After six months of contentious debates, the lower chamber of the American Congress has approved a substantial aid package for Ukraine, totaling nearly $61 billion. Approximately $10 billion of this allocation is designated for economic assistance. "Apostrophe" has conducted an analysis to ascertain the timeline and distribution of funds to Ukraine, shedding light on potential areas of expenditure.
Half-year between promising and performing
The House of Representatives of the US Congress has finally approved the provision of multibillion-dollar aid to Ukraine. The fateful vote took place on April 20.
The proposed legislation must now gain approval from the Senate, where the Democratic majority has pledged a swift decision. Following Senate endorsement, the bill will be presented to President Joseph Biden, who has consistently affirmed his commitment to expedite the signing process.
Therefore, it appears that the protracted saga of securing American aid for Ukraine, which has unfolded over more than six months, is nearing its conclusion.
The total aid package amounts to $60.84 billion, with the majority earmarked for military support.
The package includes $9.5 billion in direct economic aid, with $7.85 billion allocated for budget support and an additional $1.57 billion earmarked for other forms of economic assistance. Illia Neskhodovskyi, head of the analytical department at the ANTS network, notes that these funds will primarily be used to repair and rebuild energy facilities damaged or destroyed by Russian missile attacks.
‘This is not an investment, this is money mainly for the objects of our energy infrastructure, which were destroyed,’ he commented to Apostrophe.
Loan without consequences
It worth noting thatthe U.S. financial assistance will be provided as a loan rather than a grant, a stipulation insisted upon by Republicans, notably those who support former President Donald Trump.
Illia Neskhodovskyi points out that such a decision appeases Republican critics. These critics have expressed frustration that European nations extend loans to Ukraine, whereas the U.S. had previously provided aid for free.
The terms of the loan are notably favorable. Post-November 2024, the U.S. President, with Congressional approval, can forgive half of the loan owed by Ukraine. Furthermore, after January 1, 2026, the possibility exists to forgive the entire debt.
Nonetheless, the provision for debt forgiveness is not a guaranteed outcome. Particularly, if Donald Trump were to reassume the presidency, the likelihood of such debt relief could diminish significantly.
Debt forgiveness, though, remains highly probable.
Dmytro Boyarchuk, executive director of the CASE Ukraine Center for Socio-Economic Research, contends that realistically, there are no expectations in the United States for the repayment of this loan.
‘The repayment of this money is not anticipated in the near future, suggesting the loan might be a political maneuver’, the expert told to Apostrophe. ‘It appears unlikely that repayment was ever expected under any circumstances, implying an initial assumption that the debt would eventually be written off.’
Illia Neskhodovskyi also predicts that the loan's debt will be entirely forgiven. I believe there's a 90% chance it will be written off,’ the expert states, although he notes, ‘American politics can be somewhat unpredictable.’
He believes that if Trump returns to the presidency, he will likely use the opportunity to pressure European partners to also write off Ukraine's loan debts.
Money coming soon
Ukraine has been eagerly awaiting congressional approval of an aid package, but when this aid, including budgetary support,will actually be disbursed to Ukraine?
Experts believe it should happen quite quickly.
‘There are no conditions for the transfer of these funds, and I am confident they will arrive within a month,’ Neskhodovskyi believes. He does not rule out that the entire amount of aid will be transferred in one installment.
However, dividing it into smaller portions is also a possibility. ‘I think these will be tranches, probably monthly,’ said Dmytro Boyarchuk, who noted that this approach was used with previous American aid packages.
He also believes that payments under this loan could extend beyond September 30, the end of the US fiscal year, if the full amount of aid is not disbursed by then, citing similar precedents.
There's an additional detail concerning American financial aid: the draft legislation stipulates that it cannot exceed 50% of the total aid to Ukraine from all allies. Theoretically, this means that if a European tranche is delayed—for instance, due to actions by Hungarian Prime Minister Viktor Orbán—American aid could inadvertently surpass half of all aid from partners, potentially jeopardizing the disbursement. However, experts interviewed by Apostrophe indicate there is no cause for concern. They note that the amounts and frequency of aid from allies are consistently high, mitigating the risk of such a scenario.
Everything but war
Following the vote in the House of Representatives, there was some confusion regarding a provision in the American financial aid that apparently prohibited its use for paying pensions. This stipulation was understandable from the perspective of the American voter and was initially included as an amendment to the draft law. However, it was removed during the direct vote by its author, Representative Kevin Hern.
‘For Americans, unlike in Ukraine, pension funds are not considered state money but are the responsibility of each individual,’ Neskhodovskyi explains. ‘Consequently, it is absolutely unacceptable for American voters to have their money used for pension payments in some other country. This was the reasoning behind the proposed amendment. However, it must be acknowledged that since these funds are allocated to Ukraine's general state budget, it is impractical to specifically earmark funds to prevent their use for pensions.’
Therefore, the $7.85 billion in US financial assistance can be used for any purpose except military expenditures.
‘No country in the world directly finances the armies of other countries—as this is prohibited in virtually all nations, despite the fact that providing military aid is allowed under international obligations and national legislation,’ Neskhodovskyi noted.
Meanwhile, according to him, Denmark has circumvented this restriction by allocating funds for the acquisition of weapons from Ukrainian manufacturers, which will subsequently be transferred to the Armed Forces. ' In this way they effectively bypasses the prohibition,’ the expert says.
Prominent forfeiture
On the same day the aid package for Ukraine was approved, the House of Representatives passed another significant bill allowing for the confiscation of Russian assets in the United States, with the proceeds directed to special funds to support Ukraine.
It is important to mention that the sovereign assets of the Russian Federation in the USA are relatively limited, preliminarily estimated at around $6-7 billion. In contrast, the EU has frozen over $200 billion worth of assets from the country waging an illegal and unprovoked war against Ukraine.
However, the value of Russian Federation assets in the United States is comparable to the amount of aid the United States has committed to Kyiv this year, and this fundingwill clearly not be superfluous.
‘The vote on this issue was influenced by the possibility of a change in U.S. leadership and the potential election of a new president. Therefore, there's an emphasis on creating a financial safety net for the period when Trump, who has publicly stated he would not transfer funds to Ukraine, could hypothetically be president,’ Boyarchuk explaines.
The expert believes that if the American president, who exclusively holds this authority, makes the decision on confiscation, it will set an important international precedent.
‘We all see that world leaders often act in a herd, so if the United States proceeds with such a confiscation and the dollar remains stable, other nations will likely take note and draw their own conclusions,’ Boyarchuk concludes.
