U.S. proposal for frozen Russian assets gains popularity among G7 countries - Reuters
Kyiv • UNN
A U.S. proposal to use future interest on $300 billion in frozen Russian assets to help rebuild Ukraine instead of confiscating them outright is gaining momentum among the G7 countries, and officials are seeking consensus on the plan at the upcoming summit in June.
The US proposal to use future interest from frozen Russian assets to help Ukraine, instead of confiscating them completely, is gaining popularity among the Group of Seven countries. [Reuters quoted two G7 officials as saying this, UNN reported.
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It is worth noting that currently, due to Russia's armed aggression against Ukraine, assets of Russian businessmen and companies totaling about $300 billion have been frozen in Europe and the United States. According to experts, these assets generate a profit of about $5 billion annually. Allocating these percentages of income from these assets to rebuild Ukraine is one of the most popular options for overcoming differences between the United States and Europe. This policy option is going to be considered and probably approved at the G7 leaders' summit in Italy in June.
However, one G7 official told Reuters that the G7 countries are still arguing over certain "restraints" that will reduce these expected excess profits to only $2.5-3.0 billion. In particular, he pointed to Belgium's 25% tax rate, the "convenience fee" applied by the Euroclear depository, and the proposed provision for litigation.
G7 finance ministers will consider this issue in detail at their meeting in late May. They hope to find a consensus proposal to present to leaders at the June summit.
We feel there is an urgent need to reach an international consensus. Everyone recognizes that we need to do more.
A second G7 official echoed this view and emphasized the need to secure a long-term funding stream for Ukraine.
A senior U.S. official said that the long-delayed approval by Congress of about $61 billion in U.S. aid to Ukraine and a separate €50 billion package from the European Union will help Kyiv, but that Ukrainians will still face funding shortfalls in 2025 and 2026.
According to a U.S. official who commented on the situation to Reuters, Washington believes that all options, including direct seizure of Russian assets, are justified under international law and should remain on the table. At the same time, the Americans are trying to reach a consensus on what can help Ukraine right now.
He also added that issuing a loan instead of bonds made sense because it would not require a formal issue with a prospectus and would allow sovereign countries to act quickly. In his opinion, it would also allow the G7 countries to provide additional support to Ukraine at a relatively low cost.
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Brad Setser, a senior fellow at the Council on Foreign Relations, said Washington is clearly looking for a deal, and the proposal to shift expected interest income could be a good basis for a deal in June.
It's a very sensible approach and it has limited legal risks. There is no evidence that Russia is going away, so it means that the revenue stream will be available for a long period of time.
Setser also reminded that the G7 countries have pledged to keep Russian assets frozen until Moscow withdraws its forces from Ukraine and pays for the damage caused by the invasion.
