G7 Agrees on $50 Billion Loan for Ukraine Using Frozen Russian Assets

[Social Media]

 

In a significant move to bolster Ukraine's defense against Russian aggression, the G7 has agreed to use frozen Russian assets to raise $50 billion (£39 billion) for Ukraine. This decision, announced at the G7 summit in Italy, represents a concerted effort by the world's leading economies to provide long-term financial support to Ukraine amidst its ongoing conflict with Russia.

 

US President Joe Biden emphasized the determination of the G7 nations, stating, "It's another reminder to Russia that we're not backing down." He added that Russian President Vladimir Putin "cannot wait us out, he cannot divide us, and we'll be with Ukraine until they prevail in this war." However, Moscow has threatened "extremely painful" retaliatory measures in response to the G7's decision.

 

The funds, expected to be available by the end of the year, are intended to support both Ukraine's war effort and its economy. This financial assistance is seen as a longer-term solution, supplementing immediate military aid with economic stability for Ukraine.

 

At the summit, Ukrainian President Volodymyr Zelensky and President Biden signed a historic 10-year bilateral security agreement. This deal, hailed by Kyiv as "historic," includes provisions for US military and training aid to Ukraine. However, it stops short of committing American troops to fight alongside Ukrainian forces.

 

The agreement comes as part of a broader package of support from the G7, which includes Canada, France, Germany, Italy, Japan, the UK, and the US. These nations have been pivotal in providing both financial and military aid to Ukraine since Russia's full-scale invasion began in 2022.

 

Leveraging Frozen Assets

Following Russia's invasion, approximately $325 billion worth of Russian assets were frozen by the G7 and the European Union. These assets are generating about $3 billion annually in interest. Under the G7 plan, this interest will be used to pay off the annual interest on the $50 billion loan for Ukraine, which will be raised on international markets.

 

President Biden explained the strategy at a joint news conference in Puglia, southern Italy, saying, "The $50 billion loan would put that money to work for Ukraine and send another reminder to Putin that we're not backing down." UK Prime Minister Rishi Sunak described the loan as "game changing," highlighting the significant impact it could have on Ukraine's war effort and economic stability.

 

While the $50 billion loan is a substantial financial commitment, it pales in comparison to the $61 billion worth of US military aid agreed upon in May. Some in Kyiv had hoped for the release of the entire $325 billion in frozen assets, not just the interest. However, the European Central Bank ruled out such a move.

 

Military and Economic Support

Although the loan will not be available immediately, it underscores the G7's commitment to supporting Ukraine in the long term. In the short term, Ukraine continues to require more weapons, particularly air defense systems to counter Russia's missile and drone attacks, and F-16 fighter jets, which are expected to start arriving as early as this summer.

 

At the G7 summit, President Zelensky indicated that the new security agreement with the US includes shipments of these warplanes. He expressed his gratitude to the American and other G7 allies for their unwavering support, stating, "It's a truly historic day and we have signed the strongest agreement within Ukraine and the US since our independence [in 1991]."

 

Symbolic and Practical Impact

The loan deal is not only a significant financial boost but also a powerful symbolic gesture. It signals that the international community is holding Russia accountable for its actions. As one of Zelensky's closest advisers noted, the decision to use Russian assets to fund Ukraine's defense marks a turning point in the war, indicating a more proactive stance by the West.

 

However, despite the symbolic and practical significance of the loan, it is unlikely to force a dramatic shift in Russia's approach to the conflict. Russian Foreign Ministry spokeswoman Maria Zakharova warned of "extremely painful" retaliatory measures, reflecting Moscow's staunch opposition to the G7's actions.

 

Most of the frozen Russian assets are held in Belgium, and under international law, countries cannot directly confiscate these assets and transfer them to Ukraine. This legal constraint means that while the G7's financial support is substantial, it operates within the boundaries of international law and financial norms.

 

Credit: BBC 2024-06-15

 

Get our Daily Newsletter - Click HERE to subscribe

[Gweiloman]

An alternative take.

 

 

[thaibeachlovers]

One wonders who the major beneficiaries of the loot will be? no prizes for saying the 1%.