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Ashley Deeks, Mitu Gulati, Paul Stephan, The syndicated loan for Ukraine: a model for future crisis collaboration, Capital Markets Law Journal, Volume 20, Issue 1, March 2025, kmaf001, https://doi.org/10.1093/cmlj/kmaf001
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Extract
1. Introduction
Shortly before the 2024 US presidential election came news of a $50 billion loan package from the G7 nations to Ukraine, with a $20 billion contribution from the USA. The US Treasury closed its portion of the deal in December 2024, 6 weeks before the end of the Biden administration.1 The reluctance of the US Congress to authorize new funding for Ukraine’s defense, along with fears that the incoming Trump administration in the USA and political turmoil in Europe might upend support for Ukraine, explains the loan package’s unusual structure.
Unusual does not mean unique. With the goal of showing how states could expand the existing loan well beyond the current amounts, we delve into two pieces of financial history that provide guidance.
We begin with plain-vanilla state-to-state loans and discuss the challenges that make support to Ukraine different. To overcome these challenges, lenders needed to be creative. We explain the current steps taken by Ukraine’s G7 backers, especially their use of one class of frozen Russian assets to secure the loan. We then excavate the precedents for these steps in earlier crises touched off by Iran’s and Argentina’s acts of international aggression decades ago. Therein lie lessons for how the current lending can be expanded. We conclude by discussing the implications of these loan features for future financing of states caught up in international conflict.