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G7 officials make progress, but no final deal on money for Ukraine from frozen Russian assets
FRANKFURT, Germany (AP) — Financial officials from the wealthy Group of Seven democracies said they have moved toward agreement on a U.S. proposal to extract more money for Ukraine from Russian assets frozen in their countries. But ministers left a final agreement to be drawn up before a summit of national leaders in June.
“We are making progress in our discussions on possible paths to anticipate extraordinary profits arising from Russian sovereign assets tied up for the benefit of Ukraine,” the draft statement said, without providing details.
Despite progress made at the Stresa meeting, on the shores of Lake Maggiore in northern Italy, the final decision on how the assets will be used will rest with G7 national leaders, including US President Joe Biden, next month. , at its annual meeting. summit in Fasano, in southern Italy.
Host Finance Minister Giancarlo Giorgetti said “there has been progress so far” but that there are “legal and technical issues that need to be overcome.”
“It is not an easy task, but we are working on it,” he said at a press conference after the end of the meeting.
Ukrainian Finance Minister Serhiy Marchenko joined finance ministers and central bank heads at his closing session on Saturday.
The US Congress has passed legislation that allows the Biden administration to seize around $5 billion in Russian assets located in the US, but European countries have a strong voice in this issue as most of the $260 billion in Russian central bank assets were frozen following the February 20 crisis. October 24, 2022, raids are carried out in their jurisdictions.
Citing legal concerns, European authorities refused to confiscate the money and hand it over to Ukraine as compensation for the destruction caused by Russia.
Instead, they plan to use the interest accrued on the assets, but that represents only about $3 billion a year – about a month’s financing needs for the Ukrainian government.
US Treasury Secretary Janet Yellen is pushing for loans against future interest income on frozen assets. This would mean that Ukraine could immediately receive up to $50 billion.
But the proposal has raised concerns among European members about legal complexities and concerns that Russia could retaliate against the small number of Western companies and individuals that still have holdings in Russia, or against the Euroclear securities depository in Belgium, where most of the funds are retained.
Russia published a decree of the President Vladimir Putin allowing the confiscation of property US companies and individuals as compensation for any Russian assets seized in the United States.
The story continues
The ministers also discussed what to do about China’s outsized, state-backed production of green energy technology, which the US considers a threat to the global economy. The US imposed main new tariffs on electric vehicles, semiconductors, solar equipment and medical supplies imported from China. Included is a 100% tariff on Chinese-made EVs, intended to protect the U.S. economy from cheap Chinese imports.
The US position has been that Chinese overcapacity is a problem not only for the US but also for other G7 and developing countries. This is because the sale of low-priced products by China threatens the existence of competing companies around the world.
The G7 is an informal forum that holds an annual summit to discuss economic and security policy issues. Member countries are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Representatives from the European Union also participate, but the EU does not serve as one of the rotating presidents.
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Colleen Barry contributed from Milan.