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G7 agrees on transfer of $50 billion in profits from frozen Russian assets to Ukraine

by Chris York June 12, 2024 10:24 PM 2 min read
G7 leaders meet in Hirosima, Japan in May 2023. (Photo credit: Pool/Getty Images)
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The G7 has reached an agreement to provide Ukraine with $50 billion by the end of the year using profits from frozen Russian assets, the French presidency said on June 12 in comments reported by AFP.

"We have an agreement," a presidency official said, ahead of a G7 summit in Italy, which starts on June 13.

On June 11, it was reported the G7 will create a fund to support Ukraine using the income generated from frozen Russian assets, Nikkei Asia reported.

The fund will reportedly be created under an international organization such as the World Bank, with contributions in the form of “Extraordinary Revenue Acceleration” (ERA) loans.

While Western countries have frozen $300 billion in Russian assets, they can only access the income generated by these funds, approximately $3.2 billion, annually.

By setting up a fund with loans to be repaid using this income, countries can offer immediate support to Ukraine beyond this amount.

The French official quoted by AFP cautioned that "if for some reason or another, if the Russian assets are unfrozen or the proceeds from the Russian assets are not enough to finance the loan, then we'll have to consider how to share the load" of the loan.

The U.S. proposed seizing Russian assets outright in accordance with its recently passed REPO act, but the European Union has been more hesitant, fearing legal and fiscal pitfalls of confiscation.

Instead, Brussels seeks to use windfall profits generated by the frozen assets and funnel them to Kyiv.

Two-thirds of the frozen assets are located within the European Union, much of it held by the Belgian clearinghouse Euroclear.

The EU has already established a framework for sending investment income from these assets to Ukraine, and European G7 members do not plan to participate in the new program for now.

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