G7 agrees to lend Ukraine $50 billion from Russia’s frozen assets

The G7 agreed to use Russia’s frozen assets to donate $50 billion to Ukraine to help the country fight Russia’s invasion forces.

US President Joe Biden said this was another reminder to Russia “that we will not back down”, but in Moscow, President Vladimir Putin said the action was “theft” and would “go unpunished”. punish”.

Also at the G7 summit in Italy, Ukrainian President Volodymyr Zelensky and Mr. Biden signed a 10-year bilateral security agreement between Ukraine and the US, which Kyiv praised as “historic”.

The deal includes US military aid and training for Ukraine – but does not commit Washington to sending troops to fight for its ally.

According to the White House, the security agreement means Washington and Kyiv will work together to build and sustain Ukraine’s defense and deterrence capabilities, strengthen the country’s defense industrial base and support economic recovery. economics and energy security.

The security agreement also means that in the event of a future Russian armed attack on Ukraine, there will be consultations “at the highest level to determine appropriate and necessary measures to protect Ukraine,” the statement added. support Ukraine and force Russia to pay the price.”

Additionally, some $325 billion worth of assets were frozen by the G7, along with the EU, following Russia’s full-scale invasion of Ukraine in 2022. This trove of assets is generating returns of about $3 billion per year. year.

According to the G7 plan, that 3 billion USD will be used to pay annual interest on the 50 billion USD loan that Ukraine borrowed on the international market.

The money is expected to arrive later this year but is seen as a more long-term solution to support Ukraine’s war effort and economy.

Speaking at a joint press conference at the summit site in Puglia, southern Italy, President Biden said the $50 billion loan would “use that money to serve Ukraine and send a reminder another to Ukraine”. [Russian President Vladimir] Putin that we will not back down.”

The US leader emphasized that Mr. Putin “cannot wait for us, he cannot divide us and we will stand with Ukraine until they prevail in this war.”

President Zelensky thanked the Americans and other allies for their continued support.

And referring to the new security agreement, he said: “It is truly a historic day and we have signed the strongest agreement between Ukraine and the United States since we achieved independence.” [in 1991]”.

The G7 group of wealthy countries, Canada, France, Germany, Italy, Japan, Britain and the United States, are important financial and military supporters of Ukraine in the fight to prevent Russian occupation forces.

Other G7 leaders also praised the $50 billion loan deal, with British Chancellor Rishi Sunak describing it as a “game changer”.

A $50 billion loan is quite a large sum in comparison US military aid worth $61 billion was finally agreed in May.

A senior White House official said the fund agreed to by the G7 will have “multiple uses,” which could include “military assistance, budget assistance, humanitarian assistance, reconstruction assistance.” .

The US official added that there will be “flexibility in this structure” as some countries “prefer to send their own money for budget and reconstruction support” while others will have “set aside” funds. for military support.

Some in Kyiv who pushed for the cash wanted the G7 to release the entire $300 billion frozen fund, not simply the interest it generated. The European Central Bank has ruled out that possibility.

The bank’s president, Christine Lagarde, has previously warned that such a move risks “disrupting the international order… which you would want Russia to respect”.

Unlike the US aid package, which directly translates into sending more missiles to the front lines, this money likely won’t arrive until later this year, meaning it will have little impact on current developments. of the war.

For now, Ukraine says it still needs more weapons – mainly air defense systems to ward off Russian missile and drone attacks on its cities and power plants. , as well as the long-awaited F-16 fighter jets they hope will start arriving as soon as possible. this summer.

At the G7 summit, Mr. Zelensky said the new security agreement includes the US transporting these fighter jets.

This loan contract is also of great symbolism for Ukraine. The aggressor is now being forced to pay the price, not only to repair the destruction it caused – but also to let Ukraine defend itself.

One of Mr. Zelensky’s closest advisers said that the West’s decision to punish Russia in this way marked, in a sense, a turning point in the war.

However, this loan is unlikely to force Russia to change the war in Ukraine.

Most of the frozen assets of the Russian Central Bank are held in Belgium.

According to international law, countries cannot confiscate those assets from Russia and give them to Ukraine.

Speaking a day after the G7 decision was announced, President Putin declared that the move “will not go unpunished”.

Moscow has said it considers Western efforts to use proceeds from frozen Russian assets a criminal act.

In February, Russia’s Finance Minister said the country had “a way to respond” if Western nations moved to appropriate Moscow’s money.

European officials have previously said that European investors have around 33 billion euros worth of money stranded in Russia.