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G7 agrees on $50 billion loan for Ukraine from frozen Russian assets

Ukraine’s backers have agreed to advance a $50 billion loan to Kiev, funded by profits from frozen Russian assets in Europe and the United States, Group of Seven leaders announced on Thursday.

The agreement marks a major achievement for President Biden, as the United States spearheads efforts to get a broad group of Ukraine supporters to agree to seizing Russian assets to back Kyiv and counter Russian President Vladimir Putin.

“I’m very pleased to announce that this week the G7 signed a plan to lock in and release $50 billion in frozen asset proceeds, putting those funds to work for Ukraine and once again reminding President Putin that we will not back down. In fact, we are standing united against this illegal aggression,” Biden said at a news conference Thursday with Ukrainian President Volodymyr Zelensky.

“I thank the President for his leadership in the G7’s decision to provide a $50 billion loan to Ukraine, which is an important step forward in providing sustained support to help Ukraine win this war,” Zelenskyy said.

“Russia’s fixed assets should be used to protect Ukrainian lives from Russian terrorism and to compensate for the damage inflicted on Ukraine by the aggressors. It is fair and absolutely right.”

The proposal was led by the United States and agreed on the first day of the G7 summit in Italy.

G7 nations froze about $280 billion in Russian assets since the invasion began in February 2022, and the proposal would use about $2.6 billion to $3.6 billion in annual interest accrued from the frozen assets to repay a $50 billion loan that would be immediately provided to Ukraine.

“This is something the United States has poured a great deal of energy and effort into,” National Security Adviser Jake Sullivan said at a Thursday morning press conference ahead of the day’s events.

“We believe that revenues from these assets will be a valuable source of revenue for Ukraine at a time when Russia continues to commit atrocities against Ukraine, not only through military action but also through attempts to destroy its energy grid and economic vitality.”

The commitment from G7 nations comes as Russia’s illegal war against Ukraine, more than two years old, has strained solidarity among Kiev’s military and financial backers.

As a result, Ukraine suffered battlefield losses due to inadequate military supplies, but was able to largely repel Russia’s latest offensive around the city of Kharkiv.

Speaking to Zelenskiy last week at a meeting marking the 80th anniversary of the Normandy landings, the president apologised for a seven-month delay in getting a $1 billion aid package through parliament.

And countries supporting Ukraine are under increasing pressure to lay the foundations for a long-term effort amid shifting political dynamics at home.

There is concern among Ukrainians and their supporters that former President Donald Trump, the presumptive Republican presidential nominee, could backtrack on U.S. commitments to Kiev and NATO, in a move that would favor Putin.

Far-right parties showed strong support in European Union parliamentary elections, but analysts say there is no major threat to European support for Kiev in the short term.

In particular, Italy’s Prime Minister Giorgia Meloni, who holds the G7 presidency, is a strong supporter of Ukraine and a vocal critic of Russia, despite being described as right-wing, and her party made a strong comeback in the EU elections.

The agreement to use proceeds from frozen Russian assets is an important interim step amid ongoing debate and disagreement over whether frozen assets should be seized outright. For now, countries are independently assessing the legal legitimacy of such measures.

In April, President Biden signed the REPO Act, part of a national security supplemental package, allowing the United States to seize frozen Russian assets to help rebuild Ukraine.

Estonia is also Passed their own version Such a bill was introduced in May.

“First of all, I think it’s very important to support Ukraine financially. It’s obviously necessary for the reconstruction effort and the survival of the Ukrainian state,” Estonia’s ambassador to NATO, Juri Luyk, said in an interview with Washington’s The Hill newspaper last week.

“This is also a very important punishment for the Russian regime, because Russia is a corrupt regime. They love power, but they also love money. So I think this will be a very good move in that direction.”