Leaders at last week’s Group of Seven summit approved a plan to engineer a $50 billion loan to Ukraine using the interest on profits from Russian central bank assets as collateral following tense negotiations.
G7 negotiators reached the agreement last Thursday as representatives from the member nations discussed ways of utilizing the more than $260 billion in frozen assets, most of which is held in the EU, to help Ukraine in its fight against Russia.
EU officials, citing legal concerns and financial stability issues, have resisted the possibility of simply confiscating the frozen assets.
Under the agreed plan, the money would be provided to Ukraine in the form of a loan by the US government.
According to a French official, the loan would backed by the vast profits earned on the frozen Russian assets and “topped up” with money from EU member states and other national contributions.
The US and its allies froze Russian central bank assets being held outside of Russia immediately after Ukraine was invaded in February 2022.
Legally, the assets still belong to the Russian Federation even though Moscow cannot access the money.
While the West can freeze foreign assets or property easily, it cannot convert them into forfeited assets and directly hand the money to Ukraine without a legal basis and further judicial procedures.
However, the profits generated by the Russian assets are easier to access, so the EU set aside the profits for future use in Ukraine.
National Security Advisor Jake Sullivan said last Wednesday that the goal of the plan was to provide Ukraine with the resources necessary for “economic energy and other needs” so it could continue to “withstand Russia’s continuing aggression.”
According to the French official, the details of the plan approved by the G7 would be worked out “quickly” so that Ukraine could receive the $50 billion US loan before the end of the year.
