How the US helped protect a $20B promise to Ukraine ahead of Trump

In October 2024, the World Bank approved a new fund for Ukraine. On Dec. 10, just weeks before the Trump administration took office, the United States transferred a $20 billion loan in support of Ukraine into this fund. Russia — not the U.S. — is covering the cost of this contribution through a plan among the Group of Seven advanced economies to use the interest from Russia’s frozen central bank assets to provide $50 billion in loans for Ukraine. The unprecedented effort forces Russia to pay for its illegal full-scale invasion, launched three years ago today. On Dec. 13, three days after the U.S. first announced the loan transfer, the Facilitation of Resources to Invest in Strengthening Ukraine Financial Intermediary Fund, aka the FORTIS Ukraine FIF, approved its first grants to Ukraine, totaling $16 billion. Most of that would help sustain Ukraine’s government administration and services, all under strain from Russian attacks. The commitment of the FORTIS Ukraine FIF was fast and furious. Ukraine needs financial assistance, and the decision helped guarantee a big chunk of the U.S. commitments would reach Ukraine ahead of the uncertainty surrounding the Trump administration’s Ukraine stance. “We wanted to give some certainty that some of the money would be in the hands of the Ukrainians, and we were able to justify putting $16 billion in this reimbursable fund that is in Ukraine’s hands,” a former Biden official said. That leaves about $4 billion in U.S. money in the FIF still to be allocated, a decision that the next Trump administration can influence, though not likely block — though Trump’s team is now testing the boundaries of what is legal. Now, as the Trump administration radically and rapidly slashes foreign aid and upends U.S. policy on Ukraine, causing anxiety and uncertainty across Europe, Ukraine and its allies may have a degree of reassurance that Kyiv is getting the support America promised. Canada and Japan, which govern the FORTIS FIF alongside the U.S., have each pledged around $3 billion in loans to Ukraine, though neither has contributed any portion directly to the fund yet. All three countries will determine by a vote where the future FIF money goes. The U.S. Treasury Department did not return a request for comment about the FIF. The Russian asset test After Russia launched its full-scale invasion of Ukraine, the United States, Europe, and other allies sanctioned Russia, including by immobilizing some $300 billion in Russian sovereign funds. As Russia continued its war, destroying Ukrainian cities and strangling its economy, some of Ukraine’s backers pushed for the outright seizure of those assets, arguing that Moscow should pay for its illegal war and the rebuilding of Ukraine. In 2024, the U.S. passed legislation to do just this, but the U.S. is holding a relatively small share of those assets. Allies in Europe, where the majority of frozen Russian sovereign funds are held, were reluctant to take this extraordinary step of outright confiscation. The U.S. and its allies reached a creative compromise last October: A plan to leverage these assets without touching them directly. “Frankly, what we came up with is something that wasn't that novel. It's what lots of rich people in the United States do every day,” the former Biden official said. The G7 countries would loan Ukraine $50 billion upfront, and pay themselves back using the interest accrued over time from Russia's frozen funds. The G7 Extraordinary Revenue Acceleration, or ERA, Loans initiative plan, as it’s called, ultimately delivers Ukraine billions in vital assistance without burdening Kyiv with additional debt — or handing U.S. and European taxpayers the bill. “People shouldn't be confused about how the loan is being paid off — which is not from U.S. coffers,” the former U.S. government official said. The European Union, which is also providing about $20 billion, and the United Kingdom, are also participating in the G7 loan scheme, though they are not using the FORTIS Ukraine FIF as a financial mechanism. But this loan plan is a G7 flex: the world’s largest economies exercising their power over the global financial system. That is what makes such a plan possible, as does the sheer amount of Russian funds in Western institutions. Why the FIF The FORTIS Ukraine FIF is a small offshoot of this G7 multilateral effort to bolster Ukraine amid its ongoing war and map out a possible pathway for its recovery. No interest from frozen Russian assets is being paid directly into or out of the fund, or in any way passes through the World Bank. However, the FIF was a reliable