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PUGLIA, Italy ― World leaders have struck a deal to use the profits of frozen Russian assets to secure a loan of “approximately $50 billion” to aid Ukraine financially, according to a declaration to be issued by a summit of the G7, seen by POLITICO.
Diplomats had already laid the ground for a preliminary agreement as leaders from the group of seven advanced economies gathered on Thursday in Puglia, Italy, for the start of a three-day meeting.
“The G7 intends to provide financing that will be serviced and repaid by future flows of extraordinary revenues stemming from the immobilization of Russian sovereign assets” held in the West, according to the text.
But Western countries still have to agree on the details of the scheme, leaving open the possibility that technical talks might drag on for months.
“The exact details of how the loan will be structured are to be defined by the finance ministers by the end of the year,” a source from a G7 country with knowledge of proceedings said. The declaration also sets “the end of the year” as the deadline to finalize an agreement.
The United States is heaping pressure on its European allies to look into ways to secure cash for Kyiv amid fears that presumptive Republican nominee Donald Trump’s potential reelection to the U.S. presidency in November could halt Western support to Ukraine.
Each Western country would channel its own loan to Ukraine, according to the deal which was informally agreed hours before President Volodymyr Zelenskyy joined a session focusing on support to the war-torn country.
G7 countries agreed that individual loans will be channeled through the Extraordinary Revenue Acceleration Loans for Ukraine (ERA), although the details still have to be defined.
The preliminary deal will be discussed by leaders later on Thursday, although no single G7 country is expected to oppose it.
Western countries tried to show a united front after weeks of disagreement between the EU and the U.S. over an original plan to hand out a single G7-wide loan to Ukraine using the proceeds of immobilized Russian assets.
The EU and the U.S. have been divided over the crucial issues of who guarantees the loan if anything goes wrong and who exerts control over how the money is spent. The stakes are high for Europe as its financial institutions hold the bulk of Russia’s sovereign assets, and are therefore more exposed to risks.
There are fears that Hungary’s Russia-friendly government might veto the prolongation of EU sanctions against the Kremlin, which legally have to be renewed every six months. If the are not renewed, Russia’s assets would be unfrozen.
The scheme that is under discussion might be attractive to European states as they wouldn’t be held liable for the loan taken by the U.S. or any other G7 country.
