The Russian assets worth $325 billion were frozen by the G7 following Russia’s full-scale invasion in 2022
The G7 leaders agreed to fund Ukraine by using the frozen Russian assets to raise $50 billion during a summit held in Italy. The leaders hail unity to help Ukraine fight the invading Russian forces.
It was announced by the Italian Prime Minister, Giorgia Meloni that the major democracies agreed to help Ukraine using interest from Russian sovereign assets frozen after Moscow launched its invasion of its neighbor in 2022.
“I confirm to you that we have reached a political agreement to provide additional financial support to Ukraine of approximately $50bn by the end of the year,” Prime Minister, Meloni, who is hosting the G7 this year, said on Thursday.
The political agreement was the highlight of the annual summit in the southern leaders which was also attended by the Ukraine President, Volodymyr Zelenskiy for the second time successively. He was invited by the Italy Prime Minister, Meloni to join the summit where the subject of matter was the Ukraine war. The leaders of France, Germany, Canada, Japan and the UK along with the US President, Joe Biden joined the annual summit.
The Russian assets worth $325 billion were frozen by the G7 following Russia’s full-scale invasion in 2022. These assets generate about $3 billion interest every year. Therefore under the G7 agreement, these $3 billion can be used to settle the yearly interest of the $50 billion loan that was brought in from international markets by Ukraine.
The $50 billion will be financed from the profits of the frozen assets owned by Russia. The G7 states lay out a foundation for Ukraine to be able to acquire all the things it needs for the future. They offer aid not only in terms of weapons but also materials for infrastructure development and restoration.
According to reports, the US had decided to provide $50 billion on their own to help Ukraine stabilize but the idea was declined as other countries announced their participation as well.
The reason for declining the original idea was to safeguard the continuation of the deal for years irrespective of who is in power from the G7 states.
Prime Minister Biden congratulated Ukraine’s President Volodymyr Zelenskiy and also announced the 10-year bilateral security agreement that was signed by the two countries after 12 months of difficult negotiations.
The agreement offers training aid to Ukraine and the US military although it does not commit to sending troops to fight. The US also ruled out their weapons being used in the war to strike deeper into Russia beyond the weapons bases being used to strike the Ukrainian city of Kharkiv. Biden at a press conference said “We are putting our money to work for Ukraine, and giving another reminder to Putin that we are not backing down”.
In the agreement the US provides Ukraine with five Patriot missile defense systems and further states that everything they have will be provided to Ukraine until their needs are met.
The President of Ukraine expressed his gratitude and mentioned that this was the strongest deal ever since his country’s independence in 1991. He marked the day of the agreement as the most historic one. He describes the security guarantee to be very detailed which not only lasts during the war but promises to aid afterwards as well. The deal includes intelligence cooperation and strengthens the defense industries of Ukraine.
Zelenskiy also mentioned the Chinese President Xi Jinping’s undertaking that Beijing will refrain from selling weapons to Russia. On the contrary, Biden argued that China was arming Russia by providing technology and dual use components.
The European Central Bank ruled out the idea of the G7 releasing the entire frozen fund of $300 billion over just the interest. The money will be received by Ukraine by the end of year which would help them very little in the current war situation but will be useful post that. Unlike this, the US aid package has been directly sent in the form of missiles and more.
The Central Bank of Russia’s frozen assets are being held in Belgium. As per the international law, the G7 countries are not allowed to confiscate those assets and transfer them to Ukraine.