G7 leaders agree to loan Ukraine $50bn from frozen Russian assets 

G7 nations have agreed  to loan Ukraine $50 billion from the profits obtained from frozen Russian assets as support for the ongoing war,  Giorgia Meloni, Italian Prime Minister has revealed.

“I confirm to you that we have reached a political agreement to provide additional financial support to Ukraine of approximately $50bn by the end of the year,” Meloni, who is hosting the G7 this year, said on Thursday.

Ukraine President Volodymr Zelenskyy was invited by Meloni to join a special summit session on the Ukraine war with US President Joe Biden and the leaders of France, Germany, Canada, Japan and the United Kingdom.

Addressing the meeting at the luxury Borgo Egnazia resort, Zelenskyy thanked the leaders for their support, which he said would go towards “both defense and reconstruction”, though he emphasized the need for more weapons.

The G7 plan for Ukraine is based on a multiyear loan using profits from some $300bn of impounded Russian funds.

The issue is complicated, however, because if the Russian assets one day are unfrozen, then the windfall profits will no longer be able to be used to pay off the loan.

Each G7 country will contribute to the loan package, European Commission President Ursula von der Leyen said.

“All G7 are contributing to this loan. It is the windfall profits from the Russian immobilised assets in Europe that will serve it,” von der Leyen told reporters on the sidelines of the G7 summit in southern Italy.

The deal on Ukraine’s loan agreed upon at the three-day summit, where leaders of the Group of Seven (G7) major democracies are convening, marks “a very historic step and a historic decision,” German Chancellor Olaf Scholz said on Thursday.

Scholz added that G7 leaders are sending a clear message to Russian President Vladimir Putin and demonstrating their unity and determination.

“The Russian president has a very obvious plan: he wants to push ahead with his war until everyone else gives up supporting Ukraine. This plan has failed today,” the chancellor said.

“With the G7 states’ plan to mobilise $50bn, which will be financed from the windfall profits of the frozen Russian assets, the foundation has been laid for Ukraine to be able to procure everything it needs in the near future, not only in terms of weapons, but also for reconstruction or energy infrastructure.”

The move by the west has been criticized by Russia.  Al Jazeera reported that Russian Foreign Ministry representative Maria Zakharova said using those profits would be “extremely painful for Brussels’ ‘, as Russia owns significant European property and funds.

“So Europe will first have to pay for all its madness out of its own wallet,” said Zakharova.

Earlier, Finance Minister Anton Siluanov said actions against Russian assets in the West would receive a “reciprocal response” because in Russia essentially the same amount of Western funds have been frozen. He noted recently Russia has “income” from those assets, Al Jazeera reported.

Russian President Vladimir Putin has described the plan by the West as ‘theft’  speaking at a meeting on Friday with officials from the Ministry of Foreign Affairs, Putin said leaders in the West were trying to come up with “some kind of legal basis” for the asset freezes, “but despite all the trickery, theft is still theft and will not go unpunished”.