G7 leaders agreed Thursday on a new $50 billion loan for Ukraine using profits from frozen Russian assets, a move Joe Biden said showed Moscow “we’re not backing down”.
The US president and other G7 leaders agreed at a summit in Italy to use the profits from the interest on the assets to back the loan to provide help this year to Kyiv as it struggles in its third year of war with Russia.
Summit host Italian Prime Minister Giorgia Meloni announced the “political agreement” after the first day of the Puglia talks, saying it was a hard-fought but “fundamental” step.
Meloni invited Ukrainian President Volodymyr Zelensky to join a special session on the Ukraine war alongside the leaders of Germany, France, Canada, Britain and Japan.
At a joint press conference with the Ukrainian leader afterwards, Biden said the deal emphasised to Russian President Vladimir Putin the long-term commitment of Kyiv’s allies.
With it, the G7 leaders “collectively show Putin he cannot wait us out, he cannot divide us”, he said.
Addressing leaders earlier at the luxury Borgo Egnazia resort, Zelensky said the loan was a “vital step forward in providing sustainable support for Ukraine in winning this war”.
He said it would go towards “both defence and reconstruction”.
But he said Ukrainian forces still needed more air-defence systems to help counter attacks by Moscow, which has been pummelling Kyiv’s front-line troops and the country’s power grid.
Loan syndicate
The EU agreed earlier this year to help Kyiv by using the profits from the interest on Russian central bank assets frozen by Western allies — the majority of them held in the bloc.
But Washington has been pushing for more and faster help through a huge upfront loan.
A senior Biden administration official said the United States was willing to provide up to $50 billion, but said its contribution could be “significantly less” as it would be a shared initiative.
“We will not be the only lenders. This will be a loan syndicate. We’re going to share the risk, because we have a shared commitment to get this done,” the official said on condition of anonymity.
He would not say how much other G7 countries would contribute, nor did any other leaders on Thursday.
‘Historic step’
G7 countries, which count the EU as their unofficial eighth member, have been Ukraine’s key military and financial backers since Russia invaded in February 2022.
The G7 and the EU have frozen around 300 billion euros ($325 billion) of Russian assets, much of it frozen by Euroclear, an international deposit organisation based in Belgium.
EU countries say they could generate 2.5 to 3.0 billion euros a year for Kyiv from the profits on the interest.
German Chancellor Olaf Scholz hailed the loan agreement as a “historic step” and a “clear signal to the Russian president that he cannot simply sit this matter out”.
“The basis has been created for Ukraine to be in a position to procure everything it needs… in the near future, in terms of weapons but also in terms of investment in reconstruction or in energy infrastructure,” he said.
Zelensky has been engaged in a flurry of diplomacy aimed at shoring up international support, from a reconstruction conference in Berlin earlier this week to an upcoming peace conference in Switzerland at the weekend.
In Puglia Thursday, he also signed what he called a “historic” 10-year security deal with Biden, and another with Japan.
Political flux
The summit comes at a time of extraordinary global turmoil.
Apart from the conflict in Ukraine, the Hamas-Israel conflict in Gaza is raging and economic tensions are rising between China and Western countries.
Many G7 countries are also in political flux, with summit attendees aware this could be Biden’s last G7 summit if he loses to Donald Trump in November elections.
Britain’s Prime Minister Rishi Sunak is tipped to be ousted in July 4 elections, while France’s Emmanuel Macron and Germany’s Scholz are both under pressure after gains by the far right in EU Parliament elections last weekend.
By contrast, Italy’s Meloni is riding high after her far-right party came out on top in her country’s EU Parliament vote.
But she drew criticism from both France and the United States after reportedly seeking to remove a reference to safe access to abortion from the final G7 statement.
The summit talks began Thursday with a short session on Africa, before turning to the Middle East, and on Friday the focus will turn to China — and a visit by Pope Francis.
G7 leaders on Thursday confirmed their support for a truce and hostage deal in the Hamas-Israel war. Biden said that so far, the “biggest hang-up” was Hamas, which was refusing to sign up.