G7 countries agree on how to transfer frozen Russian assets

The Group of Seven (G7) countries have reached an agreement on how to provide Ukraine with about $50 billion of frozen Russian assets, Bloomberg reports, citing sources.

The agency writes that the loan structure will be based on the size of the G7 economies. The new aid will start flowing by the end of the year.

After months of debate over how to use the proceeds of frozen Russian assets, the plan should win the support of leaders at a summit in Italy this week.

The G7 countries will provide loans to Ukraine, which will be repaid from the proceeds of approximately $280 billion in blocked funds, most of which are located in Europe.

The deal is expected to provide critical support for Ukraine in the medium term and help cover its financing needs through 2025 and beyond.

Bloomberg's sources said that under the arrangements to be signed in Italy, the United States, the European Union and other participants will lend Ukraine money, and the income generated from the assets over time will be used to pay back the money.

The loans will be structured differently based on each participant's internal procedures, and each will bear the risk of the loans if the frozen assets generate less income than expected.

The interlocutors noted that the final technical details will be agreed upon after the summit. The aid can be used to support Ukraine's defense, economy and reconstruction. The specific details of the agreement may change at the G7 summit.

From the G7 countries' point of view, this step is a signal to Russia that they are ready to support Ukraine in the long term, as the war shows no signs of abating.

Repayment of the loan depends on the assets remaining immobilized long enough for their windfall profits to repay it, a process that will take several years. The G-7 leaders have repeatedly stated that the assets will remain blocked until Russia agrees to pay for Ukraine's reconstruction.

"I think we will resolve the main issues, but some of the details are still to be worked out by experts on a timetable... I expect that's how it will go," said US National Security Advisor Jake Sullivan.

Author - Ihor Lontkivskyi 13.06.24