G-7 decision on Russian assets: what is known and why the fight for $300 billion continues

Darina GertsevaNews
How to confiscate Russian assets in full
How to confiscate Russian assets in full. Source: Freepik

The leaders of the Group of Seven countries decided to provide Ukraine with loans to be repaid from the proceeds of $300 billion of frozen Russian assets, of which $50 billion will be provided by the end of 2024 or early 2025 . Ukraine will continue to work on the complete confiscation of these assets, as it is legal, economically justified and morally right.

This was stated by Olena Halushka, a board member of the Anti-Corruption Action Center (AntAC) and co-founder of the International Center for Ukrainian Victory. At the end of last week, the leaders of the Group of Seven countries officially announced that the G-7 would provide Ukraine with loans to be repaid from the proceeds of $300 billion of frozen assets.

The official communiqué issued following the summit states that the G-7 countries reaffirm their unwavering support for Ukraine for as long as necessary and emphasize that Russia must stop its illegal war of aggression and pay for the damage it has done to Ukraine. U.S. President Joe Biden said the move was another reminder to Russia that "we will not back down," while Vladimir Putin called it "theft" that "will not go unpunished."

The agreement to provide additional support to Ukraine through the use of frozen assets shows that the G-7 leaders remain united in their support for Kyiv. Ukraine needs this money: earlier, Finance Minister Serhiy Marchenko said that Ukraine has an uncovered need of $12 to $15 billion for the next year.

However, the decision on the loan is an interim victory. Ukraine needs to continue working on the complete confiscation of $300 billion worth of Russian assets, as it is legal, economically justified and morally right.

The path to this decision

Russian sovereign assets - the international reserves of the Central Bank of the Russian Federation worth more than $300 billion - are frozen in Western countries. Since the beginning of the full-scale invasion of Ukraine, Moscow has been denied access to them . The lion's share is held by Euroclear, a financial institution headquartered in Brussels that specializes in the storage and settlement of securities. On these assets, Euroclear generated a pre-tax profit of €0.794 billion in 2022 and €4.34 billion in 2023, amounting to more than €5 billion in two years.

As for the remaining assets, their exact size, shape and location are unknown. The US, for example, may have about $5 billion. The Group of Seven previously pledged to keep them frozen until Russia pays compensation to Ukraine for the damage caused by the aggression.

Since December 2023, the United States, along with the United Kingdom and Canada, has been pushing for full confiscation in the G-7 , but this decision has faced great resistance from European countries . In April, the U.S. Congress even passed the Restoring Economic Prosperity and Opportunity for Americans Act (REPO Act), which allows the White House to confiscate Russian sovereign assets in the United States.

The EU, in turn, chose the least risky and, accordingly, the least profitable way to transfer revenues to Ukraine annually as they are generated in the amount of 3-4 billion euros. The leaders of the European Central Bank systematically oppose full confiscation, causing panic. That is why the United States proposed an alternative model to maximize the European solution, which was politically agreed upon at the last G7 summit.

Details of the loan

The G7 countries agreed that our country will be granted individual loans through the Extraordinary Revenue Acceleration Loans for Ukraine (ERA) program according to the partners' own procedures. The summit communiqué states that experts will still be working on the details.

The partners call this model a loan, but for Ukraine, these funds will be non-repayable assistance, as the loans will be repaid from the proceeds of frozen assets. "Given that all these assets are frozen in Europe, Europe is already involved by defining a guarantee mechanism for the repayment of this loan," explained Italian Prime Minister Giorgia Meloni.

Another important part of the agreement is that this money will be used to purchase weapons and supply the army, in addition to economic needs and rebuilding the destroyed. "We intend to use these funds for Ukraine's military, budgetary, and reconstruction needs-within the constraints of our respective legal systems and administrative requirements," the summit communiqué said.

According to the latest World Bank estimates, the cost of reconstruction and recovery in Ukraine has already reached $486 billion. The losses increased significantly when Ukraine was suffering from a missile famine and Russia inflicted even more damage on Ukraine's energy sector.

Transparency and control

It is not yet clear what the mechanisms for transparency and control over their use will be. Risk-sharing mechanisms in the event of a halt or insufficient level of revenues are still being agreed upon, but the agreement is that they will be shared between the partners and not fall on Ukraine's shoulders.

According to media reports, the EU sanctions that froze these assets are to be extended every six months unanimously. Thus, even one country, such as Hungary, can disrupt the extension of these sanctions. Currently, the EU says it is exploring options to reduce this risk, for example, by voting for sanctions less frequently or through national legislation in Belgium.

Prospects for full confiscation

Opponents of full confiscation have already armed themselves with a new argument that lending against frozen assets closes the door to full confiscation. However, if the body is confiscated, part of the funds can be used to repay the rest of the loan, so this argument has no basis.

Many Western media outlets that covered the results of the G7 summit shared a common narrative: that full confiscation is too difficult. However, it is worth recalling that until the spring of 2024, the transfer of income from frozen assets to Ukraine or this $50 billion loan were also considered very difficult, but they were able to be implemented when the political will appeared.

A group of respected legal experts claimed that the confiscation of Russian frozen assets did not contradict international law. The lawyers sent a letter to the G-7 capitals, signed by international law experts from Belgium, France, Germany, Japan, the Netherlands, the United Kingdom and the United States, explaining in detail why confiscation would be a legitimate and reasonable countermeasure in response to Russian aggression.

As OBOZ.UA previously reported, the Council of the European Union (EU) extended sanctions against Russia until June 23, 2025, over the illegal occupation of Crimea and Sevastopol, supplemented by new restrictions in 2022. The sanctions include a ban on imports of goods from Crimea, restrictions on investments and exports of certain goods and technologies for Crimean companies.

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