The failure of the US to fund Ukraine puts it at risk of a disastrous defeat at the hands of a merciless Russia.  ChatGPT and I discussed several options for Ukraine in finding financing.



Kenneth J. Dillon

Your suggestion of a consortium of lenders is attractive, but it might take too much time. While a $50 billion loan would be ideal, an initial loan for $20 billion could buy 4 or 5 months for the US or EU or others to come through with more substantial funding.

An initial loan of €20 billion to support Ukraine could indeed be a more feasible and timely approach, especially if the aim is to provide immediate financial assistance while longer-term funding arrangements are made. Here are some key considerations for this approach:

  1. Speed of Arrangement:
    • A smaller loan amount might be easier and quicker to negotiate and approve. This is particularly important in a situation where timely support is crucial.
    • A consortium, even for a smaller loan, can still be complex, but with fewer parties involved or a lead lender taking initiative, the process could be expedited.
  2. Disbursement and Management:
    • Clear agreements on the disbursement and management of the funds are essential. This includes establishing mechanisms for how the money will be used and monitored.
    • The EU or the UK, or an international organization like the IMF or World Bank, could oversee the management and distribution of funds to ensure they are used effectively and for the intended purposes.
  3. Repayment Terms:
    • The terms of repayment need to be carefully considered to ensure they are feasible for Ukraine. This could include low interest rates and a grace period before repayments start.
    • Flexibility in repayment terms could be key, considering the economic challenges Ukraine faces.
  4. Political and Diplomatic Considerations:
    • This financial support carries diplomatic weight. It signals strong support for Ukraine from the West and could influence the geopolitical dynamics of the conflict.
    • The involvement of major corporations in such a loan also has implications for their relationships with other global powers, particularly Russia.
  5. Broader Strategy:
    • This loan could be part of a broader strategy to support Ukraine, combining immediate financial aid with longer-term economic and developmental assistance.
    • Continual assessment and adaptation of the support strategy would be necessary, depending on the evolving situation in Ukraine and the region.
  6. Communication and Transparency:
    • Clear communication about the purpose and terms of the loan is important for public perception and accountability.
    • Transparency in the handling of funds is crucial to maintain trust among all parties involved.

In summary, a €20 billion loan arranged quickly could provide Ukraine with much-needed immediate support, buying time for more comprehensive solutions to be developed. The success of this approach would depend on efficient coordination, clear terms, and a shared commitment from the lending parties to support Ukraine.

Would you like further details on any specific aspect of this plan, such as potential lead lenders, the structure of the loan, or the international diplomatic context?

Thanks. I was not thinking of a loan directly to Ukraine, but rather of lending the money to the EU, UK, or IMF, which would then disburse it to Ukraine. Still, a direct loan of 20 billion Euros to Ukraine arranged by a lead lender would simplify things. Of course, it would need securing with Ukrainian assets in case of all-too-possible default. Who might serve as lead lender, and how would the loan be structured and secured?

Arranging a direct loan of €20 billion to Ukraine by a lead lender, secured with Ukrainian assets, is a significant proposal that needs careful consideration in terms of structuring, security, and selection of the lead lender. Here’s how this could potentially be approached:

  1. Selection of the Lead Lender:
    • Major Financial Institutions: International banks or financial institutions with significant experience in large-scale loans and international finance could serve as the lead lender. Examples include JPMorgan Chase, Goldman Sachs, or Deutsche Bank.
    • Multilateral Development Banks: Organizations like the World Bank or the European Investment Bank could potentially take on this role, given their experience in handling international loans and development projects.
    • Consortium of Tech Companies: If tech companies like Microsoft or Google are involved, they might form a consortium to share the risk, though this is less common in direct country lending.
  2. Loan Structure:
    • Loan Amount and Disbursement: The loan would need to specify the amount, disbursement schedule, and specific conditions for fund usage to ensure alignment with intended purposes.
    • Interest Rate and Repayment Terms: The interest rate should be considered carefully to balance the risk and the economic situation of Ukraine. Flexible repayment terms, possibly including a grace period, would be essential given Ukraine’s current challenges.
    • Currency Considerations: The loan would likely be in a stable currency (e.g., Euros or US Dollars) to avoid currency risk.
  3. Securing the Loan:
    • Asset Collateralization: Ukraine could secure the loan with national assets. This could include state-owned enterprises, natural resources, or specific revenue streams.
    • Guarantees: International guarantees, possibly from other countries or international bodies, could provide additional security for the loan.
    • Insurance Mechanisms: Insurance or risk mitigation products could be used to protect the lender against the risk of default.
  4. Legal and Regulatory Compliance:
    • Ensuring compliance with international financial regulations and laws is crucial. This would involve thorough due diligence and legal structuring of the loan agreement.
    • Transparency and accountability in the loan agreement and its execution would be necessary to maintain trust among all stakeholders.
  5. Risk Management:
    • Assessing and managing the geopolitical and economic risks associated with such a loan is crucial. This includes considering the potential impact of ongoing conflict and economic instability in Ukraine.
  6. Political and Diplomatic Dynamics:
    • The loan would have significant geopolitical implications, potentially affecting relationships with Russia and other international actors.
    • Diplomatic support from the EU, the US, and other allies could be crucial in facilitating and legitimizing the loan.

