EU member states have agreed to support a €35bn EU loan package for Ukraine, backed by interest accrued on frozen Russian central bank assets held in Europe.

The agreement, which was reached on Wednesday evening, comes a day after Hungary confirmed that it would block a key change in the EU sanctions regime until after the US elections.

Hungary and Slovakia have both indicated their preference for former US president Donald Trump to win the November 5 election. Trump has vowed that should be return to the White House, he would cease aid to Ukraine.

The European Conservative reports: European Union member states have approved a €35 billion loan for Ukraine, to be financed by frozen Russian central bank assets. The money is part of the bloc’s share of a larger planned loan from the Group of Seven nations (G7)—Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

The G7 agreed to new war funding for Ukraine at its summit in Italy in June. It declared it will lend $50 billion, with the loan interest paid for from Russian assets seized following the country’s invasion of its neighbour in February 2022.

Assets worth around $325 billion (€304 billion) have been frozen by the G7, the European Union, and the European Central Bank since 2022, generating about $3 billion a year in interest. Under the plan, that money will be used to pay off the annual interest on the $50 billion loan to the Ukrainian government.

EU Commission chief Ursula von der Leyen previously said that the loan was for Ukraine to “keep warm” ahead of a third winter of war with Russia. “The European Union is here to help you in this challenge to keep the lights on, to keep your people warm and keep your economy going as you fight for your survival,” she said.

Despite European news agencies reporting that Hungary was going to block the loan to Ukraine, Hungarian Finance Minister Mihály Varga rejected the claims as “fake news.” However, Hungary does intend to wait until after the U.S. presidential election on November 5th to decide whether the EU should renew the restrictions on the Russian frozen assets every six months or every three years.

Currently, all of the EU’s sanctions on Moscow must be renewed every six months via a unanimous EU vote, but the EU Commission has proposed to extend the renewal period concerning frozen assets to three years.

Extending the renewal period is in the interests of the Democrat-led U.S. administration which fears that one single EU country could, at any given time, block the renewal of sanctions, unfreeze the assets, and throw the entire project into disarray. The U.S. is expected to put more money on the table if the renewal period is extended to three years.

Hungary, with its pro-peace stance, has blocked measures that aim to assist Ukraine militarily, as it argues that a diplomatic solution is needed to bring an end to the war, not further military help which only adds fuel to the conflict. Former U.S. President and current Republican presidential candidate Donald Trump is on the same page as Hungary and has vowed to end the war as soon as possible if he enters the White House.

“We need to see where the future U.S. administration is going on this issue. Looking at the presidential campaign, it is obvious that there are two completely different ways of solving the problem. One is headed towards peace. The other continues in the direction of war,” Mihály Varga said, explaining his government’s stance on waiting out the results of the U.S. elections.

Regarding military assistance, the meeting of the Ukraine Defense Contact Group, a loose alliance of more than fifty countries, also known as the Ramstein Format, that coordinates the ongoing donation of military aid to Ukraine, has been cancelled. The high-level meeting in Germany was to take place this weekend, but U.S. President Joe Biden scrapped his trip to handle preparations for Hurricane Milton which is wreaking havoc in the state of Florida.

Ukraine’s President Volodymyr Zelensky had been underscoring for weeks the importance of the Ramstein meeting for Ukraine and the future course of the war. Russian troops have been slowly advancing and occupying Ukrainian territory. Zelensky wants more weapons from his Western allies and the approval to use their long-range missiles deep within Russian territory.

After the cancellation of the Ramstein summit, Zelensky headed to London to meet British Prime Minister Keir Starmer and NATO Secretary-General Mark Rutte on Thursday, October 10th. The United Kingdom has been one of Ukraine’s staunchest supporters. Rutte, who last week said that Kyiv’s right to self-defence “does not end at the border,” said the parties discussed the use of British-supplied missiles on Russian territory. There is support in London for lifting the restrictions on the use of the Storm Shadow missiles but the government does not want to act alone.