G7 Agrees to Use Interest on Frozen Russian Assets to Aid Ukraine

The Group of Seven (G7) nations agreed last week at their summit in Apulia, Italy, to use interest from frozen Russian assets to finance about $50 billion in loans to Ukraine.

“The G7 found a way and agreed to make Russia pay” for its invasion of Ukraine, a senior Biden administration official told reporters.

The agreement calls for the "extraordinary revenue acceleration" loans to begin flowing to Ukraine by the end of the year to help the embattled country meet its military, budget and reconstruction needs. The U.S., Canada and potentially others will provide the loans, which will be repaid with interest earned on about $300 billion in immobilized Russian assets. Ukraine will not have to repay the loans, so it will be able to treat them as a grant, the administration official said.

The official described the agreement as “historic.” “Never before in history has a multi-lateral coalition immobilized the sovereign assets of an aggressor country and then found a way to unlock the value of those assets for the benefit of the aggrieved party as it fights for its freedom,” the official said. “That’s what happened at this G7.”

Several lawmakers said in a joint statement that the plan doesn't go far enough. Sen. Jim Risch, R-Idaho, ranking member of the Senate Foreign Relations Committee; Rep. Michael McCaul, R-Texas, chairman of the House Foreign Affairs Committee; Sen. Sheldon Whitehouse, D-R.I.; and Rep. Marcy Kaptur, D-Ohio, called for all frozen Russian assets to be transferred to Ukraine.

“We believe that [Russian President Vladimir] Putin and his cronies should never again have access to these assets and that Ukraine should be allowed to use them to emerge victorious against Russia’s aggression,” the lawmakers said.

Also at the summit, the G7 nations agreed to continue using sanctions and other economic measures to raise Russia's war costs, and they pledged to tighten compliance and enforcement of the Russian oil price cap that they imposed after the 2022 invasion (see 2212050014). They also said they will continue to target China and other countries, including financial institutions, that materially support Russia’s defense industrial base.

“China’s ongoing support for Russia’s defense industrial base is enabling Russia to maintain its illegal war in Ukraine and has significant and broad-based security implications,” the G7 said in a statement. “We call on China to cease the transfer of dual-use materials, including weapons components and equipment, that are inputs for Russia’s defense sector.”

Earlier in the week, the Biden administration announced it is taking additional measures to degrade Moscow's war machine, including sanctioning more than 300 entities and people in Russia and other countries and implementing several new export restrictions (see 2406120036).

The G7 warned Iran not to transfer ballistic missiles and related technology to Russia, “as this would represent a substantive material escalation and a direct threat to European security. We are prepared to respond in a swift and coordinated manner, including with new and significant measures.”

The G7 condemned North Korea’s ballistic missile exports to Russia, which violate United Nations Security Council resolutions. It urged countries to prevent or halt the flow of arms and dual-use materials, including jet fuel, to Myanmar’s military.