G7 support $50 billion loan to Ukraine secured by Russian assets
G7 countries have agreed to provide $50 billion in aid to Ukraine secured by Russian assets (Getty Images)
The G7 countries have reached a consensus regarding the US proposal to use frozen Russian assets to provide Ukraine with up to $50 billion in vital funding and help shield it from political shifts on both sides of the Atlantic, according to Bloomberg,
Officials familiar with the discussions say G7 governments broadly support the U.S. proposal to use future proceeds from $280 billion held by the Russian central bank, most of which are blocked in Europe, to support loans to Kyiv.
G7 finance ministers are discussing the issue this week during a meeting in Stresa, Italy, aiming to finalize options for their leaders to make a decision during the June 13-15 summit.
While the G7 is approaching a general agreement, many crucial details are still under negotiation and need to be agreed upon, according to anonymous sources.
These details include the precise loan mechanism, the amount to be advanced, and particularly how the risk will be distributed among the participating parties.
Ukraine's needs
There is a consensus among G7 nations that Ukraine requires more funding. As the war shows no signs of abating and the Russian military offensive gains momentum, the focus has shifted to providing medium-term assistance to Kyiv and sending a strong signal to Moscow that G7 allies are prepared to support Ukraine for as long as necessary.
It's not only about ensuring Ukraine can continue to fund its defense and service its debt, but also about securing sustainable financial support for 2025.
The EU has already agreed to provide Ukraine with biannual profits from the frozen funds as they accrue. The US aims to leverage this income to offer more immediate funds to Kyiv, with future earnings covering these expenses. The frozen assets are expected to generate around $5 billion annually. If the G7 reaches an agreement, this deal would replace the EU initiative.
The advantage of advancing income from these assets is that it would benefit Ukraine regardless of political uncertainties surrounding the US presidential election. Divisions in Washington have already complicated President Joe Biden's efforts to provide more aid to Ukraine, while his rival, former President Donald Trump, has expressed skepticism about supporting Kyiv.
Negotiations within the G7 have been ongoing for weeks on how best to utilize approximately $300 billion in Russian assets frozen after Moscow's invasion of Ukraine in February 2022.
The US hopes all G7 governments will participate in providing a $50 billion advance loan to Ukraine, but Washington is prepared to assume the entire loan itself, provided the EU guarantees that Russian assets will remain frozen.
