EU and the US providing loans of around $20 billion each, according to officials familiar with the deal. The UK, Canada and Japan would contribute smaller loans.
The primary goal for the EU is to have the US participate in the aid package, but some EU officials are considering the idea to move forward without the Americans.
--With assistance from Alberto Nardelli.
©2024 Bloomberg L.P.
