Finance officials from the Group of Seven (G7) countries plan to push ahead with talks on using proceeds from frozen Russian assets to fund a $50 billion loan to Ukraine, as the US seeks more assurance, particularly from the European Union, that the assets will be ;#8220;immobilized” for a long period.
As Reuters writes, the talks will take place on the sidelines of a meeting of G20 financial leaders in Brazil, dedicated to broader issues of the economy, climate and development.
Frozen assets of the Russian Federation for Ukraine: positions of the USA and the EU
A senior US Treasury official told reporters that the G7 meeting is unlikely to reach an agreement or make a statement, but it is important for Treasury ministers to review the technical details of the Ukraine lending plan. At the same time, ambassadors of EU member states discussed options on how to resolve issues of concern in the United States.
Now watching
Back in June, G7 leaders reached an agreement in principle to use proceeds from some $300 billion of Russian sovereign assets frozen since Russia's full-scale invasion of Ukraine in 2022 to provide a $50 billion loan to help Ukraine and provide the Ukrainian side with confidence in external financing in future years.
The plan does not include asset confiscation, avoiding a precedent that the European Union says could destabilize the global financial system. However, the details of the loan turned out to be more complicated than initially expected.
On the part of the United States, there is a desire to obtain guarantees that assets will be frozen for a long period — at least until a peace treaty is concluded that will end the war, preserve Ukraine's sovereignty and provide Russia with compensation for damage caused by the war, a US Treasury spokesman said.
However, this “somewhat contradicts” EU sanctions regime on Russia, which must be renewed every six months, leaving the possibility of releasing the assets underlying the sanctions.
— We have made it clear to our partners that we need firm assurances that these assets will not be used again in a way that would end the flow of profits unless a peace agreement is reached… where Russia will pay for what it did. And so from our perspective, something that makes that very clear will give us confidence that we know that this loan can be made, — said the US Treasury Department.
The unnamed official declined to say how such certainty could be achieved, but said G7 leaders had decided the lending plan should go ahead.
The draft EU document indicates that EU ambassadors discussed options for extending the sanctions, in particular on Russian Central Bank assets, in order to secure a lending plan.
It was either a “indefinite” extension period, or its increase to three years. In any case, unanimity of the EU member states will be required.
The draft also states that the extension will aim to “increase legal certainty and predictability for G7 partners regarding emergency revenue streams that will be provided to Ukraine to service and repay additional EU and partner bilateral loans G7”.