In summary, a direct loan of €20 billion to Ukraine, arranged by a lead lender and secured with Ukrainian assets, would require a carefully structured approach with considerations for risk, compliance, and geopolitical implications. The involvement of a reputable and experienced lead lender, clear terms of agreement, and support from the international community would be key to the success of such a loan.

Thanks. The urgency of the issue calls for a simple approach. What collateral options do you suggest? Is it best to have a private bank as lead lender or the IMF or European Investment Bank?

Given the urgency of the situation, a straightforward approach is indeed advisable. Let’s explore the potential collateral options and the suitability of different lead lenders:

Collateral Options for Ukraine:

  1. Natural Resources: Ukraine has significant natural resources, including fertile agricultural land, mineral resources (like iron, coal, manganese, natural gas, oil), and potentially renewable energy sources. These could serve as collateral.
  2. State-Owned Enterprises (SOEs): Shares or revenue streams from SOEs in sectors like energy, transportation, or telecommunications could be used as collateral.
  3. Government Bonds or Future Revenue: Government-issued bonds or future revenue from specific projects (like infrastructure developments) could be considered.
  4. Real Estate and Infrastructure Assets: Government-owned real estate or infrastructure assets could also be used as collateral, though this might be more complex due to valuation and liquidity considerations.

Lead Lender Options:

  1. Private Bank:
    • Pros:
      • Speed: A private bank might be able to move more quickly than a multilateral institution.
      • Expertise: Large international banks have experience in structuring complex loans.
    • Cons:
      • Risk Aversion: Private banks may be more risk-averse, especially in a conflict zone.
      • Higher Interest Rates: To compensate for the higher risk, private banks might charge higher interest rates.
  2. International Monetary Fund (IMF):
    • Pros:
      • Experience with Country Loans: The IMF has a history of providing loans to countries in financial distress.
      • Lower Interest Rates: Typically offers more favorable terms than private banks.
      • Integrated Economic Programs: Loans often come with programs designed to stabilize and reform the economy.
    • Cons:
      • Conditionality: Loans are often contingent on economic reforms, which can be politically sensitive.
      • Longer Process: May take more time due to the need for member consensus.
  3. European Investment Bank (EIB):
    • Pros:
      • EU Backing: Being the EU’s bank, it might offer more favorable terms and signal strong EU support.
      • Focus on Development: Loans are often geared towards development and infrastructure projects.
    • Cons:
      • Geopolitical Constraints: As an EU body, its actions are influenced by EU member states’ politics.
      • Process and Speed: Similar to the IMF, the process might be lengthier.


Given the urgency, a private bank as the lead lender might expedite the process, especially if it’s a consortium that can spread the risk. However, the terms might not be as favorable as those from an institution like the IMF or EIB. The IMF or EIB, while potentially slower, could provide more favorable terms and a stronger signal of international support. The final decision would depend on the balance between the urgency of the funds, the acceptability of the loan terms, and the political implications of the lender choice.

In any scenario, it’s crucial that the terms of the loan are sustainable for Ukraine and do not lead to excessive financial burden in the future.

Thanks. It seems best to arrange an expedited private bank loan of 20 billion Euros. At the same time, Ukraine could seek further financing from the EIB, IMF, WB, UK, or Norway (war profits). Which banks appear best suited to become the lead lender on a very expedited initial loan?

