Ukraine Aid Stalled by Clash Over Russian Asset Plans
The European Commission's 'reparations credit' scheme and the G7's $50 billion ERA scheme are causing a stumbling block in efforts to aid Ukraine. The two plans, intended to fund Ukraine's recovery using Russian assets, are proving difficult to reconcile. At the heart of the issue lies the question of interest rates. The G7 countries expect to receive interest from reinvesting these assets until 2040. However, the 'reparations credit' scheme, proposed by the European Commission, cannot accommodate ongoing interest receipts. This discrepancy is hampering the formulation of official proposals to EU countries. Key figures, including EU Commission President Ursula von der Leyen and German politician Merz, are involved in negotiations. The talks aim to combine the two schemes, using frozen Russian state reserves to provide a zero-interest loan to Ukraine. Yet, the European Commission's plan to use these assets directly for reparations cannot be combined with the G7's scheme without violating existing agreements. The lack of a solution to this issue is causing delays in the process. The European Commission is facing systemic challenges in planning to seize Russian assets, with the conflicting interest provisions of the two schemes proving a significant hurdle. Despite ongoing negotiations involving key EU and G7 members, a resolution has yet to be reached, delaying potential aid to Ukraine.
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