G7 leaders agree to $50bn loan for Ukraine at annual summit

G7 leaders hail ‘unity’ after reaching deal to fund Ukraine via profits on frozen Russian assets during summit in Italy.

From left : President of the European Council Charles Michel, German Chancellor Olaf Scholz, Canadian Prime Minister Justin Trudeau, French President Emmanuel Macron, Italy’s Prime Minister Giorgia Meloni, US President Joe Biden, Japanese Prime Minister Fumio Kishida, British Prime Minister Rishi Sunak and President of the European Commission Ursula von der Leyen pose for a photo [Ludovic Marin/AFP]Published On 13 Jun 202413 Jun 2024

G7 nations have agreed upon a $50bn deal to fund Ukraine through profits on frozen Russian assets, Italian Prime Minister Giorgia Meloni has said.

“I confirm to you that we have reached political agreement to provide additional financial support to Ukraine of approximately $50bn by the end of the year,” Meloni, who is hosting the G7 this year, said on Thursday.

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Meloni had invited President Volodymr Zelenskyy to join a special summit session on the Ukraine war with US President Joe Biden and the leaders of France, Germany, Canada, Japan and the United Kingdom.

Addressing the meeting at the luxury Borgo Egnazia resort, Zelenskyy thanked the leaders for their support, which he said would go towards “both defence and reconstruction”, though he emphasised the need for more weapons.

The G7 plan for Ukraine is based on a multiyear loan using profits from some $300bn of impounded Russian funds.

The issue is complicated, however, because if the Russian assets one day are unfrozen, then the windfall profits will no longer be able to be used to pay off the loan.

Each G7 country will contribute to the loan package, European Commission President Ursula von der Leyen said.

“All G7 are contributing to this loan. It is the windfall profits from the Russian immobilised assets in Europe that will serve it,” von der Leyen told reporters on the sidelines of the G7 summit in southern Italy.

“The finance ministers are now going through the details – for example, the topic of backstops that are necessary – and [will] clarify this as soon as possible.”

Germany’s Finance Minister Christian Lindner hailed “unity” following the agreement.

“Good news from the G7: another $50 billion for Ukraine,” he wrote on X.

The deal on Ukraine’s loan agreed upon at the three-day summit, where leaders of the Group of Seven (G7) major democracies are convening, marks “a very historic step and a historic decision,” German Chancellor Olaf Scholz said on Thursday.

“The next step will be just to create the technical conditions for implementation in the shortest possible time,” Scholz said.

Scholz added that G7 leaders are sending a clear message to Russian President Vladimir Putin and demonstrating their unity and determination.

“The Russian president has a very obvious plan: he wants to push ahead with his war until everyone else gives up supporting Ukraine. This plan has failed today,” the chancellor said.

“With the G7 states’ plan to mobilise $50bn, which will be financed from the windfall profits of the frozen Russian assets, the foundation has been laid for Ukraine to be able to procure everything it needs in the near future, not only in terms of weapons, but also for reconstruction or energy infrastructure.”

‘Significant military force’

French President Emmanuel Macron said that finance ministers would now work on the details of the agreement.

Reporting from Moscow, Yulia Shapovalova said Russian Foreign Ministry representative Maria Zakharova said using those profits would be “extremely painful for Brussels”, as Russia owns significant European property and funds.

“So Europe will first have to pay for all its madness out of its own wallet,” said Zakharova.

Earlier, Finance Minister Anton Siluanov said actions against Russian assets in the West would receive a “reciprocal response” because in Russia essentially the same amount of Western funds have been frozen. He noted recently Russia has “income” from those assets.

US-Ukraine security deal

Also on Thursday, US President Joe Biden and Zelenskyy signed a 10-year bilateral security agreement aimed at bolstering Ukraine’s defence against Russia’s invasion.

The agreement, signed on the sidelines of the summit, is meant to be a step towards Ukraine’s eventual NATO membership, according to the text of the deal.

“The parties recognise this agreement as supporting a bridge to Ukraine’s eventual membership in the NATO alliance,” the text says.

Zelenskyy has long sought NATO membership but the allies have stopped short of taking that step. The Western alliance regards any attack launched on one of its 32 members as an attack on all under its Article Five clause.

President Joe Biden and Ukraine’s President Volodymyr Zelenskyy pose for a photo, as they attend an event with G7 leaders to announce a joint declaration of support for Ukraine [Kevin Lamarque/Reuters]

In the event of an armed attack or threat of such against Ukraine, top US and Ukrainian officials will meet within 24 hours to consult on a response and determine what additional defence needs are required for Ukraine, the agreement says.

Under the agreement, the United States restates its support for Ukraine’s defence of its sovereignty and territorial integrity, amid a renewed push by Russia on Ukraine’s eastern front.

“To ensure Ukraine’s security, both sides recognise Ukraine needs a significant military force, robust capabilities, and sustained investments in its defense industrial base that are consistent with North Atlantic Treaty Organization [NATO] standards,” the text says.

“The United States intends to provide long-term materiel, training and advising, sustainment, intelligence, security, defense industrial, institutional, and other support to develop Ukrainian security and defense forces that are capable of defending a sovereign, independent, democratic Ukraine and deterring future aggression,” it says.

The summit comes at a time of extraordinary global turmoil.

Apart from the conflict in Ukraine, Israel’s continuing assault in Gaza is raging and economic tensions are rising between China and Western countries.

Leaders’ last summit?

Many G7 countries are also in political flux, with summit attendees aware this could be Biden’s last G7 summit if he loses to Donald Trump in November’s elections.

The UK’s Prime Minister Rishi Sunak is tipped to be toppled in July 4 elections, while France’s Emmanuel Macron and Germany’s Scholz are both under pressure after gains by the far right in EU Parliament elections last weekend.

By contrast, Italy’s Meloni is riding high after her far-right party came out on top in her country’s EU Parliament vote.

The summit talks began with a short session on Africa, development and climate change, before turning to the Middle East.

G7 leaders have already announced their support for a Gaza truce deal outlined by Biden, which would also see the release of captives taken in Hamas’s October 7 attack on southern Israel.

Meanwhile, Biden said he has not lost hope of getting an agreement on a Gaza ceasefire, but called on the Palestinian Hamas group to step up.

Biden, asked if he was confident there would be a ceasefire deal between Hamas and Israel soon, said, “No”.

“I haven’t lost hope, but it’s going to be tough,” he told reporters. “Hamas has to move.”

Mediators from the US, Qatar and Egypt have tried for months to broker a ceasefire amid Israel’s deadly assault on Gaza, which has killed more than 37,200 Palestinians and devastated the heavily populated enclave.

Source: Al Jazeera and news agencies