Yahoo Finance G7 finance ministers seek consensus on how to fund Ukraine through frozen Russian assets
The G7 finance ministers will look to find consensus on how to use revenues from frozen Russian assets to finance Ukraine aid at this week's meeting in Italy, Reuters reported, citing a source in the U.S. Treasury.
Finance ministers and the heads of central banks of the G7 countries will gather on May 24 and 25 in the northern Italian town of Stresa.
Specific agreements are not expected to be signed at the meeting, the American official said.
Read also: Germany supports US proposal to use frozen Russian assets for Ukraine
G7 ministers are trying to reach consensus on a plan that would give Ukraine enough money up front to meet medium-term military and civilian needs, while also signaling to Russia that it cannot stay in the war longer than Ukraine's financial support lasts.
The talks aim to present a proposal to the G7 heads of government, who will meet in southern Italy from June 13 to 15.
G7 negotiators have debated for weeks on how to best use frozen Russian financial assets worth around $300 billion.
The United States insists on finding a way to utilize future income from these assets to support a loan that could provide up to $50 billion in the near term.
Read also: Former Ukrainian PM calls for full transfer of frozen Russian assets to Ukraine
Many legal and technical aspects needed to be agreed on, and no detailed agreement was expected to be reached in Stresa, several G7 officials said, including the U.S.
Who will administer the loan - the World Bank or some other organization - how it will be guaranteed, how future profits can be estimated, and what will happen in the event of a peace agreement with Russia - all these questions remain to be determined.
European officials are particularly cautious, with one EU diplomat saying it will take "weeks, if not months" to make a final decision.
"If there is a legally viable mechanism that will allow us to make even better use of these financial flows from frozen assets in the future, then we are certainly ready to do so," Reuters quoted a German source saying.
“We are open to the idea of mobilizing the income of these assets as best as possible and as much in advance as possible within international law,” said French Minister Bruno Le Maire.
U.S. proposals to use Russian assets have "quite serious legal implications" that still need to be clarified, Italian Economy Minister Giancarlo Giorgetti said last week.
The German government is cautious about the U.S. plan to use the principal from the frozen Russian assets for Ukraine, as opposed to simply the interest the assets accrue.
Read also: German Defense Ministry seeks over $4 billion in additional military aid for Kyiv – Bild
"Our position remains unchanged: we are talking about interest from frozen assets," German government spokesperson Steffen Gebestreit said in Berlin on May 22.
"It's not about the assets themselves."
Only interest from frozen assets would be used, a German finance ministry official also told Reuters.
Russia has repeatedly warned the West of retaliation if its assets are affected and has accused Washington of intimidating Europe into taking more drastic steps to thwart Russia's war in Ukraine.
With both Germany and France supporting the plan, the chances of its full approval during the G7 leaders' summit from June 13 to 15 have increased, Bloomberg said.
Ukrainian Finance Minister Serhiy Marchenko will attend the meeting in Italy, sources said.
Confiscation of Russian Assets
The USA and EU are jointly considering legal authority to direct $300 billion in Russian assets to Ukraine's reconstruction and other needs, U.S. State Secretary Antony Blinken said.
The U.S. Senate Foreign Relations Committee approved a bill to confiscate Russian assets and transfer them to Ukraine to rebuild its infrastructure on Jan. 24.
Outlines of decisions necessary to transfer frozen Russian assets to Ukraine are already being prepared, Ukrainian President Volodymyr Zelenskyy said.
Bill No. 8038 on the transfer of frozen Russian assets to Ukraine received the required number of votes to be passed by the U.S. House of Representatives on April 20.
Ukraine may receive almost $8 billion as part of this procedure.
Read also: London calls for ‘creative’ use of frozen Russian assets to aid Ukraine
The bill must now be approved by the U.S. Senate.
EU ambassadors reached a preliminary agreement on May 8 to direct revenue generated by frozen Russian assets toward supporting Ukraine.
The U.S. intends to use seized Russian assets to finance the reconstruction of Ukraine, Blinken confirmed on May 14, during a visit to Kyiv.
The first payment of surplus profits from the use of frozen Russian assets in the EU will be in July 2024, the European Commission announced on May 21.
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