For an expedited private bank loan of €20 billion to Ukraine, certain global financial institutions stand out as potential lead lenders due to their size, international presence, and experience with large-scale financing. Here are a few that could be considered:

  1. JPMorgan Chase & Co.: As one of the largest and most prominent global financial services companies, JPMorgan has extensive experience in handling large-scale loans and complex financial transactions.
  2. Goldman Sachs Group Inc.: Known for its global investment banking and financial management services, Goldman Sachs has the expertise and capacity to structure and manage significant financial deals.
  3. Citigroup Inc.: With a broad international network and substantial experience in cross-border financing, Citigroup could effectively handle a large loan to a nation like Ukraine.
  4. HSBC Holdings plc: Given its vast international network and experience in various markets, HSBC could be a strong candidate, especially considering its involvement in European markets.
  5. Deutsche Bank AG: As one of Europe’s largest and most influential banks, Deutsche Bank could be particularly suited for a loan to Ukraine, given its proximity and understanding of the European financial landscape.

Factors to Consider in Choosing a Lead Lender:

  • Speed of Execution: The bank’s ability to move quickly in arranging and approving the loan.
  • Risk Management: Expertise in assessing and managing the risks associated with lending to a conflict-affected country.
  • International Experience: Experience in handling international loans and familiarity with the geopolitical nuances.
  • Reputation and Stability: A bank with a strong reputation and financial stability would be more trustworthy in such a significant transaction.
  • Interest in the Region: Banks with a strategic interest or existing relationships in Eastern Europe may be more willing to engage in such a loan.

Parallel Actions:

While the private bank loan is being arranged, Ukraine could indeed simultaneously pursue additional financing options with institutions like the European Investment Bank (EIB), the International Monetary Fund (IMF), the World Bank, or directly with supportive governments such as the UK and Norway. These institutions could provide longer-term financing with potentially more favorable terms and could focus on specific development projects or economic stabilization efforts.


Selecting the right lead lender for this expedited loan requires balancing the need for swift action with due diligence in risk assessment and terms negotiation. The involvement of a reputable and experienced financial institution is key to the success and credibility of such a loan.

Thanks. JPMorgan Chase & Co. seems best. Please discuss how Ukraine could best deal with JPMorgan and with the EIB.

Dealing with JPMorgan Chase & Co. for an expedited loan and engaging with the European Investment Bank (EIB) for additional financing involves distinct strategies and considerations. Here’s how Ukraine could approach each:

Dealing with JPMorgan Chase & Co.:

  1. Initial Engagement:
    • Formalize a high-level delegation comprising finance ministry officials, economic advisors, and legal experts to initiate discussions with JPMorgan.
    • Present a clear and concise proposal outlining the purpose of the loan, the amount needed, and the intended use of funds.
  2. Negotiation and Terms:
    • Negotiate the terms of the loan, including interest rates, repayment schedule, and any covenants. Given the urgency, Ukraine should aim for a balance between expedient processing and sustainable terms.
    • Discuss collateral options and agree on what assets Ukraine can offer as security.
  3. Risk and Compliance:
    • Work closely with JPMorgan’s risk assessment teams to address any concerns about loan security, especially given the ongoing conflict and economic challenges in Ukraine.
    • Ensure all legal and regulatory compliance, both from an international standpoint and within Ukraine’s domestic laws.
  4. Transparency and Accountability:
    • Establish clear mechanisms for how the loan will be managed and reported, ensuring transparency and accountability in the use of funds.
  5. Communication:
    • Maintain open and continuous communication channels with JPMorgan to facilitate smooth processing and address any issues promptly.

Engaging with the European Investment Bank (EIB):

  1. Strategic Approach:
    • Approach the EIB with a strategy focused on long-term economic development and recovery. Projects that align with EU interests, such as infrastructure, green energy, and technology, could be more favorably received.
  2. Proposal Development:
    • Develop detailed project proposals that demonstrate economic viability, potential for job creation, and alignment with broader European economic goals.
    • Include assessments of environmental impact, sustainability, and community benefits, as these are often key considerations for the EIB.
  3. Collaboration and Support:
    • Seek support from EU member states that are key stakeholders in the EIB. Political backing from these countries can be influential in securing funding.
    • Explore co-financing options where the EIB partners with other financial institutions or member states.
  4. Negotiation and Compliance:
    • Negotiate terms that are favorable yet realistic, taking into account the EIB’s requirements for economic stability and project feasibility.
    • Ensure strict adherence to EIB’s policies and standards, particularly regarding procurement, environmental impact, and social safeguards.
  5. Leveraging EU Relationships:
    • Utilize Ukraine’s existing political and economic relationships within the EU to bolster the case for EIB support.


