European Parliament Approves Article 52 Loans in Ukra...Payment by the end of next year

The European Parliament has finally approved a proposal to provide Ukraine with up to 35 billion euros and about 52 trillion won in new loans as collateral for the proceeds of Russia's frozen assets.

At the plenary session of the European Parliament held in Strasbourg, France, on the 22nd local time, the support proposal was approved with 518 votes in favor, 56 against and 61 abstentions.

This has completed all the EU and EU decision-making processes, and the loans will be paid by the end of next year.

The EU's plan follows a decision by the Group of Seven major economies, the G7 and the EU to provide 45 billion euros, about 67 trillion won in loans as collateral for proceeds from Russian assets frozen by Western sanctions in June.

Under the G7 agreement, participating countries lend to Ukraine on their own budgets and use the proceeds from Russia's frozen assets as repayments.

If the proceeds are exhausted or unavailable, they must be repaid with the budget of the participating countries.

After the announcement of the agreement, the EU was the first to announce a detailed sharing plan and significantly increased the sharing upper limit over the initial notice.

As a result, the EU's final loan amount is likely to be adjusted for contributions from other G7 countries within a range of 35 billion euros.

EU judicial commissioner Didier Reynders said other countries are also expected to unveil plans to implement the agreement at a meeting of G7 finance ministers in Washington on the 25th.

In this regard, the U.S. is considering providing up to $20 billion (18.4 billion euros), according to a recent report by the British daily Financial Times (FT).

Britain, a member of the G7, unveiled its implementation plan to provide about 2.3 billion pounds (€2.8 billion) in loans.

There are still concerns about the risk of repayment and guarantee.

In the case of the EU, where about two-thirds of Russia's assets frozen by the West are tied, extending sanctions on Russia's asset freeze currently requires unanimous approval from its 27 member states every six months.

If Hungary, which opposes Ukraine's aid and is friendly to Russia, puts the brakes on the freeze, it risks suspending the measure.

The U.S. has also called for safeguards since the G7 agreement, fearing the EU's uncertain decision-making structure.

In response, the EU Commission proposed to member states that the sanctions renewal period should be extended from six months to 36 months, but Hungary is holding out, saying the decision should be postponed until after the US presidential election.

Unanimous approval is also required to amend regulations related to sanctions renewal.