The G-7 seeks to seal the pact to help Ukraine with frozen Russian assets

The leaders of the G-7, the group of the most advanced democracies, plan to hold from this Thursday to Saturday in the Italian region of Apulia an annual summit marked by the will to give a definitive political boost to the use of the interests generated by Russian assets frozen by Western powers. The objective is to use this instrument as leverage to grant Ukraine a loan worth about 50 billion dollars (about 46 billion euros). The negotiators of the delegations are trying to finalize the conceptual framework of a complicated maneuver, held up for months by disagreements between the partners. European sources close to the negotiations show optimism about the possibility of “finding ways” to activate the mechanism in a consensual manner.

Although Russian assets, around $300 billion, are mainly blocked in Europe, the EU, the source points out, is seeking common action with partners. The community club already has a mechanism to allocate the returns from these immobilized assets to Ukraine for weapons – the first payment is expected to arrive next month – but now that the debate has reached the G7 table, driven above all by the US , wants to involve the rest of the members, especially Washington, as a guarantee not only that it will not be left alone in supporting Ukraine but also in the face of any change in the White House. Above all, in the face of a hypothetical return of Republican Donald Trump.

The underlying idea is to use the interest already generated by Russian capital blocked in retaliation for the invasion of Ukraine as leverage for a loan that would be repaid little by little with the interest that the assets generate in the future. Essential points of the negotiation are who would make the loan based on these guarantees and how precautions would be designed in case problems arise in the long repayment period. The European source points out that the money could be used for defense needs, reconstruction or financial stabilization of Ukraine.

Joe Biden’s Administration has been pushing for months to use these funds, having even considered the possibility of using not only the interest, but all of the blocked capital. Given the reluctance of the European partners, who have doubts about the legality of this maneuver, the group has opted for the compromise solution that uses interests. Biden is trying to create a new economic support scheme that would help Ukraine at least in the first phase of 2025 if Republican Donald Trump wins the presidential election next November and the flow of support from the United States is permanently cut off.

Reverse a negative trend

Western partners are looking for ways to reverse a negative trend for kyiv on the battlefield, where a gradual advance of Russian forces is detected. The president of Ukraine, Volodymyr Zelensky, will also be present at the summit.

“The current strategy does not work. It is necessary to change it, we cannot win the war with a step by step approach. We have to surprise and overwhelm the adversary,” said former NATO Secretary General Anders Fogh Rasmussen in a meeting at the end of last week in Madrid. “We would have to lift all limits on the delivery of weapons and their use by Ukraine. “NATO should also establish an air and missile defense shield based on Alliance territory on the western border of Ukraine,” said Rasmussen, who has just presented a strategic report on the war prepared together with Zelensky’s chief of staff, Andrii Yermak.

These reflections are part of an intense debate among Ukraine’s Western partners. The G-7 is not the appropriate forum for military decisions, but it will try to provide an economic boost to change the trend. It is the most important element of a summit with many other aspects of relief.

Other aspects of the summit

The leaders will seek a common political position on what Western countries consider China’s excess industrial production capacity in key sectors, such as the manufacturing of products with green technologies, achieved based on subsidies considered abusive and that threatens consolidate a position of absolute Chinese dominance in strategic markets. Westerners hope to get the support of emerging countries on this issue, making them see that they too have no interest in this path continuing.

China will also be the protagonist of the session dedicated to Indo-Pacific security, an issue of utmost interest to Japan, one of the members of the G-7, and India, whose Prime Minister, Narendra Modi, will participate as a guest. This is the Indian president’s first trip after his recent, bitter, electoral victory, which opens the way for him to a third term, but without an absolute majority. The West seeks to strengthen cooperation with India with the lever of common distrust of a Chinese rise with disturbing features.

Thirdly, the summit will also address the crisis of the Gaza war, trying to give new impetus to Biden’s ceasefire plan, approved in the UN Security Council, and which, however, fails to take off.

The Italian presidency has invited several leaders beyond the G-7 circle (United States, Canada, Germany, France, the United Kingdom, Italy and Japan, plus the EU) and the aforementioned Zelensky and Modi to the summit. The leaders of Brazil, Luiz Inácio Lula da Silva, Argentina, Javier Milei, Turkey, Recep Tayyip Erdogan, and the Pope are scheduled to attend, among others, who will address the participants on the subject of artificial intelligence and its impact on the humanity, another hot topic at the summit.

The event will also be an occasion for bilateral meetings or exchanges of opinions without structured frameworks on other relevant issues.

First of all, the presence in Puglia of the leaders of the three main EU countries – Germany, France and Italy – and the president of the European Commission, Ursula von der Leyen, a few days after the elections for the European Chamber constitutes an obvious opportunity to discuss in person the schemes for the EU leadership in the next term. Von der Leyen, from the popular family, aspires to repeat her position. The leaders of Germany, Olaf Scholz, and of France, Emmanuel Macron, are the reference figures in the Council for the social democratic and liberal families, respectively, due to the weight of the countries they lead.

Another element of interest is the coincidence at the summit of the leaders of Brazil, the leftist Lula da Silva, and Argentina, the far-right Milei.

On the other hand, the Italian presidency has a great interest in the group addressing the issue of migration – which will be the subject of a specific work session – and the future of Africa – addressed in another along with different topics. Symptom of Italian interest in Africa is the invitation to the leaders of Algeria, Kenya, Mauritania and Tunisia, who plan to attend.

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