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G7 aims to tap income from US$300 billion frozen Russian assets to help Ukraine

G7 aims to tap income from US$300 billion frozen Russian assets to help Ukraine
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The G7 will explore ways of using the future income from frozen Russian assets to help Ukraine, according to a draft statement of finance chiefs from the Group of Seven industrial democracies.

The G7 and its allies froze some US$300 billion of Russian assets shortly after Moscow invaded its neighbour in February 2022.

“We are making progress in our discussions on potential avenues to bring forward the extraordinary profits stemming from immobilised Russian sovereign assets to the benefit of Ukraine,” the draft statement said on Saturday.

G7 negotiators have been discussing for weeks how to best exploit the assets, such as major currencies and government bonds, which are mostly held in European-based depositories.

The cautious wording of the statement, containing no figures or details, reflects numerous legal and technical aspects which still need to be hammered out before such a loan could be issued.

A Ukrainian rescuer works at the site of a missile attack in Kharkiv amid the Russian invasion of Ukraine. The US wants its G7 partners to back a multi-billion loan to Ukraine. Photo: TNS

The statement would not undergo significant changes before a final version to be released later on Saturday, a G7 source said.

The ministers will be joined on Saturday by Ukraine’s Finance Minister Serhiy Marchenko, whose war-torn country is struggling to contain a Russian offensive in the north and the east, more than two years after Moscow first invaded.

The finance ministers and central bankers meeting in Stresa, northern Italy, aimed to present options on the issue of Ukraine funding for G7 heads of government to consider at a summit in mid-June, the statement said.

“Consistent with our respective legal systems, Russia’s sovereign assets in our jurisdictions will remain immobilised until Russia pays for the damage it has caused to Ukraine,” the G7 said.

China’s growing export strength and what G7 ministers call its industrial “overcapacity” have been another central theme of the two-day gathering in the northern Italian lakeside town.

“We express concerns about China’s comprehensive use of non-market policies and practices that undermines our workers, industries, and economic resilience,” the statement said.

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“We will continue to monitor the potential negative impacts of overcapacity and will consider taking steps to ensure a level playing field, in line with World Trade Organization (WTO) principles.”

The United States last week unveiled steep tariff hikes on an array of Chinese imports including electric vehicle batteries, computer chips and medical products.

Washington has not called on its allies to take similar steps but Treasury Secretary Janet Yellen said this week she wanted the G7 to express a “wall of opposition” to China’s industrial and trade policies.

The 13-page draft statement also said the G7 aimed to sign off on the first pillar of an accord on a global minimum tax rate for multinationals by the end of next month.

This first pillar aims to reallocate the taxing right on mainly US-based digital giants, allowing about US$200 billion of corporate profits to be taxed in the countries where the companies do business.

Palestinians search for survivors at the site of an Israeli strike on the Al-Daraj neighbourhood in Gaza City. The G7 wants Israel to maintain banking links between Israeli and Palestinian banks. Photo: AFP

The G7 finance leaders also reaffirmed their exchange-rate commitment warning against excessively volatile and disorderly currency moves, nodding to a request by Japan.

Tokyo has argued this G7 agreement gives it freedom to intervene in the currency market to counter excessive yen moves.

The G7 also called on Israel to maintain correspondent banking links between Israeli and Palestinian banks to allow vital transactions, trade and services to continue, according to the draft.

This echoes a warning from US Treasury Secretary Janet Yellen on Thursday against cutting off a vital financial lifeline for the embattled territories.

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