Group of Seven leaders agreed at a summit in Italy on Thursday to give Ukraine $50 billion using frozen Russian Central Bank assets, a step that marks a significant escalation in the economic war against Russia.
The plan is to provide the $50 billion to Ukraine by the end of the year in the form of a loan, which will be paid back using profits from the approximately $280 billion in frozen Russian assets held by the US and its allies.
The idea is seen as a compromise between the US and Europe, as President Biden wanted to steal all of the frozen Russian funds to give to Ukraine. But the vast majority of the money is held in Europe, and EU leaders were hesitant to do that.
Instead, the EU devised a separate plan to provide Ukraine with about $3 billion per year using the interest made by the Russian assets. Ukraine said that amount wasn’t enough, and the US proposed the $50 billion loan.
“This has been something that the United States has put a lot of energy and effort into,” National Security Advisor Jake Sullivan told reporters. “We see proceeds from these assets as a valuable source of resources for Ukraine at a moment when Russia continues to brutalize the country, not just through military action on the front but through the attempted destruction of its energy grid and its economic vitality.”
Russia has made clear it would view either plan as the theft of its sovereign funds and is preparing to retaliate. Stealing the money makes reconciliation between Russia and the West even less likely since lifting sanctions would mean having to give assets back to Moscow that have already been spent. The move will also reduce faith in the Western banking system and speed up global de-dollarization.
