G7 ministers cite ‘progress’ but no done deal on Russian assets for Ukraine

AFP | Stresa

The Daily Tribune – www.newsofbahrain.com

G7 finance ministers cited “progress” in finding ways to use profits from frozen Russian assets to help Ukraine as they wrapped up a meeting yesterday, envisioning a concrete proposal to present to a leaders’ summit next month.

A search for creative yet legally sound solutions was top of the agenda at the two-day Group of Seven meeting in Stresa, northern Italy, as Kyiv continues its urgent appeals for more funds from Western allies in its third year of war with Russia.

“We are making progress in our discussions on potential avenues to bring forward the extraordinary profits stemming from immobilised Russian sovereign assets to the benefit of Ukraine, consistent with international law and our respective legal systems,” the ministers said in a final statement.

They hope to present a proposal “defined in all its dimensions” to G7 leaders ahead of a summit in Puglia, southern Italy, on June 13-15, Italian Finance Minister Giancarlo Giorgetti said during a press conference yesterday following the summit.

“Progress has been made,” Giorgetti said, cautioning however that an agreed proposal “is clearly not yet finalised because it has significant technical and legal issues”.

“We do not deny the difficulties but there is a firm determination to arrive at a solution,” he added. G7 finance ministers reiterated in their final statement that Russian assets frozen by the Group of Seven nations “will remain immobilised until Russia pays for the damage it has caused to Ukraine”.

But they went further, saying they were “committed to further financial and economic sanctions,” including in the energy sector.

The G7 is “ready to impose sanctions on individuals and entities that help Russia acquire advanced materials, technology, and equipment for its military industrial base,” added the statement.

Meanwhile, the governor of the Bank of Italy, Fabio Panetta, said Italian banks should quit Russia even though doing so would be complicated and costly. “Knowing that you are forced to find a buyer can be difficult, however in the end you have to get out of there because there is a reputational problem as well,” he told reporters.

‘Right direction’ The summit wrapped up a day after the United States announced a new $275-million package of aid for Kyiv, part of a $61-billion military aid deal passed by Congress last month after months of delays. Kicking off the talks in Stresa, US Treasury Secretary Janet Yellen had urged her counterparts to embrace “ambitious options” in considering how to use the frozen Russian assets.

A debated US proposal would tap the interest generated by the 300 billion euros ($325 billion) of Russian central bank assets frozen by the G7 and EU, creating a $50-billion loan facility backed by future interest on the assets.

Giorgetti -- whose country Italy holds this year’s G7 presidency -- called the US proposal a “flexible and pragmatic” plan that addressed the legal and regulatory concerns shared within the EU.

Last week, the European Union agreed to a more modest plan, using interest from Russian assets frozen by the bloc potentially amounting to up to three billion euros a year.

Finance ministers attending the talks had warned that the Stresa summit was not likely to result in a concrete deal. On Friday, France’s Finance Minister Bruno Le Maire downplayed what was reached as a “political agreement in principle, not a turnkey solution”.

Ukrainian Finance Minister Sergii Marchenko, who also attended the Stresa talks, said it was a “good signal that we are moving in the right direction”.

“I hope that during the G7 leadership summit in June there will be some decision,” he told reporters. ‘Concerns’ over China trade The G7 ministers also called out China’s trade policies and industrial overcapacity, warning that the bloc could take measures to counter them.

The United States has led warnings that a surge of lowcost Chinese exports fuelled by Chinese government support in key sectors like solar and electric vehicles pose a risk to global markets.

“While reaffirming our interest in a balanced and reciprocal collaboration, we express concerns about China’s comprehensive use of non-market policies and practices that undermines our workers, industries, and economic resilience,” said the statement.

The G7 will “continue to monitor the potential negative impacts of overcapacity” and “consider taking steps to ensure a level playing field”, it said.

The nonpartisan, Washington-based Atlantic Council wrote yesterday that “no white smoke emerged from the meeting” of finance ministers, while citing “small, sensible” steps on additional Russia sanctions.

“Success at the Italy summit cannot be taken for granted,” wrote the council’s John E. Herbst, a former US ambassador to Ukraine, due to concerns among G7 nations about retaliation from Russia.