‘Groundless and Irresponsible’ – Ukraine at War Update for May 24

On Thursday, representatives from Ukraine’s Finance Ministry met with the leadership of the International Monetary Fund’s European Department and the IMF’s mission in Ukraine. The group discussed the country’s compliance with benchmarks that allow for regular distributions of the Extended Fund Facility (EFF) budget of $15.6 billion to Kyiv over four years, part of a broader international IMF allocation of $122 billion in total.

The outcome of the meeting is that Kyiv can expect $4.5 billion this year, pending regular reviews, separated into three tranches.

“Ukraine’s compliance with the conditions under the EFF is crucial, as the implementation of certain measures and policies helps to maintain macro-financial stability and paves the way for the country’s European integration while adapting the financial system to function in an unstable environment. Three more reviews are planned for 2024 under the EFF, which will potentially attract budget support totaling about $4.5 billion,” First Deputy Minister of Finance Denys Uliutin said.

About $880 million has already been sent to Kyiv as a result of the latest, third review. The reviews focus on the government’s fiscal policy and the country’s financial sector performance, and include guidelines to strengthen tax policy and manage public debt.

G7 mulls the amount and legal avenues of Russian-asset-backed loan to Ukraine

Other Topics of Interest

Security Guarantees for Ukraine, Ratcheting up Sanctions, Kharkiv Offensive

More from the author’s weekly update in his Newsletter on several key developments.

At a meeting on the picturesque shores of Lago Maggiore, Italy, the US Treasury Secretary encouraged fellow G7 finance leaders to “continue our collective work on more ambitious options” to get as much assistance to Kyiv as possible by leveraging some $350 billion in frozen Russian assets in the US and the Central European Bank.

Legal hurdles remain, and the final amount has not been finalized, but Treasury Secretary Janet Yellen has proposed a $50 billion loan and has pushed for even harsher sanctions on Russia. It was not clear even whether the other G7 countries would participate or whether the US would have to issue the loan on its own.

“Failure to take additional action is not an option, not for Ukraine’s future and not for the stability of our own economies and the security of our peoples,” Yellen said.

According to AFP, European members of the Group of Seven (which include France, Italy and Germany) worried about creating a precedent in international law and the “risk of serious legal disputes with Moscow,” especially if they follow the American inclination to confiscate the assets outright, rather than keep them frozen in the banks.

Italy’s finance minister, Giancarlo Giorgetti, said that “a solid legal basis” would have to be established before the group could take up such a measure.

“Now the problem is how we are able to use the future windfall profits to build a loan facility for Ukraine,” he said. “Perhaps for the next political summit in Puglia we will reach a solution,” he added.

The G7 summit is set for mid-July in that southern Italian region.

China calls UK accusations of sending weapons to Russia “groundless and irresponsible”

A spokesperson of the Chinese Foreign Ministry on Thursday issued a furious response to the UK Defense Ministry’s claims the day before that Beijing was supplying weapons to Russia for its unprovoked invasion of Ukraine.

“We condemn the UK politician’s groundless and irresponsible vilification of China,” PRC spokesperson Wang Wenbin said.

“We noted the fact those remarks from the UK side were not even seconded by its close ally,” he added, referencing US National Security Adviser Jake Sullivan’s comments that the American side could not confirm any evidence of those claims coming from Whitehall.

“What we would like to say to the UK politician is that vilifying China will not get the UK out of its difficult spot on Ukraine, still less solve the UK’s thorny domestic issues. Instead of falsely accusing China, why not take a hard look at what role the UK itself has played on the Ukraine issue?”

Wenbin also said that two years ago, Russia and Ukraine “were close to an agreement to end the conflict,” but the UK, among others, “jumped in the way” to stop it. The Foreign Ministry spokesperson said that China will “keep working hard to push for peace talks and oppose fanning the flames.”

UK Defense Secretary Grant Shapps on Wednesday told a gaggle of reporters that both the US and UK intelligence services had corroborated that Beijing and the Kremlin had plans already put in motion to send Chinese-made weapons to Moscow.

Kremlin rails against calls to use US weapons on Russian territory

As both Democratic and Republican leaders in the US have complained that Ukraine has been disadvantaged by restrictions on using American-made missiles to attack targets within Russia, Moscow on Thursday attacked what it called “hothead” lawmakers.

The US Speaker of the House, Mike Johnson (R-LA), said on Wednesday that it was “not a good policy” to keep Kyiv’s hands tied behind its back in this way. His sentiments were echoed by many on his side of the aisle when grilling Secretary of State Antony Blinken on Capitol Hill about President Joe Biden’s policy on the issue, a position regularly articulated by Sullivan at White House briefings.

“We know that among US Senators and Congressmen there are very many hotheads who consider it their duty to keep pouring oil on the fire,” said Kremlin spokesperson Dmitry Peskov. He called it an “absolutely irresponsible position” that could be “dangerous in its consequences.”

Meanwhile, many NATO allies this week, notably France, Lithuania and Estonia, have voiced their opposition to the US administration’s reticence to send Western troops to train soldiers in Ukraine, fearing a similar reaction from Moscow.