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G7 Finance Ministers Discuss Using Frozen Russian Assets to Aid Ukraine

Stresa, May 25, 2024, The Europe Today: The G7 group of wealthy democracies is exploring ways to use future interest from frozen Russian assets to support Ukraine as it continues to resist Russian aggression, according to finance ministers from the group who met on Saturday.

The meeting, held in the northern Italian city of Stresa, centered on securing additional funds for Ukraine amid a new Russian offensive in the Kharkiv region, now in the third year of the unprovoked invasion. Shortly after Russia’s full-scale invasion of Ukraine in February 2022, the G7 and its allies froze approximately $300 billion (€276 billion) of Russian assets.

This meeting follows the European Union’s formal approval of a plan to use interest from these frozen assets, which could potentially yield up to €3 billion annually for Ukraine.

French Finance Minister Bruno Le Maire indicated that the ministers aimed to reach a “political agreement in principle” rather than a finalized solution. A draft statement, seen by Reuters, noted progress in discussions about using profits from immobilized Russian sovereign assets for Ukraine’s benefit. However, it lacked specifics, acknowledging the need to resolve various legal and technical issues before such loans could be made.

Any detailed agreement would require the approval of G7 leaders, who are set to meet next month in Puglia, Italy. The United States has been advocating for a loan facility for Ukraine backed by future interest generated from the frozen Russian assets, a proposal that could raise $50 billion in the short term. This proposal raises several questions, including who would issue the debt and how the risk would be apportioned among G7 partners.

US Treasury Secretary Janet Yellen stated that a loan for Ukraine backed by income from frozen Russian sovereign assets is the “main option” for G7 leaders to consider in June but added that she is open to other possibilities.

Ukraine’s Finance Minister, Serhiy Marchenko, joined the ministers on Saturday. The meeting coincided with claims from Kyiv that they had “stopped” a Russian advance in the Kharkiv region, though Ukraine’s General Staff admitted that “the enemy has partial success” and described the situation as “tense.”

Ukraine’s military struggles with shortages of arms and ammunition, exacerbated by delays in US aid due to domestic political disputes. However, on Friday, Washington announced a new $275 million military aid package for Kyiv, marking a positive development.

The G7 finance ministers’ discussions reflect ongoing efforts to find innovative financial solutions to support Ukraine as it continues to face significant challenges in its defense against Russian forces.