Via Teleconference
9:09 A.M. EDT
MODERATOR: Good morning, everyone. Thanks so much for joining today’s call to discuss the G7’s Extraordinary Revenue Acceleration loans effort for Ukraine.
As a reminder, this call is going to be on the record, and it is embargoed until its conclusion.
The speaker on today’s call is Daleep Singh, who’s the White House Deputy National Security Advisor for International Economics. He’ll have a few words at the top, and then we’ll take some of your questions.
With that, Daleep, I’ll turn it over to you.
MR. SINGH: Thanks, Eduardo. Thanks, everybody, for joining.
Since Russia’s invasion began over two years ago, the United States has rallied the world to defend Ukraine’s freedom, leading a coalition of allies and partners to surge security, economic, and humanitarian assistance, while spearheading unprecedented efforts to impose costs on Russia for its senseless aggression.
At the G7 Leaders’ Summit in Apulia this June, the United States proposed an idea to ensure Putin pays for the damage he’s caused in Ukraine by committing we issue $50 billion in loans to Ukraine, backed by the interest earned on the Russian sovereign assets we collectively immobilized just after the invasion began. We call these Extraordinary Revenue Acceleration loans.
Today, we’re announcing that of the $50 billion G7 commitment, the United States plans to provide a loan of $20 billion. The other $30 billion in loans will come from a combination of our G7 partners, including the European Union, the United Kingdom, Canada, and Japan.
To be clear, nothing like this has ever been done before. Never before has a multilateral coalition frozen the assets of an aggressor country and then harnessed the value of those assets to fund the defense of the aggrieved party, all while respecting the rule of law and maintaining solidarity. And as a result, Ukraine will receive the assistance it needs now without burdening our taxpayers.
As we committed in June, the G7 will begin disbursing assistance for the benefit of Ukraine by the end of this year so that we can meet Ukraine’s urgent needs as we approach the winter, while sending an unmistakable signal: The United States and its G7 partners will not fatigue. We will continue to use our creativity and collaboration to support Ukraine’s fight for independence and sovereignty. And tyrants are responsible for the damages they cause, not U.S. taxpayers.
It’s also a testament to this administration’s belief that multilateralism is a force multiplier. We couldn’t have done this by ourselves. The income used to repay these loans will be generated from frozen Russian assets held in the European Union. This is another example of how Putin’s war of aggression has unified and strengthened the resolve of G7 countries and our partners to defend shared values. It’s also a model for how we can rally our closest allies towards a shared purpose while ensuring that each country contributes its fair share.
Let me give you a few more details, and then I’ll be happy to take your questions.
So, the United States will provide at least $10 billion of our loan via economic support. The World Bank recently established what’s called a financial intermediary fund for Ukraine, which will be the vehicle through which we will disburse U.S. loan proceeds for economic support to Ukraine.
The financial intermediary fund, or FIF, will be subject to robust accountability and transparency measures, much like those used for existing U.S. economic assistance to Ukraine.
The United States also hopes to provide up to $10 billion
of our loan as U.S. military support, but our ability to do that relies on Congress taking action before mid-December on certain legislative changes that allow us to make loans for military support under the contours of this broader G7 initiative.
To be clear, either way, the U.S. will provide $20 billion in support for Ukraine through this effort, whether it’s split between economic and military support or provided entirely via economic assistance.
In terms of next steps, the United States will now work with Ukraine to sign loan agreements in order to execute the loan and begin disbursing funds for the benefit of Ukraine before the end of this year. More details will be available at the conclusion of the G7 finance ministers meeting later this week or early next.
Let me stop there and take your questions.
MODERATOR: Thanks. If folks have questions, please use the “raise your hand” function on Zoom and we’ll turn to you.
First up, we’ll go to Alan Rappeport. You should be able to unmute yourself.
Q Hi. Thanks very much, Daleep. A couple things. One, can we expect a G7 statement today saying that this is fully done? Because I know, yesterday, Secretary Yellen said it was 99 percent done.
And then, second of all, can you explain how the U.S. has gotten around the need to appropriate any funds to account for the risk associated with the loan? I know there were concerns about the EU needing to extend its sanctions renewal period, or something like that, to minimize the risk.
MR. SINGH: (Inaudible.) (Audio muted) — from partners, if we had sufficiently strong repayment assurances from the immobilized assets. And since the Leaders’ Summit, we’ve engaged in intensive diplomacy and technical negotiations every day with our partners to secure the strongest possible repayment assurances.
Let me just mention a few. Number one, the EU Council released a statement at the end of June, and again in October, from all 27 EU heads of state to keep Russia’s central bank assets immobilized until there’s a just peace with a free and sovereign Ukraine and until Russia pays for the damages it’s caused. This represents an expansion of the G7 leaders’ commitment to the entire EU, including Hungary.
Number two, equal burden sharing. So, the EU committed to provide at least $20 billion in loans alongside the United States, which means the Europeans have equal skin in the game and, therefore, fully aligned incentives to keep the assets immobilized until we get fully repaid.
