G7 ministers cite ‘progress’; no deal on Russian assets

STRESA, Italy: G7 finance ministers cited “progress” on Saturday in finding ways to use profits from frozen Russian assets to help Ukraine, envisioning a concrete proposal to present to a leaders’ summit next month.

STRESA, Italy: Finance Ministers and Central Bank Governors pose for the family picture at the G7 Finance Ministers meeting in Stresa, on May 24, 2024. – AFP.

A search for creative yet legally sound solutions was top of the agenda at the two-day Group of Seven meeting in Stresa, northern Italy that wrapped up on Saturday, as Kyiv continues its urgent appeals for more funds from Western allies in its third year of war with Russia.

“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 draft final statement seen by AFP. They hope to present a proposal that is “defined in all its dimensions” to G7 leaders ahead of a summit in Puglia, southern Italy, on June 13-15, Italian Finance Minister Giancarlo Giorgetti told a final press conference on Saturday.

“Progress has been made,” Giorgetti said, adding that there was a “strong political positioning by all the G7 countries” over the idea. An agreed proposal “is clearly not yet finalized because it has significant technical and legal issues”, Giorgetti cautioned.

“We do not deny the difficulties but there is a firm determination to arrive at a solution,” he added.

G7 finance ministers reiterated in the draft that Russian assets frozen by the Group of Seven nations “will remain immobilized until Russia pays for the damage it has caused to Ukraine”. But they went further, saying they were “committed to further financial and economic sanctions... including continuing to target Russia’s energy revenue and future extractive capabilities”. “(The G7 is) ready to impose sanctions on individuals and entities that help Russia acquire advanced materials, technology, and equipment for its military industrial base,” added the draft statement.

The summit wrapped up a day after the United States announced a new $275-million package of aid for Kyiv, part of a $61-billion military aid deal passed by Congress last month after months of delays. Kicking off the finance summit, US Treasury Secretary Janet Yellen had urged her counterparts to embrace “ambitious options” in considering how to use the frozen Russian assets.

A debated US proposal would tap the interest generated by the 300 billion euros ($325 billion) of Russian central bank assets frozen by the G7 and EU, creating a $50-billion loan facility backed by future interest on the assets. Giorgetti - whose country Italy holds this year’s G7 presidency - called the US proposal a “flexible and pragmatic” plan that answered the legal and regulatory concerns shared within the EU.

Last week, the European Union agreed to a more modest plan, using interest from Russian assets frozen by the bloc in what it estimates could generate up to three billion euros a year.

The G7 ministers also expressed concern in the draft statement over China’s trade policies and industrial overcapacity, warning the bloc could take measures to counter them. The United States has led growing concerns that a surge of low-cost Chinese exports fuelled by Chinese government support in key sectors like solar and electric vehicles pose a risk to global markets. — AFP.