In the 26 months since Russia invaded Ukraine in February 2022, the west has been riven with disagreement about how much – and what – support it will provide for Volodymyr Zelensky’s government. There are two main reasons for this. One is Russia’s deep integration in the global economy, particularly when it comes to energy supplies. The other is the fear of escalation into a wider conflict.
Nonetheless, at its recent meeting in Puglia in southern Italy, leaders of the Group of Seven nations (the G7) agreed a deal to use frozen Russian central bank assets to fund a US$50 billion (£40 billion) loan to Kyiv to help fund its defence and reconstruction. Russia currently has US$350 billion of assets frozen in the western banking system earning annual interest of about US$3 billion. The deal envisages using this to back a US$50 billion loan to Kyiv.
It’s a contentious move and one which many were reluctant to endorse while at the same time insisting that the rule of law must be respected. It is expected to take months to settle on the final details of how the loan will be structured. But it’s a strong message from some of the world’s most powerful economies – both of support for Ukraine and that the G7 itself remains a key decision-making body in a fast-changing world order.
