London will provide Ukraine with a loan worth £2.26 billion ($2.9 billion) backed by profits from frozen Russian assets, the U.K. government announced on Oct. 22.
The funds are the U.K.’s contribution to the Group of Seven (G7)’s initiative to provide Kyiv with a $50 billion loan by the end of the year, which will be repaid using interest from billions in frozen Russian assets.
The U.K.’s loan will be allocated to Ukraine’s military spendings. Kyiv will be able to invest in key equipment to fight Russia, such as artillery, air defense, and wider equipment support, the statement read.
“This new money is in Britain’s national interest because the front line of our defense — the defense of our democracy and shared values — is in the Ukrainian trenches,” said Rachel Reeves, U.K. chancellor of the exchequer.
“A safe and secure Ukraine is a safe and secure United Kingdom.”
British Defense Minister John Healey said the money could be used to help Kyiv develop long-range drones capable of travelling further than some missiles.
The aid comes on top of the UK’s existing 3 billion pounds ($3.9 billion) a year assistance for Ukraine.
European countries hold roughly two-thirds of the $300 billion Russian sovereign assets immobilized after the outbreak of the full-scale war. While hesitant to confiscate the assets outright, the EU devised a plan to use windfall profits to fund Ukraine’s reconstruction and defense needs.
Under the G7 plan, profits from Russia’s frozen assets will gradually be used to repay the multi-billion-euro loan. EU officials said that the 35 billion loan will be “undesignated” and “untargeted,” allowing Ukraine maximum flexibility in how it spends the funds.
The EU expects to start distributing the money early next year.
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