G7 agrees to loan Ukraine $50 billion from the interest on frozen Russian assets
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Ukraine's President Volodymyr Zelenskyy is welcomed by Italy's Prime Minister Giorgia Meloni at the G7 Summit on June 13.Ludovic Marin/AFP / Getty Images -
A boy jumps next to a destroyed Russian self-propelled gun on Mykhailivska Square in the center of Kyiv on June 11.Anatolii Stepanov/AFP via Getty Images / AFP
Western leaders have agreed to loan Ukraine up to $50 billion to fight Russia and rebuild after the lengthy war, money that will be repaid over time from the interest accumulating on frozen Russian financial assets, a senior U.S. official told reporters.
G7 leaders are still working out the details of exactly how and when to distribute the money. The negotiations have been at the top of the agenda for the G7 leaders’ summit in Puglia, Italy.
What are the frozen Russian assets and how much are they worth?
When Russia invaded Ukraine in 2022, Western governments froze about $300 billion in Russian assets — including money, securities, gold and bonds — held mainly in banks in Europe.
Leaders of the G7 economies have agreed to use the interest generated by the assets — about $3 billion per year — to help Ukraine.
When will Ukraine get the loan?
Some of the details are still being worked out. The United States and European countries have different proposals for distributing the money.
Scheherazade Rehman, a professor of international finance at George Washington University, explained it in simple terms.
“The Europeans would like to transfer them to Ukraine yearly or every two years, so spread it out. The Americans, however, want to find a way to get this money very quickly to Ukraine all at once,” Rehman said.
The European proposal had been for about $3 billion a year go to Ukraine, and only interest from a certain part of the frozen Russian assets — $190 billion held by a company called Euroclear in Belgium — to be shared.
The U.S., on the other hand, wanted to give $60 billion to Ukraine up front, because Ukraine’s need on the battlefield is dire. Officials had said the interest generated from the frozen Russian assets would go toward paying back that money.
Rehman said Washington has the weaker hand in the debate because only about $5 billion of the $300 billion in Russian assets are held in the United States — and European nations are concerned about how they would be paid back for a big initial lump sum.
The agreement will likely be some sort of compromise between the European and U.S. proposals. But Rehman said recent elections in countries like France and Germany may also affect discussions.
“Europeans really have to get their act together at this G7 meeting because they’re on shaky ground just because of the European parliamentary elections that just took place where the hard right has now got a historic toehold,” she said.
“The Europeans are coming into this with very different footing than if this was 10 days ago.”
Transcript
ROB SCHMITZ, HOST:
First, presidents and prime ministers from the world's leading democracies are here in Europe today. They're holding the Group of Seven summit in Italy.
STEVE INSKEEP, HOST:
The U.S. and other nations have been supporting Ukraine's defense against Russia, and their latest idea is to pay for the war using Russia's own money. They're negotiating a plan that would spend the interest on $300 billion of Russian assets that are frozen in Western banks.
SCHMITZ: NPR White House correspondent Deepa Shivaram is in Puglia, Italy, where the leaders are meeting. She joins us now. Good morning, Deepa.
DEEPA SHIVARAM, BYLINE: Good morning.
SCHMITZ: So Deepa, what is the plan with using these frozen Russian assets?
SHIVARAM: Yeah. So when Russia invaded Ukraine back in 2022 - right? - Russian assets that are in banks, mostly in Europe, were frozen. And that's money, securities, gold, bonds, things like that. And the interest collected from those frozen assets is generating a decent chunk of change, Rob, roughly $3 billion a year.
SCHMITZ: Wow, three billion. That's a lot of interest. How are they planning on using that money?
SHIVARAM: The idea is that the money can be given to Ukraine to help them with the weapons they need and also help rebuild their country when this war eventually ends. This idea has been discussed for months. And the thing that needs to be sorted out here is that the details of how much money Ukraine gets is in question. You know, at what rate can they get that money? Is it a big lump sum? Does it get spread out over the course of years? And who's responsible for this money going out of the banks and to Ukraine? Is it Europe's responsibility or the U.S.'s? So a lot of questions left. At this point, it's kind of unclear what the final agreement is going to look like on this issue. But there is a general consensus here that leaders do need a plan to continue helping Ukraine financially.
SCHMITZ: Got it. So this summit is taking place pretty soon after elections, where some G7 countries like France and Germany, saw far-right candidates win more seats. How is that factoring into these discussions?
SHIVARAM: I would say it's factoring pretty heavily in. I talked to Scheherazade Rehman, who's a professor of international finance at George Washington University, and she says that when it comes to this conversation about funding Ukraine, how leaders in Europe are approaching it today might be different than before these elections in France and Germany took place, right? Far-right parties winning more seats, like France's National Rally Party, for example, could potentially complicate future support for Ukraine. So Rehman says there's more pressure on European leaders to hammer out this plan on securing funding.
SCHEHERAZADE REHMAN: Europe has its own worries now with snap elections in some key countries. The Europeans are coming into this meeting in a very different footing than if this was 10 days ago.
SCHMITZ: Elections, elections. There is one coming up in the United States. How is that going to impact everything?
SHIVARAM: Yeah, that's right. I would say it's been pretty top of mind, Rob, that this, you know, might be the last summit where all of these specific G7 leaders get together. And G7 leaders know what it was like to work with former President Trump, who wasn't a fan of the G7, and has been critical of giving more funding to Ukraine. So that's definitely contributing to this sense of urgency at this summit to find a way to economically support Ukraine no matter which candidate wins the election in November.
Finalizing these details on Ukraine is also a way to secure more funding without fully relying on Congress, which took months to pass the latest round of support for Ukraine. And in the meantime, Biden will also sign a security agreement today with Ukrainian President Zelenskyy, which outlines U.S. support for Ukraine, but it's not a binding agreement necessarily, so it's not really clear what'll happen depending on if there's a new president after the election in November.
SCHMITZ: That's NPR's Deepa Shivaram. Thanks for joining us, Deepa.
SHIVARAM: Thanks for having me. Transcript provided by NPR, Copyright NPR.
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