and accountable way for the U.S. and its allies to deliver and manage large loans to Ukraine. FIFs are approved by the World Bank’s board, but its governance is separate — in this case, its members include the three contributors, and Ukraine, which can offer input on its needs. This more independent structure makes it a useful mechanism to mobilize a lot of resources from many different partners. Kelbesa Megersa, an economist and independent development consultant, explained FIFs are particularly well-suited to extraordinary circumstances. “You need to act fast and large. It's very good to carry out the mission of the day,” he said. FIFs have been deployed for global emergencies, such as pandemic prevention and climate action, and now the conflict in Ukraine, though the World Bank confirmed this is the first FIF applied to an individual country. The FIF is a way station — where the monies sit before they go out to programs. FIFs can partner with financial institutions, including other World Bank programs, which can do the actual implementation and oversight. In the case of the Ukraine FIF, $15 billion is allocated for the Public Expenditures for Administrative Capacity Endurance, or PEACE, project for Ukraine, the World Bank’s program to sustain Ukraine’s basic government services. The FORTIS Ukraine FIF is flexible in what it can fund, with the critical exception of military financing. A lifeline for Ukraine Collectively, the $50 billion in loans pledged by all G7 countries is expected to help finance Ukraine until around 2027, according to an analysis from the Kyiv School of Economics. “This program absolutely changes the macrofinancial situation for Ukraine,” Nataliia Shapoval, chairperson of KSE Institute, said. Ukraine’s dependency on external support perpetually risks a financial crisis, Shapoval added. Political opposition from countries such as Hungary threatened to derail European Union support for Ukraine, and last year, U.S. House Republicans blocked billions in supplemental Ukraine aid for many months. “This year, it's totally different because of this ERA,” Shapoval said, referring to the G7 initiative. “It’s a big deal.” The U.S. $20 billion contribution to the FORTIS Ukraine FIF will largely go to this kind of macroeconomic support, which experts and officials said was essential not just to Ukraine’s survival, but necessary for any future peace. A model tested amid uncertainty Immobilized Russian assets are expected to earn between €2.5 billion to €3.1 billion ($2.6 billion to $3.1 billion) each year, according to EU estimates. This means the $50 billion isn't getting paid off soon, but as long as the assets stay frozen, it will. The U.S. and Russia have begun bilateral talks in Saudi Arabia about their relationship and a possible “peace plan” in Ukraine, though Ukraine was not invited to these discussions. Any negotiations are still in the early stages, but U.S. Secretary of State Marco Rubio did not rule out the possibility of lifting sanctions as part of any settlement to end the war. He noted, however, that the European Union would need to be included in those discussions. Russian President Vladimir Putin has accused the West of “theft” for using interest from its frozen assets to fund Ukraine. Moscow may seek to reclaim the funds in negotiations — sources told Reuters that Russia may concede these funds for reconstruction, though seek to use some of that money to rebuild Ukrainian territory Russia now occupies. Last year, the World Bank estimated Ukraine’s recovery costs at about $486 billion. So far, Trump has not publicly made any demands about Russia’s assets. Instead, he has insisted Ukraine – not Russia – pay for Russian aggression, including securing U.S. support in exchange for critical minerals. Some U.S. lawmakers and European leaders are now pushing for the complete confiscation of Russian funds — a hedge against Russia negotiating for their return. Jacob Funk Kirkegaard, a senior fellow at the think tank Bruegel in Brussels, said the securitization of Russian assets amounts to a “backdoor confiscation.” The G7 plan is set up so Ukraine only pays back its G7 lenders if it reaches a negotiated settlement with Russia, where Moscow pays reparations to Kyiv or allocates some of its assets to fund reconstruction. The goal, again, is to ensure Russia pays for the war it instigated, no matter how the conflict may end. This G7 loan plan sought to hold Russia accountable and to bolster Ukraine, amid political uncertainty. “They put together a flexible instrument that is very helpful to Ukraine, and it worked,” Kirkegaard said of the G7. “It was pragmatic. It worked. That’s the bottom line.”