Washington’s G7 allies are warming to a US plan to rush tens of billions of dollars in funding to Ukraine before Donald Trump’s potential return to the White House.
Under the plan, set to be discussed at a June summit, Kyiv would receive money upfront from a G7 loan. The loan would be backed by future profits generated from about $350bn of Russian assets that have been immobilized in the west in response to Moscow’s full-scale invasion of Ukraine.
Some G7 members have been reluctant to endorse the plan but their feelings have changed after a diplomatic push by the US, according to eight western officials.
Washington’s plan would raise about $50bn to be disbursed to Ukraine as early as this summer, US officials have said.
US Treasury Secretary Janet Yellen described the move as a “key topic” for this week’s gathering of G7 finance ministers and central bank governors in Stresa, Italy.
“It’s vital and urgent that we collectively find a way forward to unlock the value of Russian sovereign assets immobilized in our jurisdictions for the benefit of Ukraine,” Yellen is set to say on Tuesday at a conference in Frankfurt, according to remarks seen by the Financial Times.
The event will feature officials from the European Central Bank, which has been reluctant in endorsing more aggressive plans such as the seizure of Russian frozen assets, warning that such a move could dent the euro’s attractiveness as an international reserve currency.
The G7 funding plan would arrive at a crucial time for Kyiv as its forces struggle to hold the line amid a renewed Russian offensive following delays in the delivery of western military aid.
The most reluctant G7 members have warmed to the plan as a way to ensure long-term funding for Kyiv if Joe Biden loses this year’s presidential election to Trump, who has opposed US aid to Ukraine.
It could be “done before November so, even if Trump wins, the money has already been deployed,” said one person involved in the discussions.
Officials from Italy, which holds the rotating G7 presidency, have said the summit will seek to reach consensus on how to “maximize the use of windfall profits to ensure the long-term financing of Ukraine.”
“I feel there is momentum and there is interest,” a senior US Treasury official said on Friday. “And what we’re involved in is trying to engage in hard, detailed economic diplomacy to make sure we can all get on the same page. And I think we’re making progress there.”
The US wants to include language in the joint G7 statement referring to leveraging the proceeds from Russian state assets — and has secured backing from Canada and the UK, the western officials said.
France, Germany, Italy and Japan have previously opposed more far-reaching US plans, such as seizing Russia’s underlying assets, fearing it could create a precedent for the seizure of state property and wreak havoc in financial markets. They have shown more openness in recent weeks to the idea of leveraging profits to generate loans for Ukraine, officials have said.
These four countries are “coming around,” one official said.
Details are yet to be agreed, however, the official added, including who would issue the debt — the US alone or G7 countries via a special purpose vehicle, who would guarantee it, and how risks and repayment would be shared in case the future profits do not materialize.
The senior US Treasury official said any decision would be “fundamentally a political decision, one that’s going to be taken by leaders” of the G7 next month. “The goal is to have consensus coming out of the finance ministers to provide advice to leaders,” the US official said.
A different person familiar with the talks on Russian sovereign assets said the US was not driven by the timing of the election.
Separately, EU countries earlier this month agreed to use part of these profits to jointly buy weapons for Ukraine. Under that plan, Belgium’s central security depository Euroclear, where most sanctions-hit Russian state assets being held in the block are stuck, would pay out the first tranche of profits as soon as July.
The G7 scheme faced an additional snag, according to officials in Brussels, since any plan to leverage the profits would need a fresh unanimous decision at EU level. Countries such as Hungary could potentially cause more delays.
Additional reporting from Kana Inagaki in Tokyo, Martha Muir in Washington, and Claire Jones and Martin Arnold in Frankfurt
