(Paris) Even if the contours of the agreement still remain quite vague, Paris came forward to announce Wednesday evening an agreement in principle by the leaders of the G7 “on the disbursement of 50 billion” dollars for Ukraine guaranteed by the interests of frozen Russian assets.
The idea of making Russia pay for aid to Ukraine is attractive, but complex: after the “progress” made by G7 finance ministers in May, this issue should be at the top of the agenda on Thursday of their leaders’ summit in Italy.
“There is an agreement. As always at the G7, the leaders make a decision and the technicians then do their work to “put it into shape” to ensure that it “complies with the law,” explained a source from the French presidency.
The idea of providing Ukraine with up to $50 billion in loans secured by the interest on the roughly $300 billion in Russian central bank assets frozen by the European Union and G7 countries was unheard of. no consensus among the member countries of the “Group of 7”.
“It is initially an American initiative,” underlined the Élysée. “This loan is intended to be repaid with the proceeds of frozen Russian assets,” it was explained.
One of the remaining questions is what are the guarantees of this loan “which is essentially American, but which can be supplemented with European money or national contributions,” added the same source.
After advocating a pure and simple confiscation of Russian assets, the United States has now aligned itself with the European position of using only the interest generated by the frozen assets.
The European Union and G7 countries have frozen some €300 billion in assets of Russia’s central bank, according to the EU. They also seized private assets of people linked to Russian power.
The World Bank estimates the cost of rebuilding Ukraine at more than $486 billion.
Especially in the European Union: around 185 billion euros were frozen by Euroclear, an international money depository established in Belgium.
This gives Europe a predominant influence on the use of Russian assets.
The remainder is mainly shared between the United States, Japan, the United Kingdom, Austria and Switzerland.
Concerning a possible confiscation of Russian assets themselves, the West encountered “immunity from execution”, a legal principle which prevents the seizure of the assets of one state by another.
In the process, the big financiers of the G7 meeting in Stresa at the end of May agreed on the principle of using future interests in Russian assets, without however formalizing an agreement.
Many questions persist regarding a G7 loan guaranteed by the interests of Russian assets, such as the sharing of risk between the United States and Europe, the unknown evolution of interest rates or even the fact of knowing who will issue the debt.
A G7 loan “would send a strong message of international unity and cooperation to support Ukraine,” indicates a preparatory document for a meeting in early June of European finance ministers consulted by AFP.
However, Japan’s hands are tied by its constitution which prohibits it from financing the military spending of third countries, which would limit a loan to Kyiv’s budgetary needs only.
Another obstacle is that EU sanctions imposed on Russia, including the immobilization of Russian assets, must be renewed every six months by a unanimous vote of the Council.
A possible veto by nationalist Prime Minister Viktor Orban, who remains close to the Kremlin, could therefore block the mechanism, especially since Hungary will assume the presidency of the European Union on July 1.
And what would happen if the assets were released in the event of a peace agreement?
Some also worry about an impact on investments from third countries, such as China, which could reduce their assets in Western countries for fear of them being seized.
And Russia is threatening retaliation against Western private interests. Vladimir Putin thus signed a decree at the end of May authorizing the confiscation in Russia of assets belonging to the United States or to people “associated” with it.