In a show of solidarity with Ukraine, G7 leaders cleared the way for a $50 billion loan package for Kyiv as US President Joe Biden prepared to sign a security agreement with his Ukrainian counterpart, President Volodymyr Zelenskyy. Both measures are highlights of this year’s G7 summit being held in southern Italy.
Determined as the G7 leadership’s message to Russia’s President Vladimir Putin may have been about its commitment to stand with Ukraine, the fact that a number of key leaders attending the summit face elections that could yet usher in a new and more conservative brand of leadership may weaken the G7’s stated resolve to back Kyiv.
Among the pending elections, most notable perhaps is November’s in the US, with the prospect of a return to the presidency of Donald Trump. An avowed sceptic when it comes to providing additional military aid to Ukraine, Trump has criticised what he has described as the “endless flow of American treasure”. More recently, however, he has indicated a willingness to lend money instead, acknowledging that Ukraine’s independence is important to Washington.
Now, according to a senior US official, Washington and countries in Europe have agreed to hold onto sanctioned Russian assets until such time as Moscow pays reparations for its invasion of Ukraine. This made it possible to announce the $50 billion loan package for Kyiv, which will leverage interest and income from more than $260 billion in frozen Russian assets, largely held in Europe, to secure a $50 billion loan from the U.S. and additional loans from other partners.
Ukraine can expect to receive the first payments sometime this year, the unnamed US official indicated, noting that details of the deal will feature in the G7 leadership communique being issued today. Ukraine will be able to draw on the package for military, economic, humanitarian and reconstruction needs, the official added. Today’s communique is also expected to include provision for confiscating the Russian assets entirely, but doing so would require overcoming various legal and financial stability concerns.
The agreement on how to use the frozen Russian assets to benefit Ukraine comes several months after the White House broke through a logjam in the US Congress that stalled approval of some $60 billion in US aid for Ukraine.
The ten-year security pact offers no new money to Ukraine but does include a commitment by the US to work with Congress on a source of sustainable funding for the future. The text of the agreement issued by the White House details how Washington will coordinate with Ukraine and other US allies and partners to make sure that Kyiv has the military, intelligence and other means necessary to defend itself and deter Russian aggression.
