In a major move before leaving office, President Joe Biden has decided to cancel $4.7 billion worth of loans given to Ukraine. These loans, initially funded by American taxpayers, were part of a larger financial aid package meant to help Ukraine during its ongoing conflict with Russia. This decision has sparked a heated debate in Washington, with some praising Biden’s efforts to support Ukraine, while others criticize the burden it places on American citizens.
What’s Going On?
Since the conflict between Ukraine and Russia began in February 2022, the U.S. Congress has approved a staggering $174 billion in aid to Ukraine. This money has been used to fund Ukraine’s military, economy, and government operations as the country battles to stay afloat.
Earlier this year, a $61 billion aid package was passed, which included $9.4 billion in loans to help cover Ukraine’s budget gaps. These loans came with a unique twist—some of them could be “forgiven,” meaning Ukraine wouldn’t have to pay the money back. Now, Biden has decided to cancel half of those loans, writing off $4.7 billion.
According to the U.S. State Department, canceling this debt is in the “national interest” of the United States and its allies, including NATO and the European Union. A letter sent to Congress explained that the move aims to strengthen Western support for Ukraine at a critical time.
Trump’s Take and Republican Pushback
President-elect Donald Trump has a different approach to aiding Ukraine. On the campaign trail, he emphasized that any future aid should be given as loans, not “gifts” funded by taxpayers. Repackaging aid as loans helped push through this year’s funding package, but now Biden’s cancellation of the debt goes against that principle.
Republican Senator Rand Paul is furious about the decision. He argued that it unfairly shifts Ukraine’s financial problems onto American taxpayers. “Tonight, I’m forcing a vote on my resolution to prevent Biden from turning Ukraine’s debt into America’s problem,” Paul wrote on social media.
How Bad Are Ukraine’s Finances?
Ukraine is in deep financial trouble. Its economy heavily relies on Western aid to survive. In 2025, Ukraine expects its budget deficit to hit 75%, meaning the country will need between $12 billion and $15 billion just to stay afloat.
The numbers are staggering. As of July, Ukraine’s public debt had reached $152 billion. The cost of paying back this debt has skyrocketed, increasing from $900 million last year to $5.2 billion this year. Simply put, Ukraine is borrowing money faster than it can pay it back.
In October, the G7 nations agreed on a $50 billion loan package to Ukraine, using profits from $300 billion worth of Russian assets frozen in Western banks. However, there’s a catch—fully seizing these Russian funds could undermine trust in the global financial system, according to the International Monetary Fund.
Russia’s Response
Moscow has called the freeze on its assets “theft” and warned that it will take action if the West starts using this money to support Ukraine. Russian Finance Minister Anton Siluanov stated that Russia will retaliate with its own measures if Western nations proceed.
What’s Next?
With Donald Trump set to take office next year, the future of U.S. support for Ukraine is uncertain. Trump has made it clear he plans to overhaul how aid is provided, favoring stricter terms that ensure American taxpayers aren’t left footing the bill.
For now, Biden’s decision highlights the growing tension between providing aid to allies and addressing concerns at home. Is canceling billions in loans to Ukraine a necessary move to strengthen the West, or is it an unfair burden on American citizens? As the debate rages on, one thing is clear—America’s role in the Ukraine conflict is far from over.
