G7 Finance Ministers Support Proposal to Use Frozen Russian Assets to Finance Ukraine

G7 finance ministers have proposed issuing a loan to Ukraine, secured by profits on frozen Russian assets, to provide financing for Kyiv beyond 2024. The loan, estimated at around $50 billion, would be repaid with profits from approximately €190 billion in Russian central bank assets held in Euroclear, a Belgian central securities depository.

During discussions in Stresa, Italy, the ministers expressed optimism about the proposal, stating they were “making progress” on options to expedite the process of utilizing the profits. They plan to present the loan construction options to G7 leaders ahead of a summit in June.

In addition to the loan proposal, the finance chiefs discussed pressing China to reduce industrial subsidies that disadvantage western competitors. They also emphasized the importance of implementing a historic global tax deal and raised concerns about Israel’s plan to restrict Palestinian banks’ access to Israeli lenders.

Ukraine’s finance minister, Serhiy Marchenko, welcomed the progress on the loan but emphasized that it was only a temporary solution. He stressed the need for the confiscation of Russian assets as a more permanent solution.

While details of the loan are still being finalized, there are concerns about fair-risk sharing among European nations, as the majority of the assets are held on the continent. The US also urged the G7 to address trade tensions with China, particularly regarding manufacturing subsidies that impact global trade.

Despite challenges, the G7 remains committed to supporting Ukraine and ensuring financial stability for Kyiv beyond the current year. The discussions highlight the complex geopolitical and economic dynamics at play in the aftermath of Russia’s invasion of Ukraine.