G7 agrees on $50 billion loan for Ukraine financed by frozen Russian assets

Unanimously, the leaders of world powers in the G7 meeting in Italy agreed to use frozen Russian assets to finance a $50 billion loan to Ukraine.

The goal is to help the country fight the war against Russia, which Moscow started in February 2022.

UK Prime Minister Rishi Sunak called it a “game-changing” deal, while German Chancellor Olaf Sholz described it as a “historic step.”

Russian assets, which amount to US$325 billionwere frozen by the group of the world’s richest nations, including the European Union, when Moscow launched its full-scale invasion of Ukraine in 2022.

Russia called the move “theft” and threatened retaliation.

Ukrainian President Volodymyr Zelensky welcomed the agreement that “puts that money to work for Ukraine and sends another reminder to Putin that we are not going to back down.”

The G7 countries –Germany, Canada, the United States, France, Italy, Japan and the United Kingdom– have already transferred significant financial and military support to Ukraine since the war began.

On the sidelines of the summit, German Chancellor Sholz stated that the agreed loan “is a clear signal to the Russian president [Vladimir Putin] that he cannot sit idly on this matter.

“The bases have been created so that Ukraine is in a position to supply itself with everything it needs in the near future, in terms of weapons, but also investment in reconstruction or energy infrastructure,” he explained.

For her part, the president of the European Commission, Ursula von der Leyen, assured that “the entire G7 contributes to this loan.”

“It is the windfall profits from Russian assets tied up in Europe that will do the trick,” he said.

Most of the assets of the Central Bank of Russia are located in Belgium. Under international law, countries They cannot confiscate those assets to Russia and give them to Ukraine.

But frozen Russian resources are generating a lot of interest -about US$3,000 million a year-which can be used at the convenience of the group.

The plan is to borrow on international markets, give about $50 billion to Ukraine, and use the $3 billion interest on Russian assets to pay the interest on the loan each year.

Russian Foreign Ministry spokesperson Maria Zakharova warned that there would be “painful” retaliatory measures.

Within the framework of the same summit, Biden and Zelensky also signed a separate agreement on security that is presented as a step prior to a possible entry of Ukraine into NATO.

The pact establishes that, in the event of an armed attack against Ukraine, Washington and Kyiv will meet within 24 hours to discuss a response.

However, does not commit the United States to send forces to defend Ukraine.

It also states that the US will support Ukraine in developing its military force through training, joint planning and cybersecurity efforts. Washington will also help claim compensation for damage caused by Russia.

Biden and Zelensky announced the agreement in a joint press conference in which they reported that it was a 10-year agreement.

“Our security agreement is a bridge to Ukraine’s entry into NATO,” Zelensky said. “Today is a truly historic day.” He celebrated.

Putin “cannot divide us and we will stand with Ukraine until they prevail in this war,” Biden said.

Later, White House national security adviser Jake Sullivan told reporters that the agreement was intended to demonstrate that U.S. support “will last long into the future and promises continued cooperation, particularly in space.” defense and security”.

Analysis by BBC News’ Jean Mackenzie from Ukraine

Some in Kyiv who had pushed for this money wanted the G7 to release the entire frozen $300 billion fund, and not just the interest it generates.

The European Central Bank had ruled it out.

However, the settlement amount was welcomed as a very important first step in supporting the Ukrainian economy in times of war.

Unlike the $61 billion U.S. aid package approved in Washington in May, which directly translated into more missiles being sent to the front, the G7 money likely won’t arrive until the end of the year, meaning it will have little impact on the current course of the war.

For the moment, Ukraine still urgently needs more weapons, especially air defense systems, to counter Russian attacks on its cities and power plants, as well as the long-awaited F-16 fighters, which would arrive this summer.

This $50 billion loan is more of a long-term solution to Ukraine’s financial and defense problems. The idea is that it can be used in its defense industry and manufacture weapons in collaboration with other countries.

And so, over time, depend less on its Western allies for its defense and survival.

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