The G7 states have achieved a breakthrough: they want to use interest income from frozen Russian assets for Ukraine. Moscow calls it theft.
With huge financial commitments, a security agreement and sanctions, the USA and its G7 allies want to give Ukraine new strength. The aim is to provide long-term security for the country, which is being attacked by Russia. At their summit, the seven major industrial nations agreed on a billion-dollar loan that is to be paid off with interest income from frozen Russian state assets. With a security agreement, the US government wants to enable Ukraine to continue to defend itself.
The war in Ukraine dominated the first day of the summit of the G7 group, which includes Italy, Germany, France, Great Britain, Japan, Canada and the USA. The meeting of the heads of state and government lasts until Saturday and is taking place in the luxury resort “Borgo Egnazia” not far from Bari in Apulia.
USA: Main player in realizing billion-dollar loan
According to the US government, around 280 billion US dollars (around 260 billion euros) of Russian central bank funds have been frozen in Western countries since the Russian attack began. Discussions have long been underway about how the interest income generated by these funds can benefit Ukraine. The G7 countries now want to use this money to finance a loan of 50 billion US dollars.
Chancellor Olaf Scholz said on Thursday that the money would enable Ukraine to finance everything it needed militarily and for reconstruction. “The Russian president has a very obvious plan: he wants to push his war forward until everyone else gives up supporting Ukraine. And that plan has failed today,” the chancellor said.
A high-ranking US government official previously said that the United States was willing to provide up to 50 billion US dollars (around 46 billion euros) for this purpose. However, he stressed: “We will not be the only lenders.” Others would also participate. He did not provide any specific details. But he indicated that the amount could end up being higher. The US government official stressed that the loan would in any case be financed from Russian funds. The extent to which Berlin will participate is still to be clarified.
According to the World Bank, the war damage now exceeds 486 billion US dollars. The draft of the summit’s final declaration said of Ukraine: “It is not right for Russia to decide whether or when it will pay for the damage caused in Ukraine.” The G7 is therefore continuing to examine all legal ways to force Russia to fulfill these obligations.
Moscow rages
The plan of the G7 states will have fatal consequences, warned the Russian Foreign Ministry spokeswoman. “Using the funds that have effectively been stolen from Russia for the military adventures of the Kiev regime is criminal and cynical,” said Maria Zakharova on Thursday. She threatened the Europeans in particular with harsh countermeasures and hinted at expropriations of European companies in Russia.
The Kremlin was initially more cautious in its comments. Russia will follow the G7 summit very closely, said Kremlin spokesman Dmitry Peskov, without commenting on the possible decisions that had been rumored in advance.
Security agreements without security guarantees
The United States has also signed a bilateral agreement to provide Ukraine with further assistance against Russia’s war of aggression – and also against potential future attacks.
US President Joe Biden and his Ukrainian counterpart Volodymyr Zelenskyy wanted to sign the agreement on Thursday evening on the sidelines of the summit. It is to run for ten years and provides for military support, cooperation with regard to the arms industry and the exchange of intelligence information. The agreement is intended to help Ukraine become fit for NATO membership. At the same time, it calls on Ukraine to reform.
The US does not provide any security guarantees. The agreement also makes no commitments to supply specific weapons systems.
Warning to China
Before the summit even began, the USA had imposed new sanctions on Russia and supporters of the war – including Chinese companies. New EU sanctions could follow. In a negotiated declaration by the G7, which the German Press Agency has seen, it says that China is being called upon to stop supplying Russia with goods that can also be used for military purposes. Supporting the Russian defense industry enables Moscow to continue its illegal war in Ukraine and thus has significant and far-reaching security policy consequences.
Indirect threat to China over trade practices
China is also likely to be on the agenda on the second day of the summit, when the G7 discuss economic security. In the negotiated declaration, the G7 accuse the People’s Republic of using non-market economy practices such as subsidies to create harmful overcapacity and distort global competition.
In this context, China is also indirectly threatened with possible further punitive tariffs: If necessary, further measures will be taken to protect workers and companies from unfair practices, warns the G7 group.
Just this Wednesday, the EU announced plans for punitive tariffs on imports of electric cars from China. The USA had previously taken the lead. The Ministry of Commerce in Beijing sharply criticized the EU Commission’s threat and hinted at countermeasures.