EU approves $35 billion loan to Ukraine secured by Russian assets

 European Union countries agreed on Wednesday to lend Ukraine up to 35 billion euros ($36 billion) secured by frozen Russian assets, diplomats said.

The Kiev government desperately needs the funds to shore up its economy, rearm its military and keep its power grid running through the coming winter after heavy shelling by Russian forces.

The EU loan, signed by a majority of its ambassadors at a meeting in Brussels, is part of a wider $50 billion initiative agreed by the Group of Seven nations in June.

The European move is the first under the G7 initiative, with other G7 nations, including the United States and Britain, expected to step forward to do their part.

EU officials said the loan would be worth up to 35 billion euros, but could be reduced if other G7 members decide to contribute more money.

The EU has frozen about $235 billion of Russian central bank funds since Moscow invaded Ukraine in 2014, the bulk of frozen Russian assets worldwide.

About 90% of the Russian funds are held by the Belgium-based Euroclear International Depository.

The G7 plan aims to use interest on Russian assets to transfer more money to Ukraine, and would replace an existing EU plan that transferred $1.7 billion to Kiev in July.

The G7 loan was delayed as the US sought EU assurances that Russian assets would remain frozen.

European Union member states must now agree every six months to extend the asset freeze.

Hungary has rejected a proposal to extend the freeze to 36 months, saying it wants to wait until after the US presidential election in November.

The European Parliament is now expected to approve the loan at a meeting later in October, allowing it to be disbursed next year.