US Treasury Secretary Janet Yellen on Thursday urged G7 ministers meeting in Italy to consider “more ambitious options” to use frozen Russian assets to help Ukraine.
The ministers and central bankers from the Group of Seven world powers are meeting in Stresa, on the shores of northern Italy’s Lake Maggiore, to prepare for a summit of G7 heads of state next month in Puglia.
Yellen said the group would also discuss what Washington considers to be “overcapacity” of key green technologies from China such as electric vehicles, batteries and solar panels.
Top of the agenda is a plan to finance crucial aid to war-torn Ukraine using the interest generated by the 300 billion euros ($325 billion) of Russian central bank assets frozen by the G7 and Europe.
The European Union earlier this month approved using the profits from the assets it froze to arm Ukraine, hoping to raise up to three billion euros a year.
In a press conference, Yellen welcomed the plan but added that “we must also continue our collective work on more ambitious options, considering all relevant risks and acting together.”
The United States has proposed granting Ukraine up to $50 billion in loans secured by interest on the assets.
But the details have not been finalised, including whether the debt would be issued by the United States alone or G7 countries as a whole.
Yellen had initially advocated a more radical solution — the confiscation of the Russian assets themselves.
But European countries worried about creating a precedent in international law and the risk of serious legal disputes with Moscow.
As the G7 ministers gathered, Russian President Vladimir Putin signed a decree allowing the confiscation of assets inside Russia belonging to US companies or citizens.
Many Western companies have left Russia since the February 2022 invasion of Ukraine and the Western sanctions that followed, but those that remain risk having their assets seized.
In addition to the United States and Italy — which is G7 president this year — the group includes Britain, Canada, France, Germany and Japan.
Legal issues
Yellen said she was looking for “general agreement on the concept” of a deal on assets, to form the basis of “concrete options” to be presented to G7 leaders meeting from June 13-15.
She added that while the 50-billion-euro figure was being discussed, “there hasn’t been a decision on an amount”.
“Failure to take additional action is not an option — not for Ukraine’s future and not for the stability of our own economies and the security of our peoples,” Yellen said.
Experts have warned any further G7 action against Russia could lead to similar reprisals against European companies still operating in the country.
In April, Moscow took “temporary” control of the Russian subsidiary of the Italian heating equipment group Ariston in retaliation for what it called “hostile actions” by Washington and its allies.
Italy’s economy minister, Giancarlo Giorgetti, told journalists “a solid legal basis” had to be found.
“Now the problem is how we are able to use the future windfall profits to build a loan facility for Ukraine,” he said.
“Perhaps for the next political summit in Puglia we will reach a solution,” he added.
His German counterpart Christian Lindner was sceptical, saying: “There are many unresolved questions, many open questions, it’s now the time to speak about them but Im not expecting a decision, the subject is too complex”.
John Kirton, director of the University of Toronto’s G7 Research Group, said that tapping just the interest on Russian assets “would considerably reduce the legal problems”.
“Legally, it would not be confiscating the ‘assets’,” he told AFP.
France on Wednesday welcomed the US plan with Economy Minister Bruno Le Maire saying the US proposals “fall within the framework of international law”.
China overproduction
The G7 ministers will also discuss concerns that Chinese government support for green technologies is leading to more production capacity than global markets can absorb, driving cheap exports and stifling growth elsewhere.
“Overcapacity threatens the viability of firms around the world, including in emerging markets,” Yellen said.
She added: “It’s critical that we and the growing numbers of countries who have identified this as a concern present a clear and united front.”
France is also pushing for discussion in Stresa of a proposal championed by G20 head Brazil on a global tax on the world’s wealthiest.
But Yellen said she was opposed to “this particular formulation” that would redistribute proceeds among countries based on their exposure to climate-related damage.