Russian assets plan for aiding Ukraine to dominate G7 meet

G7 finance ministers gather in
Italy on Thursday for a three-day meeting dominated by plans to use Russian
assets to help Ukraine, as well as new sanctions on Moscow and the commercial
threat posed by China.

The ministers and central bankers from the Group of Seven world powers are
meeting in Stresa, on the shores of northern Italy’s Lake Maggiore, to
prepare for the larger summit of G7 heads of state next month in Puglia.

Top of the agenda is a plan to finance crucial aid to Ukraine using the
interest generated by the 300 billion euros ($325 billion) of Russian central
bank assets frozen by the G7 and Europe.

The United States has proposed granting Ukraine, which has been fighting a
Russian invasion for more than two years, up to $50 billion in loans secured
by this interest.

“It’s vital and urgent that we collectively find a way forward to unlock the
value of Russian sovereign assets immobilised in our jurisdictions for the
benefit of Ukraine,” US Treasury Secretary Janet Yellen said this week.

The details of the US plan have not yet been finalised, including who would
issue the debt — the US alone or G7 countries as a whole.

But it will serve as a basis for G7 discussions, according to a Treasury
source in Italy, which as G7 president this year is hosting the Stresa talks.

The US proposal is an “interesting way forward” but “any decision must have a
solid legal basis”, the source said.

Time is of the essence, as the slow speed of European material reaching Kyiv
and the near-halt in US aid for months during wrangling in Washington have
strained Ukraine’s capabilities just as Russia has regained the initiative on
the ground.

In addition to the United States and Italy, the G7 includes Britain, Canada,
France, Germany and Japan.

– ‘More ambitious options’ –

The European Union took a first step in agreeing a deal this month to seize
revenues from frozen Russian assets to arm Ukraine, a windfall that will
reach 2.5 to 3 billion euros ($2.7-$3.3 billion) a year.

Yellen will now try to convince her G7 counterparts to consider “more
ambitious options” to “provide more money to Ukraine as quickly as possible”,
according to a US Treasury spokesperson.

EU members of the G7 “will face continued pressure from the US to do more,
with support from Canada and perhaps the UK”, John Kirton, director of the
University of Toronto’s G7 Research Group, told AFP.

Yellen had initially advocated a more radical solution — the confiscation of
the Russian assets themselves.

But European countries worried about creating a precedent in international
law and the risk of serious legal disputes with Moscow.

Stresa host Giancarlo Giorgetti, Italy’s economy minister, has made no secret
of the complexity of the issue.

He said Rome would be an “honest mediator” in discussions but said the task
was “very delicate”.

France on Wednesday welcomed the US plan, saying it was hoping the G7 finance
ministers would reach a deal this week.

“The Americans have made proposals that fall within the framework of
international law, and we are going to work on them openly and
constructively,” Economy Minister Bruno Le Maire said.

– Russian retaliation? –

In April, Moscow sent a thinly veiled warning to Italy in its capacity as G7
chair, taking “temporary” control of the Russian subsidiary of the Italian
heating equipment group Ariston in retaliation for what it called “hostile
actions” by Washington and its allies.

Experts warn that any further G7 action against Russia could lead to similar
reprisals hitting other European companies still operating in the country.
In March, Russia threatened the European Union with legal action “lasting
decades” if the proceeds from its frozen assets were used to benefit Ukraine,
describing it as “theft”.

Kirton noted that tapping just the interest on Russian assets “would
considerably reduce the legal problems”.

“Legally, it would not be confiscating the ‘assets’,” he said.

As to further sanctions on Moscow, Yellen said the Stresa meeting would
consider “additional action, including to further restrict Russia’s access to
critical goods to support its military-industrial base”, according to
extracts of an address due Thursday.

She has also said the G7 will discuss Chinese overproduction of key green
technologies, which Washington fears is driving cheap exports and stifling
growth elsewhere. (BSS/AFP)