G7 summit: Frozen Russian assets to cover £41bn Ukraine loan
A White House representative on Friday explained the decisions made during the summit in Italy, saying Ukraine will not have to repay the £41 billion loan agreed upon by the G7. Instead, it will be repaid from the interest generated by frozen Russian state funds.
The official summarized this during a briefing for journalists on the most important decision of the G7 summit in Italy's Apulia, which ended on Friday. One of the main topics was using frozen Russian assets.
Although the G7 decision does not yet constitute a final decision, it determines how allies will use frozen Russian funds to support Ukraine. It will involve granting Ukraine a loan for around £41 billion through an intermediary institution. Although it will formally be a loan, Ukraine will not have to repay it, as the obligation will be repaid from the profits (interest) generated by the frozen Russian assets.
The USA has already committed to providing a loan of up to £41 billion, while Canada - up to £4 billion, but other countries can still contribute. The primary role of the EU - where the vast majority of the £247 billion Russian money is located, will be to direct the interest to repay the loan. Other countries (including Japan and France) where Russian funds are frozen will play similar roles. Some countries will additionally commit to guaranteeing the loan.
According to the White House, money will flow to Ukraine through several channels and be allocated for various purposes. The EU will transfer funds for military aid through the European Peace Facility and Japan for economic aid. Still, the priority will be allocated funds for the reconstruction of Ukraine through a particular coordination platform established in 2023. The first money is expected to flow to Ukraine before the end of the year.
A key step to finalizing the provisions will be the approval by all EU countries to extend the freezing of Russian assets (currently, this decision must be renewed every six months).
"Historic decisions and a powerful set of new sanctions"
Summarizing the decisions made this week by the USA and the G7 leaders, the official assessed that they were "historic decisions," with the potential to "create a psychological turning point." In addition to the decisions regarding Russian funds, he mentioned the 10-year US-Ukraine security agreement and a powerful set of new sanctions aimed at hitting the Russian defence industry and the countries supplying it, primarily China. The official described these restrictions as "the most significant in years".
- Some of these Chinese actions supporting the Russian war machine threaten not only the existence of Ukraine but also European and transatlantic security, he emphasized.
