G7 makes 'progress,' but no deal on Russian assets for Kyiv

Finance ministers from the G7 group of wealthy democracies on Saturday cited "progress" but no breakthrough in talks on how to use frozen Russian assets to support Ukraine as it continues to battle invading Russian forces.

The meeting of the G7 ministers in the northern Italian city of Stresa focused mainly on the question of how to find more funds for Ukraine as Russia presses on with a new offensive in the Kharkiv region in the third year of its unprovoked invasion.

The G7 and its allies froze some $300 billion (€276 billion) of Russian assets shortly after Moscow launched a full-scale invasion of its neighbor in February 2022.

The meeting comes after the EU this week formally approved a plan to use interest from the Russian assets it has frozen, estimating that this could produce up to €3 billion annually for Ukraine. 

What did ministers say about the talks?

The G7 finance ministers did not report any final agreement on using Russian assets on Saturday.

"We are making progress in our discussions on potential avenues to bring forward the extraordinary profits stemming from immobilized Russian sovereign assets to the benefit of Ukraine, consistent with international law and our respective legal systems," the ministers said in a final statement.

The ministers reiterated that Russian assets will remain frozen "until Russia pays for the damage it has caused to Ukraine." They also raise the possibility of imposing further sanctions on Moscow.

Italian Finance Minister Giancarlo Giorgetti said that the ministers had faced technical and legal issues, but were hoping to present a proposal before a G7 leaders' summit next month in Puglia, Italy.

"We do not deny the difficulties but there is a firm determination to arrive at a solution," he said.

What kinds of plans were discussed?

French Finance Minister Bruno Le Maire said ministers aimed to "reach a political agreement in principle" and not a ready-made solution.

A draft statement from the meeting seen by the Reuters news agency said: "We are making progress in our discussions on potential avenues to bring forward the extraordinary profits stemming from immobilized Russian sovereign assets to the benefit of Ukraine."

The statement contained no figures or details, reflecting the fact that several legal and technical issues need to be resolved before such loans could be made.

Any detailed agreement would require the approval of G7 leaders, who meet next month in Puglia, Italy.

The United States, for its part,  has been urging its G7 partners — Japan, Germany, France, Britain, Italy and Canada — to create a loan facility for Ukraine backed by future interest generated by the frozen Russian assets.

That proposal, which could raise $50 billion in the short term for Kyiv, raises several questions, including who would issue the debt and the apportioning of risk between the G7 partners.

At the end of the meeting, US Treasury Secretary Janet Yellen said that a loan for Ukraine backed by the income from frozen Russian sovereign assets is the "main option" for G7 leaders to consider in June but added that she doesn't want to "take anything off the table as a future possibility."

The ministers will be joined on Saturday by Ukraine's finance minister, Serhiy Marchenko.

Ukraine struggling amid shortages

The meeting comes as Kyiv claims to have "stopped" a Russian advance in the Kharkiv region.

However, that claim came amid admissions by Ukraine's General Staff that "the enemy has partial success" and that "the situation is tense." 

Ukraine's army is currently running short of arms and ammunition, a situation made worse by a long hold-up in the US Congress of an aid package for Kyiv amid a domestic political dispute, with the funding not released until late in April.

In another positive development for Ukraine on Friday, however, Washington announced a fresh $275 million package of military aid.

tj, sdi/lo, wd (AFP, Reuters)