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At G-7, Biden and European leaders agree to finance Ukraine using Russian assets
FASANO, Italy – President Biden and top European leaders have reached an agreement to finance Ukraine with a loan of up to $50 billion, backed by profits from frozen Russian assets.
FASANO, Italy – President Biden and top European leaders have reached an agreement to finance Ukraine with a loan of up to $50 billion, backed by profits from frozen Russian assets.
Key details of the financing deal still need to be agreed, but leaders, meeting at a summit of the Group of Seven major advanced economies, hope it will bolster Ukraine’s finances as it battles a two-year-old Russian invasion.
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Key details of the financing deal still need to be agreed, but leaders, meeting at a summit of the Group of Seven major advanced economies, hope it will bolster Ukraine’s finances as it battles a two-year-old Russian invasion.
Separately, Biden and Ukrainian President Volodymyr Zelensky are expected to unveil a bilateral security agreement that seeks to establish a long-term U.S. commitment to military aid to the embattled country.
The G-7 leaders’ steps at the summit in southern Italy represent the latest effort by Western allies to signal their commitment to supporting Ukraine’s defense with weapons and funding, even as political divisions within the US and Europe create uncertainty. on the longevity of this support.
Russian President Vladimir Putin has redoubled military pressure on Ukraine in recent months, exploiting the intermittent flow of Western military aid to severely damage Ukraine’s energy grid with missile strikes and expanding Russia’s ground offensive in eastern Ukraine.
G-7 leaders intended to announce the framework for an agreement to use investment returns, mainly interest payments, generated from about $300 billion in Russian sovereign assets that the US and Europe froze after the Russia has launched its full-scale invasion of Ukraine. Most of the Russian central bank’s assets are held in Europe.
The plan seeks to create a new financial instrument to provide Kiev with expected years of profits on Russian assets.
U.S. and French officials have said they hope disbursements can begin flowing to Ukraine by the end of the year.
A senior Biden administration official said G-7 leaders had “political agreement at the highest levels for this agreement. And that’s $50 billion… that will be committed.”
Zelensky, one of several world leaders invited to attend the three-day summit at a luxury resort in Italy’s Puglia region, was scheduled to hold a joint news conference with Biden on Thursday evening.
The U.S.-Ukraine security pact seeks to commit future administrations to work with Congress to provide funding and military support to Kiev. It makes no new promises regarding Ukraine’s candidacy to join the North Atlantic Treaty Organization. White House officials acknowledge that future U.S. presidents could withdraw from the bilateral agreement, which is not a treaty and does not require congressional approval. It also has no dollar value of military funding attached.
Ukraine has already signed a number of similar pacts with European and other countries, some of which set out specific future support.
Former President Donald Trump, who faces Biden in a November election rematch, said he believed he could persuade Putin to negotiate an end to the war and questioned why the US has been sending billions of dollars in military and financial aid to Ukraine.
But Trump quietly consented to approval of a short-term military aid package for Ukraine and approved proposals from some Republicans to support Ukraine in the form of a loan.
White House national security adviser Jake Sullivan told reporters on Thursday that the security agreement with Ukraine was a “true marker of our commitment, not just for this month, this year, but for many years to come.” to support Ukraine, both in defending against Russian aggression and in deterring future aggression so that Ukraine can be a sovereign, viable and prosperous democracy.”
Sullivan told reporters traveling aboard Air Force One on Wednesday that this would send Russia “a signal of our resolve. If Vladimir Putin thinks he can survive the coalition supporting Ukraine, he is wrong. He just can’t wait for us.”
Ukraine desperately needs continued financial support. A separate package of European Union loans worth €50 billion, equivalent to about $54 billion, is intended to help bolster Kviv’s ability to pay for basic public services, salaries and pensions by 2027 .
Furthermore, the World Bank estimated in February that the costs of rebuilding Ukraine after the war will total close to $500 billion.
The planned $50 billion in financing for Kiev, backed by Russian assets, must still overcome differences between Washington and European capitals over the technical details of how to structure the financing and how the risk of the loans should be shared.
European officials have said in recent days that they anticipate much of the funding would flow through existing EU programs for Ukraine. They also want the US to help guarantee the loan so that if profits from Russian assets stop flowing, Europe won’t have to foot the bill alone.
The EU intends for the loan to mainly pay for military aid to Ukraine, in line with a previous agreement it made on how to use the windfall profits, which are expected to total around $3 to $4 billion a year. The EU also wants to ensure that its companies win some of the contracts for civilian or military work that Ukraine spends money on.
Washington had been pushing for a loan to be provided by a special purpose vehicle run by the World Bank, with the US and its G-7 partners providing the money upfront. The US fears that the flow of profits from frozen Russian assets could be disrupted in Europe if Hungary, whose leader Viktor Orban has long maintained close relations with Moscow, vetoes continued EU sanctions on Russian assets. Authorization for asset freezes and other EU sanctions must be renewed every six months.
European officials said resolving the technical details could take many weeks. Sullivan said G-7 leaders plan to establish a clear timeline for experts to agree on details.
Noemie Bisserbe contributed to this article.
Write to Ken Thomas at ken.thomas@wsj.com and Laurence Norman at laurence.norman@wsj.com
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