G7 leaders reached a compromise agreement to use profits from Russia’s frozen assets as collateral in a $50 billion loan for Ukraine.
The Group of Seven has finally moved the dial on a contentious idea to provide funding to Ukraine by using Russian funds.
After months of headbutting, leaders have reached a compromise that offers Kyiv a major financial lifeline. As collateral, the G7 will tap profits generated by Russian reserves that were first frozen in 2022.
“This week, the G7 signed a plan to finalize and unlock $50 billion from the proceeds of those frozen assets — to put that money to work for Ukraine, another reminder to Putin that we’re not backing down”, President Joe Biden said in a speech during the G7’s June meeting.
What is the deal about?
Roughly $322 billion in funds were frozen after Moscow invaded Ukraine and have sat untouched for over two years. During that time, the assets have continued to accumulate interest and profits.
With Ukraine’s situation growing dimmer, the US has pushed to completely confiscate the assets, and has even given Biden the ability to take control of Russian funds held by the US.
Yet some $280 billion is actually frozen in Europe, which has been less keen to seize the funds. At most, the European Commission has agreed to transfer around $3 billion of the generated profits to Kyiv annually.
The G7’s agreement is a meeting in the middle, and uses about 20 years’ worth of the interest to back the $50 billion figure.
