As 2024 approaches, the United States and the European Union's new assistance to Ukraine is still pending. U.S. congressional Republicans refuse to compromise on aid to Ukraine, and Hungary remains firmly against the EU's aid plan.
To demonstrate continued support for Ukraine, the Biden administration bypassed Congress and newly approved $250 million in military aid. However, this may be the last new aid the U.S. can provide before Congress relents. The EU, on the other hand, is preparing to circumvent Hungary by raising funds for Ukraine through capital market loans.
If all else fails, the U.S. is considering using the hundreds of billions of dollars in frozen assets of the Russian central bank to support Ukraine.
On December 27, the U.S. State Department announced the latest $250 million military aid package for Ukraine, including anti-air missiles and anti-armor ammunition. This is the final batch of weapons aid the U.S. will provide to Ukraine this year, and the State Department is urging Congress to act quickly to approve new aid.
Since the Russia-Ukraine conflict began in February 2022, the U.S. has provided $46 billion in military aid to Ukraine. Including the newly announced aid, the U.S. has provided three batches of military assistance to Ukraine this month, each worth around $200 million, showing a decrease in assistance.
To approve new aid for Ukraine, President Biden used the "Presidential Drawdown Authority," which allows the government to ship from the Department of Defense's existing inventory and provide military aid to foreign countries without going through Congress.
However, the $250 million aid approved on Wednesday might be the last the U.S. government can provide on its own. Mike McCord, the Pentagon's Comptroller, warned Congress that the Department of Defense's funds for military aid to Ukraine will be depleted after this month's aid is sent.
This month, the U.S. Senate rejected a $110.5 billion security assistance bill, which included $60 billion in new aid for Ukraine. As the U.S. elections approach, Republican calls to stop aid to Ukraine are growing louder, urging the money to be spent domestically. Republicans are also pressuring the Biden administration to increase efforts to limit immigration at the U.S.-Mexico border, or they will not compromise on aid to Ukraine.
Internal disputes are also affecting the EU's aid to Ukraine. At this month's EU summit, Hungary made a concession by not casting a veto vote, allowing the EU to approve the start of accession negotiations with Ukraine.
Hungarian Prime Minister Viktor Orban believes Ukraine does not meet the conditions to join the EU and strongly opposes starting accession negotiations with Ukraine. Finally, at the suggestion of German Chancellor Scholz, Orban chose to temporarily leave the meeting room during the vote. Hungary was marked as absent in the vote, which did not affect the EU's voting outcome.
However, Orban refuses to compromise on aid to Ukraine, and the EU has not been able to pass the 50 billion euro aid plan for Ukraine.
To continue "transfusing" Ukraine, the EU is considering bypassing Hungary and raising funds for Ukraine through loans on the capital market. EU officials revealed to the Financial Times that the EU is considering two alternative plans.
One alternative plan is for EU member states willing to aid Ukraine to issue guarantees, allowing the European Commission to borrow up to 20 billion euros from the capital market for Ukraine's aid. This plan doesn't require guarantees from all 27 EU member states, just from the highest credit-rated EU members, like Germany.
But for the European Commission to issue guarantees from countries like Germany requires parliamentary approval in each country, so this plan will take several months. Another alternative plan is to extend this year's 18 billion euros in low-interest loans to Ukraine for several months to a year. This plan needs the agreement of most EU member states.
Regardless of the plan, the EU intends to provide new funds for Ukraine by March next year at the latest. If no other solution is found, the U.S. is considering pulling out a "trump card."
U.S. and European officials told The New York Times that the U.S. is discussing with G7 members whether it can confiscate the $300 billion in assets of the Russian central bank frozen in various countries for aid to Ukraine. Most of these assets are stored in European countries, and the U.S. is urging countries to submit asset confiscation plans by February next year.
However, U.S. Treasury Secretary Janet Yellen has warned that confiscating another country's frozen assets without U.S. Congress's permission would violate U.S. law. U.S. officials are also concerned that confiscating the Russian central bank's assets will scare off other countries from storing funds in the U.S.
Russian President Vladimir Putin's spokesperson warned that if the U.S. and European countries confiscate the Russian central bank's assets to support Ukraine, countries will face serious consequences, including retaliatory asset confiscation or breaking off diplomatic relations. European companies like Wintershall Dea, a subsidiary of the German chemical giant BASF, and the Austrian oil and gas company OMV, have assets in Russia.
Aid from various countries is crucial for Ukraine to continue fighting. Ukraine's projected expenditure for 2024 is 3.35 trillion hryvnia (about $91 billion), with nearly half allocated for defense.
But the country's projected fiscal revenue for 2024 is only 1.77 trillion hryvnia, with a budget deficit of 1.57 trillion hryvnia. According to Ukraine's plans, 47.4% of its 2024 expenditures will come from loans and aid from other countries and international institutions.
