The G7 has agreed to use frozen Russian assets to raise $50 billion (£39 billion) for Ukraine to support its fight against Russian forces. US President Joe Biden emphasized that this move signals to Russia that the international community remains resolute, although Moscow has threatened “extremely painful” retaliatory measures.
During the G7 summit in Italy, Ukrainian President Volodymyr Zelensky and President Biden signed a significant 10-year bilateral security agreement. This deal, praised by Kyiv as “historic,” includes US military and training aid to Ukraine but does not commit US troops to combat. According to the White House, the agreement aims to enhance Ukraine’s defense capabilities, bolster its defense industry, and support economic and energy security. In the event of another Russian attack, the deal ensures high-level consultations to determine the appropriate response to support Ukraine and impose costs on Russia.
The G7 and the EU have frozen approximately $325 billion in assets following Russia’s 2022 invasion of Ukraine, generating about $3 billion in annual interest. The G7 plan involves using this interest to service a $50 billion loan for Ukraine, which will be sourced from international markets and expected to arrive by the end of the year. This long-term funding solution is intended to support Ukraine’s war effort and economy.
At a press conference in Puglia, Italy, President Biden reiterated that the loan would reinforce support for Ukraine and remind Russian President Vladimir Putin of the West’s steadfastness. He declared that Putin “cannot wait us out, he cannot divide us, and we’ll be with Ukraine until they prevail in this war.” President Zelensky expressed gratitude for the unwavering support from the US and other allies, highlighting the historic nature of the new security agreement.
The G7, comprising Canada, France, Germany, Italy, Japan, the UK, and the US, has been crucial in providing financial and military assistance to Ukraine. UK Prime Minister Rishi Sunak described the $50 billion loan deal as “game-changing.” A senior White House official noted that the fund would be used flexibly for military, budget, humanitarian, and reconstruction support.
While some in Kyiv had hoped for the release of the entire $300 billion frozen fund, the European Central Bank had ruled this out, warning of potential risks to the international order. Unlike direct military aid, this money is expected to have a delayed impact, arriving at the end of the year. Ukraine continues to urgently need more weapons, particularly air defense systems and F-16 fighter jets, which it hopes to receive this summer as part of the new security agreement with the US.
The loan deal is symbolically significant for Ukraine, as it means that Russia is indirectly paying for Ukraine’s defense and reconstruction. However, it is unlikely to force a change in Russia’s stance on the war. Most of the frozen Russian assets are held in Belgium, and under international law, these cannot be confiscated and given to Ukraine. Moscow has condemned the West’s attempts to use money from these frozen assets, labeling it a criminal action and warning of severe retaliatory measures. European officials have also noted that European investors have about €33 billion worth of funds stuck in Russia.
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