$50 Billion in Aid to Ukraine Stalls Over Legal Questions

A long-awaited plan to help Ukraine rebuild using Russian money is in limbo as the United States and Europe struggle to agree on how to construct a $50 billion loan using Russia’s frozen central bank assets while complying with their own laws.

The fraught negotiations reflect the challenges facing the Group of 7 nations as they attempt to push their sanctions powers to new limits in an attempt to punish Russia and aid Ukraine.

American and European officials have been scrambling in recent weeks to try to get the loan in place by the end of the year. There is added urgency to finalize the package ahead of any potential shifts in the political landscape in the United States, where support for Ukraine could waver if former President Donald J. Trump wins the presidential election in November.

But technical obstacles associated with standing up such a loan have complicated matters.

Group of 7 officials grappled for months over how to use $300 billion in frozen Russian central bank assets to aid Ukraine. After European countries expressed reservations about the legality of outright seizing the assets, they agreed that it would be possible to back a $50 billion loan with the stream of interest that the assets earn.

The solution was intended to provide Ukraine with a large infusion of funds without providing more direct aid from the budgets of the United States and European countries. It also allowed western allies to make use of Russia’s assets without taking the step of actually spending its money, which many top officials in Europe believed would be illegal.

But differences in the legal systems in the United States and in Europe, which both plan to provide the money up front, have made it difficult to structure the loan.