Russian assets to help kyiv: G7 Finance aims for agreement in principle

G7 finance ministers meeting in Italy are expected to lay the foundations on Saturday for an agreement in principle on the use of interest from frozen Russian assets to help Kiev, but the final decision will come at the summit of heads of state and government scheduled for mid-June.

This meeting comes at a time when on the ground, Ukraine assured Friday that it had “stopped” the Russian assault on the Kharkiv region, which has been underway for two weeks, and that it had started a counterattack in this sector of the northeast. But the fighting continues and the Ukrainian army recognized on Saturday Russian “partial successes” and a “tense situation” in the sector further south of Ivanivka.

So that Ukrainian President Volodymyr Zelensky is increasing his appeals to the West to speed up arms supplies, his Finance Minister Serguiï Marchenko will attend a G7 session in the morning devoted to aid to his country.

“We must reach a declaration of principle on Saturday which marks the overall agreement of the G7 countries to use the income from Russian assets to finance Ukraine”, said the minister on Friday French Economy Bruno Le Maire.

Citing “technical problems” that complicated efforts to find an agreement, Mr. Le Maire declared that the objective of this declaration was “to have a political agreement in principle and not a turnkey solution”.

The European Commissioner for the Economy Paolo Gentiloni noted on Friday “a climate of positive convergence” on the thorny issue of Russian assets, even if according to him there is “still a lot of details to clarify, to deepen.”

A position shared by the host of the meeting, the Italian Minister of the Economy Giancarlo Giorgetti: “We are working to arrive at a solution, we hope to lay the foundations for a solution here at the mid-June summit of the leaders of the G7 countries in Puglia (southern Italy).

< p>– First step –

The countries of the European Union took a first step by adopting an agreement in early May to seize income from Russia's frozen assets in order to arm Ukraine, a windfall representing between 2.5 and 3 billion euros. per year.

The United States, however, wants to go further and has put pressure on the G7 countries to rally around a mega-loan of around 50 billion of dollars guaranteed by future interest generated by immobilized Russian assets.

But too many questions to clarify persist, such as the sharing of risk between the United States and Europe, the unknown of the evolution of interest rates or even the fact of knowing who will issue the debt.

And an agreement on an amount of this magnitude seems still distant.

“The objective is to have a method and to have security for the financing of Ukraine. So we are not going to talk about the amount . I think we must first talk about method”, argued Mr. Le Maire.

Russian assets will remain frozen until Moscow has paid “for the damage it has caused to Ukraine”, the finance ministers reaffirmed during their last meeting in April in Washington.

Hence the prospect that Russian assets could generate profits for a long time to come.

– Moscow retaliation?-

The idea of ​​the Biden administration is also to ensure lasting aid to Ukraine before a possible return of Donald Trump to the White House, at the end of the November presidential election.

The United States proposed in February that the G7 countries purely and simply seize the frozen assets, an idea which they then renounced in due to the reluctance of their allies, worried about the creation of a dangerous legal precedent and retaliation from Russia.

But even the sole recourse to profits from Russian assets risks leading to a Russian response, fears Jean-Paule Castagno, lawyer specializing in international law at the Orrick firm.

“To the extent that Russia would consider the use of profits from assets immobilized in Europe as well as from +theft+, it is very likely that it will turn against Western groups still present on its national territory”, she explains to AFP.

Russian President Vladimir Putin has already taken action by signing a decree on Thursday authorizing the confiscation in Russia of assets belonging to the United States or to people “associated” with them.

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