Negotiators from the delegations of the G-7 countries, meeting at their annual summit in southern Italy, have managed to reach an agreement in principle on the mechanism for delivering new financial aid to Ukraine using the interest generated by the frozen assets of Russia, according to a European source. “It is done, some details are missing that will be seen at the leaders’ table, but the political agreement is there,” says a senior European official participating in the negotiations. This is a far-reaching measure, which has taken months to agree on, aimed at guaranteeing continuity of support for kyiv while inflicting damage on Russia.
The idea is to reach a loan of 50 billion dollars – a value similar to that of the latest support packages approved by the EU or the US – to be paid with the returns on Russian assets immobilized by Western sanctions. . The mechanism being considered, which still needs to be adjusted, is for each member of the G-7 with frozen Russian assets to structure their loans in accordance with their internal procedures. The European Union — where most of the frozen Russian assets are located — can make the loan and use the return on those frozen Russian assets to subsidize Ukraine’s payment of interest and principal. The rest of the G-7 could follow those steps using the return of assets tied up in their jurisdictions.
The expectation is that the final statement will not go into technical details, but will simply send a strong political message. However, the summit is an opportunity to outline those details that will have to be finalized later by the specialized teams of the member countries.
Germany was one of the countries showing some reluctance, with a desire to outline the scheme and guarantees as clearly as possible, but European sources do not believe it will block the final agreement.
From the EU’s point of view, it is possible: an exceptional item enabled this year by the European budget regulation would allow this loan to be channeled as a macroeconomic assistance program with the approval of a qualified majority of the Council (since unanimity is not necessary, approval by the body representing the Member States would circumvent Hungary’s possible veto, for example). “It is the perfect window of opportunity because if it is delayed, its approval in 2025 would require changing the budget regulations, for which unanimity is needed,” says a senior European diplomat. Within these details, it is proposed that the US be the one to provide the guarantees (or part of them) for the European loan, a way to involve Washington and also to reassure the EU; but that chapter is still under discussion.
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The EU has brought the proposal very close and agreed at home, with the Member States, so that there are no endless negotiations afterwards. The EU has already approved a measure – which has been created in the form of a sanction on Russia – to arm Ukraine with the returns generated by Russian assets tied up by sanctions on the Kremlin; That generates about 3,000 million euros a year. The idea now is to transform this system into a loan for Ukraine, since if those returns are used to pay the interest on the loan there may be more money available for kyiv, and even more so in a context like the current one, very difficult on the battlefield. and enormous political volatility.
The president of the European Council, Charles Michel, noted this Thursday the determination of the partners: “We want to support Ukraine. Provide more financial support so they can defend themselves,” he argued.
On the other hand, Ukrainian President Volodymyr Zelensky plans to sign security agreements with the United States and Japan on the occasion of the G-7 summit. The G-7 countries announced at the NATO summit in Vilnius last year their intention to proceed with the signing of bilateral security agreements with Ukraine pending the clearing of the path for kyiv’s accession to the Atlantic Alliance. About thirty countries adhered to that declaration and several of them, including Germany, France and Spain, have already sealed the promised pacts, which guarantee flows of arms and other types of support to Ukraine, in an attempt to send a signal of persistent commitment. This Thursday it is the turn of Washington and Tokyo.
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