Frozen Russian assets will be used by the G7 to raise $50bn for Ukraine. This substantial move is intended to help Ukraine resist Russian forces. President Joe Biden highlighted that this sends a clear message to Russia that the West will not back down. Meanwhile, Russian President Vladimir Putin condemned the action as “theft” and vowed consequences.
Historic Security Deal
At the G7 summit in Italy, Biden and Ukrainian President Volodymyr Zelensky signed a landmark 10-year security agreement. This deal includes US military and training support for Ukraine but does not involve deploying American troops. The White House stated that the deal aims to boost Ukraine’s defense capabilities and support its economic recovery.
Utilizing Frozen Assets
The G7, along with the EU, previously froze approximately $325bn worth of Russian assets after Russia’s invasion of Ukraine in 2022. These frozen Russian assets generate about $3bn in interest annually. Under the new plan, this interest will cover the annual interest on the $50bn loan for Ukraine. The funds are expected to be available by the end of the year, offering long-term support for Ukraine’s war efforts and economic stability.
G7 Leaders’ Statements
Biden said the $50bn loan would significantly aid Ukraine and stressed that Putin cannot outlast or divide the Western allies. Zelensky thanked his allies for their consistent support, describing the security deal as the strongest agreement between Ukraine and the US since Ukraine’s independence in 1991. UK Prime Minister Rishi Sunak also praised the loan deal as “game-changing.”
Multiple Uses of Funds
A senior White House official mentioned that the $50bn fund would serve various purposes, including military support, budget support, humanitarian aid, and reconstruction. Countries can allocate their contributions flexibly, with some prioritizing budget support and others focusing on military aid.
Ukraine’s Call for More Weapons
Despite the new agreement, Ukraine urgently needs more weapons, especially air defense systems and F-16 fighter jets. At the G7 summit, Zelensky confirmed that the new security deal includes US shipments of these warplanes.
Symbolic Victory for Ukraine
The loan deal symbolizes a victory for Ukraine, with its aggressor now forced to contribute to the reconstruction it necessitated. A close adviser to Zelensky noted this as a turning point in the war, though it may not compel Russia to alter its strategy.
Legal and International Concerns
Most of the frozen Russian assets are held in Belgium, and international law prohibits confiscating these assets to give to Ukraine. Putin has vowed retaliation, viewing the use of funds from these assets as criminal.
European Perspectives
European Central Bank President Christine Lagarde warned that releasing the entire frozen fund could jeopardize the international order. European officials also noted that European investors have around €33bn worth of funds stuck in Russia.
NATO’s Support
NATO Secretary-General Jens Stoltenberg has been striving to secure long-term military support for Ukraine. NATO defense ministers approved a plan for the alliance to coordinate security assistance and training for Ukraine, led by the US. Stoltenberg emphasized that these changes do not make NATO a party to the conflict but support Ukraine’s right to self-defense.
