Hungary to hold up G7 loan to Ukraine until after US election

By Jan Strupczewski

LUXEMBOURG (Reuters) – Hungary will hold up a final deal on a $50 billion G7 loan to Ukraine until after the U.S. presidential election by delaying its decision on the timing of the renewal of EU sanctions against Russia, Hungary’s finance minister said.

Washington needs the EU to revise its timeframe for the renewal of sanctions to every three years from the current six months for it to contribute some $20 billion to the G7 loan, matching the European Union’s contribution, EU officials said.

The remaining $10 billion would be provided by G7 members Canada, Britain and Japan, who are already on board.

The loan, agreed in principle by G7 leaders in June, would be serviced with proceeds generated by some $300 billion of Russian central bank assets frozen in the West after Moscow invaded Ukraine in early 2022.

Washington does not want to worry every six months whether the Russian assets backing the loan will remain frozen or not, the officials said.

“We believe that this issue, the prolongation of the Russian sanctions, should be decided after the U.S. elections. We have to see in which direction the future U.S. administration is going with this issue,” Finance Minister Mihaly Varga told a news conference.

The European Union has said that the proceeds from all the Russian assets frozen in the West can finance a loan of up to 45 billion euros ($49.44 billion).

Because most of the assets are in Europe, the EU said it can provide up to 35 billion euros for the G7 loan. That amount would be reduced by the sum the United States would contribute.

The issue will be further discussed at the G7 finance ministers meeting in Washington in late October, but Hungary’s decision means that the final contributions of each of the G7 countries will only be decided after the Nov. 5 election.

($1 = 0.9102 euros)