Finance ministers from the Group of Seven major democracies meeting in Italy this week are set to discuss a European Union plan to use the income from frozen Russian assets to help Ukraine's war effort.
This Thursday's meeting of finance ministers in the northern Italian town of Stresa is set to do the groundwork for enabling G7 heads of government to reach a final decision on using frozen Russian funds at a summit in southern Italy in June.
The G7 froze around €270 billion worth of financial assets soon after Moscow's attack on its neighbour in February 2022.
Since then, the European Union and other G7 countries have debated whether and how to use the funds to help Ukraine – specifically a €30 billion loan to Kyiv.
The G7 comprises the United States, Japan, Germany, France, Britain, Italy and Canada.
The United States has proposed seizing the assets in their entirety, but Europe has balked, citing risks to the euro currency and potential legal repercussions.
The G7 is, however, expected to support the EU's line to use the extraordinary revenues from the frozen Russian assets to the benefit of Ukraine.
Congress has given us the power to seize Russian assets in the U.S., and we intend to use it.
— Department of State (@StateDept) May 19, 2024
We are working with @G7 partners to see that Russia’s immobilized sovereign assets are used to remedy the damage Putin continues to cause in Ukraine. - @SecBlinken pic.twitter.com/QxJl1cwQYO
Question of legality
The talks will be focused on using income from the assets – not the assets themselves – and any decision must have the backing of the EU and a solid legal basis.
The frozen assets are immobilised and can't be accessed by Moscow – but they still belong to Russia.
While governments can generally freeze property without difficulty, turning that property into forfeited assets that can be sold for the benefit of Ukraine requires an extra layer of judicial procedure, including a legal basis and adjudication in a court.
In the face of European resistance, Washington has more recently proposed using the assets as collateral to provide loans for Ukraine.
For more than a year, officials from multiple countries have debated the legality of confiscating the money and sending it to Ukraine.
The European Union already has begun to set aside windfall profits generated from frozen Russian central bank assets, with the bloc estimating the interest on that money could provide around €3 billion each year.
In March, EU foreign policy chief Josep Borrell told reporters: "The Russians will not be very happy. The amount of money – 3 billion per year – is not extraordinary, but it is not negligible”.
G7 finance ministers are set to debate a €30 billion loan for Ukraine, considering the legality of using €270 bn in frozen Russian state assets as collateral. https://t.co/pYPLUpe1Y8
— Euromaidan Press (@EuromaidanPress) May 20, 2024
EU leaders 'hesitant'
Still, some European leaders have expressed hesitation about moving forward with a plan to formally seize Russia's assets in Europe.
European Central Bank President Christine Lagarde said at a Council on Foreign Relations event earlier this month that confiscating Russian assets "is something that needs to be looked at very carefully" and could “start breaking the international legal order.”
The reaction from G7 finance ministries so far has been cautious.
The French Finance Ministry said in a statement: "France supports and shares the fact that more resources are needed for Ukraine. We have taken note of the US proposal and we will work together technically at the G7 level and at the European level to determine the best option."
Meanwhile, Japan's Finance Minister Shunichi Suzuki said last Friday that any proposals to use the frozen Russian assets must comply with international law.
The US Treasury reportedly maintains there is a unified goal among the G7 countries to provide more money to Ukraine, and to demonstrate to Russian President Vladimir Putin that he cannot simply "wait out our coalition".
The proposal to use revenue from Russian assets as collateral for a bond is still on the table – and G7 ministers will discuss its feasibility – but any final decision will be up to G7 leaders.