In dealing with both JPMorgan and the EIB, Ukraine should adopt a strategic, well-prepared approach. With JPMorgan, the focus should be on swift action, clear terms, and risk management. In contrast, engagement with the EIB should emphasize long-term development, project viability, and alignment with EU economic and environmental policies. In both cases, transparency, legal compliance, and effective communication are critical for success.

Thanks. I am concerned that banks will consider Ukraine’s collateral too risky: if Ukraine cannot withstand Russian forces, the banks could lose all their money. Is there a form of collateral that can be put in escrow outside of Ukraine so that, whatever happens, it will be available in a default?

Your concern about the perceived riskiness of collateral within Ukraine is valid, especially in the context of ongoing conflict. To mitigate this risk, Ukraine could consider offering collateral that can be held in escrow outside of the country. This approach ensures that the collateral remains secure and accessible to the lender in the event of a default, regardless of the internal situation in Ukraine. Here are some potential forms of such collateral:

  1. Overseas Assets:
    • Ukraine could offer assets held outside its borders as collateral. This might include foreign investments, properties, or holdings in international companies.
  2. Foreign Currency Reserves:
    • Part of Ukraine’s foreign currency reserves could be pledged as collateral. These reserves are usually held in stable currencies and deposited in foreign banks, making them a secure option.
  3. Gold Reserves:
    • Gold or other precious metals, which Ukraine may hold as part of its national reserves, can be physically stored in secure locations outside the country.
  4. Government Bonds:
    • Ukraine could issue government bonds specifically as collateral for the loan. These bonds could be held in escrow in a reputable international bank.
  5. Revenue from International Transactions:
    • Future revenue streams from international trade agreements or export earnings could be pledged as collateral. Arrangements would need to be made to direct these revenues to an escrow account in the event of default.
  6. State-Owned Enterprise (SOE) Revenues or Shares:
    • Shares of SOEs or their overseas revenue can be used as collateral. If these enterprises have significant operations or assets outside Ukraine, their value as collateral would be more stable.

Structuring the Collateral Arrangement:

  • Legal and Financial Structuring: The arrangement would need to be legally and financially structured to ensure that the collateral is easily accessible and liquid in case of default. This might involve international legal expertise.
  • Escrow Account Management: An escrow account managed by a neutral third party (like an international bank or law firm) would provide security and trust in the arrangement. The terms of the escrow account, including conditions for release of collateral, would be clearly defined in the loan agreement.
  • Valuation and Liquidity: The collateral would need to be accurately valued and should be sufficiently liquid to cover the loan amount in case of default.
  • Monitoring and Reporting: Regular monitoring and reporting mechanisms should be established to keep the collateral’s value in line with the loan amount over time.

By using collateral that is held in escrow outside of Ukraine, the risk to lenders can be significantly reduced, making the loan more attractive and feasible. However, it’s important for Ukraine to carefully consider the implications of pledging significant national assets or revenues, ensuring that this does not adversely impact its long-term economic stability and sovereignty.

Thanks. Frozen Russian assets could also be collateralized.  Please tell me the approximate amounts of Ukraine’s foreign currency and precious metal reserves, also the approximate value of its overseas real estate and other holdings.

As of January 2024, Ukraine’s international reserves stand at approximately USD 40.5 billion. This figure represents a significant increase from previous years, indicative of the inflows from international partners and support Ukraine has been receiving. This amount includes various types of reserves, such as foreign currency, but specific details about the composition of these reserves (e.g., the exact amount in precious metals) aren’t provided in the sources.

Regarding Ukraine’s overseas real estate and other holdings, there isn’t readily available detailed public information specifying the value of these assets. Typically, such assets could include government-owned properties, investments in foreign companies, or holdings in international markets, but the precise value and details of these would be known primarily to the Ukrainian government and possibly not disclosed publicly for strategic or security reasons.

Given the size of Ukraine’s international reserves, they could potentially serve as a form of collateral for a loan. However, the decision to use these reserves as collateral would need to be carefully considered, given their importance in maintaining national financial stability and security, especially in times of economic or geopolitical uncertainty.

For securing a loan with collateral held in escrow outside of Ukraine, the exact mechanism and type of collateral would depend on the agreement with the lender and the legal and financial structures put in place to manage the loan and collateral. The lender, in this case, a major institution like JPMorgan Chase & Co., would typically require a detailed assessment of the collateral’s value and a legally binding agreement on how the collateral is to be managed and accessed in case of default.