Number three, we’ve worked with Ukraine on loan agreements under which, at the conclusion of this war, Ukraine would use settlement proceeds it receives from Russia towards repayment of these loans.
Number four, we’ve negotiated loan terms with our partners that further reduces any fiscal risks to the U.S. taxpayer.
And number five, history. You know, the EU has had sanctions in place against Russia for almost 10 years now. Every six months, those sanctions need EU unanimity to get rolled over for another six months. And, yes, there’s grandstanding and drama, but the EU has built a track record of staying the course, and that adds to our confidence that Russia’s sovereign assets will remain immobilized until Russia ends its war and pays for the damages it’s caused.
One last point, Alan. I’m sorry to belabor this, but it’s a really important question. While we have found a way to move forward without legal changes to the EU sanctions regime, we will keep pushing for those changes to get made.
MODERATOR: Alan, I think we had a little bit of trouble hearing the first part of your question, if you could ask that again.
Q Oh, sorry. Yeah. I think maybe — or maybe you were muted in the first part of your response. I was trying to understand if there was going to be a G7 statement today and if this is fully done now. I know Secretary Yellen said it was 99 percent done yesterday.
MR. SINGH: Oh, I’m sorry if you didn’t hear me. You should expect further statements today, both from the United States and from the G7.
MODERATOR: Next up we’ll go to Victoria. You should be able to unmute yourself.
Q Hi. Thank you. I just had a couple of questions. First, I was wondering if you could explain a bit the part you talked in the beginning on the Congress contribution side of things. What needs to happen from Congress exactly for the $10 billion, the second half, to come through the military aid part? Is it a matter of using appropriations that have happened already, different appropriations? If you could just explain that. And just to clarify that if that doesn’t happen, you could give the other ten through economic support.
And then, just a second question on the timing of things. I’m just wondering if you could talk us through how frontloaded you expect this load to be, as in, you know, do you think over the next couple of months we’re going to get a big chunk of it over to Ukraine? Just the timeline of the disbursements. Thank you.
MR. SINGH: Sure. So, on the second part of your question, we expect to disburse at least half of our $20 billion loan to the World Bank Trust Fund this December, and possibly the entire amount.
And this kind of gets to your first question: We do need authority from Congress to raise the amount of foreign military financing we can provide to Ukraine and also to make certain technical changes that would allow us to split the loan in half between economic assistance and security assistance. And we’ll be having conversations with Congress between now and December to assess those odds.
MODERATOR: Next up, we’ll go to Colby Smith.
Q Hi. Thank you so much. I just wanted — a couple questions just to follow up on — in terms of assessing the odds. Did you have, kind of, an initial assessment as it stands today? And how do you kind of — do you expect that support to come through?
And then, just more specifically on the economic support side of things, can you just mention a couple of specifics there in terms of how you expect this money to be used?
MR. SINGH: Sure. Thanks, Colby. So, I just want to be clear: The only question we’re talking about here is the split between economic assistance and security assistance. We’re going to provide $20 billion either way.
But, you know, we’ll work with Congress over the next few months to assess whether we can get sufficient authority through foreign military financing loan guarantee authorities to provide half of our assistance through military support.
In terms of your question, Colby, on what kinds of projects could the economic assistance support, you know, I would highlight a couple: Energy assistance. So, we all know Ukraine is at risk of being plunged into cold and darkness this winter. Helping to fund the rapid repairs that will be needed to stabilize the grid and also to provide passive protection against drone attacks for substations and transformers. That’s an urgent priority that we hope this assistance can help meet.
There are a number of other initiatives that relate to Ukraine’s infrastructure that can create the conditions for an eventual economic recovery that we expect this fund can also support through World Bank project support.
And there are many other projects that we can assess, but those are just a couple of examples.
MODERATOR: And our last question will go to Daniel. You should be able to unmute yourself.
Q Hi. How are you doing? Thank you for taking my question. I wanted to ask about any potential Russian reprisals. I know that was a large consideration when you guys were determining the mechanism for these loans. Are you guys expecting any kind of retaliation? And do you guys have any preparations for that, whether it be European assets or American? Thank you very much.
MR. SINGH: Well, Russia has been expropriating assets, seizing assets, really, from close to the beginning of its invasion. So, nothing — nothing new would change on that front if they continue to do so.
I would just make clear, though, that the revenues that we are using to repay these loans, under European law, these revenues don’t belong to Russia. It’s actually contractual law. The interest earned doesn’t belong to Russia but rather the custody in Belgium. And so, we don’t view this as a seizure of Russia’s assets, per se.
MODERATOR: Thanks, everyone. Thanks for joining. If there are any follow-up questions, do reach out to us, and we’ll get back to you.
As a reminder, this call was on the record, and the person you heard from was Daleep Singh, Deputy National Security Advisor for International Economics. The embargo on this call is now lifted. Thanks again.
9:23 A.M. EDT
