Leaders of the G7 states intend to back a US plan to provide $50 billion in aid for Ukraine through a loan issued against frozen Russian assets, according to media reports.
G7 countries will use profits from frozen Russian assets to pay themselves the interest on a loan to Ukraine. The group's leaders are expected to approve the arrangement in principle during this week’s summit in Apulia, Italy, according to Bloomberg and Agence France-Presse (AFP).
Disagreements remain, however, as to who will carry the loan risks if Western powers lose control over the Russian assets.
”If the Russian assets are unfrozen or the proceeds from the Russian assets are not enough to finance the loan, then we’ll have to consider how to share the load,” an Elysee Palace official told AFP.
Most of the frozen assets, which are worth some $300 billion, are held in the EU. Moscow has said it would treat any attempt to tap into them as theft, and would retaliate. American officials reportedly want the Europeans to carry the burden if the plan goes wrong.
”What Washington is proposing is, ‘We [the US] take a loan, Europe takes all the risk, you [Europe] pay the interest, and we [the US] use the money for a US-Ukraine fund,'” a senior European diplomat told Politico. “We might be stupid but we’re not that stupid.”
The US reportedly argues that any deal that puts the obligation to pay on Washington’s shoulders would have to be ratified by Congress, and may get stalled there.
The Europeans are also concerned that if the money is allocated by the US directly or through an international financial institution controlled by Washington, such as the World Bank, it would primarily go to American companies, not European ones, the outlet said.
Disputed details of the financial scheme may take months to negotiate, according to insiders. Western leaders hope to have a final deal before the US presidential election in early November. Officials are concerned that later on, a possible victory by Donald Trump could derail the entire project.