In parallel, seeking additional financing from organizations like the European Investment Bank (EIB), International Monetary Fund (IMF), World Bank, or directly from supportive governments can provide a more diversified financial support structure, potentially with different terms and focused on various aspects of economic development and recovery.​

Thanks. Please give me an overview of Ukraine’s loan history and current indebtedness.

As of November 2023, Ukraine’s national government debt reached approximately $131.9 billion USD. This figure represents the cumulative debt of the country, encompassing various types of borrowings and obligations. The national debt has seen changes over the years, reflecting the country’s economic and geopolitical challenges, especially in light of the ongoing conflict and its economic repercussions​​.

In 2024, Ukraine faces significant financial challenges. The country has been heavily reliant on economic assistance from Western countries during the conflict with Russia. Since Russia’s full-scale invasion in February 2022, Ukraine has received over $68.5 billion in budgetary support. However, there is uncertainty over the continuation of this level of support for the upcoming year. The Ukrainian government expects a budget deficit of about $43 billion in 2024 and plans to cover it with domestic borrowing and financial aid from Western partners. However, the provision of this financing is not fully certain, with some analysts predicting that Western aid might start to diminish.

Ukraine is in talks with various international partners for economic assistance in 2024. This includes discussions with the European Union for a multi-year support package and negotiations with the U.S. government for economic aid. The country also anticipates financial support from the International Monetary Fund (IMF) as part of a new lending program. This program, approved in the current year, is valued at about $15.6 billion, with disbursements linked to reform targets and economic indicators. The IMF has already made substantial disbursements this year, and Ukraine expects to receive additional funding in 2024.

Apart from the IMF, Ukraine is also expecting about $1.5 billion from other international financial institutions, including the World Bank, next year. Moreover, the country has secured financial support packages from Britain and Japan for 2024 and is in talks with governments of Canada, Norway, South Korea, and others to secure further funds.

The financial assistance received and expected is crucial for Ukraine, as the country spends all its revenue on the defense sector and the army, with the majority of the budget sector overheads being covered by Western aid. The funds are necessary for the government to disburse social payments, wages for budget workers, and pensions for millions of Ukrainians.

The situation, however, remains fluid and somewhat uncertain, with Ukraine dependent on continued international support to manage its budget deficit and meet its financial obligations. The country’s ability to secure and effectively manage this aid will be crucial for its economic stability and recovery efforts amid the ongoing conflict​​.

Thanks. Please discuss the state of Ukraine’s economy and recovery/growth prospects.

As of 2024, Ukraine’s economy is facing a complex situation, influenced significantly by the ongoing conflict and the need for extensive international support.

Ukraine expects its economy to grow by about 5% in 2024, driven by investment in reconstruction and stronger consumer demand. The growth projection comes after the economy shrank by about a third in the previous year due to the invasion. Despite the significant challenges, there has been some adaptation to the wartime realities, and there is a general expectation of economic growth. The Ukrainian government is optimistic about the war ending in 2024, which would further drive investment for the country’s reconstruction. Additionally, the return of Ukrainian refugees is expected to support domestic consumption. However, it’s important to note that these projections are contingent on the evolving situation and the continuation of foreign aid and support​​.

The World Bank’s overview of Ukraine highlights the severe impact of the war on the country’s development, setting back years of progress and significantly increasing poverty. The Ukrainian government has shown remarkable resilience, maintaining essential services like education, healthcare, and social support despite the challenges. The economy is expected to grow by 3.5% in 2023 after a significant contraction in 2022. Ukraine’s immediate needs are immense, with urgent investment required for repairs in various sectors. The World Bank has mobilized significant commitments and pledges to support Ukraine, which have been crucial in sustaining public services and undertaking essential repairs​.

Ukraine’s 2024 budget is heavily focused on military spending, reflecting the ongoing conflict. A significant portion of the GDP is allocated for defense and homeland security. Social and pension expenditures are also high, with the government deciding to increase pension payments and other social spending. The growing debt burden is a concern, with state debt expected to increase significantly. Ukraine’s consolidated budget for 2024 projects a substantial budget deficit, which is expected to be covered by external loan financing and possibly military support. However, there is uncertainty regarding the provision of international financial aid​​.

Overall, Ukraine’s economic recovery and growth prospects are closely tied to the resolution of the conflict, the continuation of international financial aid, and the country’s ability to manage its increasing debt burden effectively.


Kenneth J. Dillon is a historical and scientific researcher.  See his biosketch.

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