On Thursday, the Group of Seven summit commencing in Italy will see world leaders attempting to devise a strategy to use Russia’s frozen assets in Western banks and financial institutions, with the aim of providing Ukraine with up to $50 billion per annum.
According to ABC News, U.S. President Joe Biden’s top priority at the three-day gathering in Bari is to secure an agreement that would replace taxpayer funding for the defense of Ukraine. His plan involves using profits gained from Russian foreign-currency deposits, equities, and sovereign bond holdings. The aim is to alleviate the financial burden on the United States and help support an increasingly embattled Ukraine.
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During his address to G7 leaders in Savelletri, Biden highlighted the potential of G7 countries to pool their resources and invest in infrastructure development. He cited the sub-Saharan Africa and the Philippines as prime examples, citing the more than $60 billion that has already been invested in these regions.
Biden acknowledged that despite making progress, there is still a significant infrastructure gap that hinders the development of many countries. He emphasized the importance of collaborating to close this gap and expressed his optimism that democracies can achieve this feat. According to him, this moment presents a unique opportunity to demonstrate the efficacy of democratic governance.
The G7 nations, which includes the United States, Britain, France, Germany, Japan, Italy, and Canada, are currently not in complete agreement. They have scheduled a two-hour session on Thursday afternoon to iron out the details and hopefully come to a consensus. The aim is to announce an agreement in their end-of-summit communique.
The United States has suggested a loan that would be backed by the interest earned on the $325 billion worth of Russian assets that were frozen by the G7 nations and the European Union after Russia’s invasion of Ukraine in February 2022.
According to the plan, there is a solution to bypass the international law that restricts governments from seizing assets and transporting them to Ukraine. This not only eases the burden on the finances of Western donors, but also serves as a warning to potential aggressors.
There are still concerns regarding the potential knock-on effects on the risk premium demanded by countries such as China, India, and Saudi Arabia on their assets. Additionally, there is a risk of reciprocal action by Moscow against Western-controlled assets in Russia, which could potentially negate any financial benefits of the plan.
While in Bari for a series of bilateral meetings, Ukrainian President Volodymyr Zelensky expressed his appreciation for the focus on Ukraine’s funding plan, as well as its defense and economic resilience. He met with Italian Prime Minister Giorgia Meloni, British Prime Minister Rishi Sunak, Canadian Prime Minister Justin Trudeau, and the heads of the European Council and IMF.
X wrote that their top priorities are to develop their fighter jet coalition, speed up pilot training, and hasten aircraft delivery. Additionally, they aim to enhance the Ukrainian air defense system by utilizing the most potent Western systems and increasing their long-range capability.
“We have approved a format for utilizing Russian assets to support the growth of Ukraine’s defense industry, as well as for joint weapon production. This is a significant step towards enhancing our capabilities and strengthening our partnership with Russia.”
On Thursday, Biden and Zelensky signed a bilateral security agreement that aims to establish a durable security relationship between Ukraine and the United States.
Through training, equipment and information sharing, the United States will assist in enhancing Ukraine’s military and cybersecurity capabilities as per the agreement. Additionally, the United States will also provide support in Ukraine’s economic recovery from the war.
During a joint press conference with Biden, Zelensky expressed his elation over signing the agreement and referred to it as a “truly historic day.”
According to Zelensky, this agreement is not just about security, but also about ensuring the protection of human life. He believes that this agreement will pave the way for cooperation between nations, making them stronger. Furthermore, the agreement outlines steps that will ensure sustainable peace, which will ultimately benefit everyone in the world. Zelensky also emphasized that this agreement will serve as a bridge for Ukraine’s attempt to join NATO.
In addition to that, Zelensky’s agenda includes the signing of a bilateral security agreement with Japanese Prime Minister Fumio Kishida. This agreement is a follow-up to the Declaration of Support for Ukraine, which was announced by G7 chair Japan during the NATO Summit in Vilnius back in July. Zelensky is expected to sign the final agreement during his visit to Japan.
Zelensky expressed his gratitude towards the G7 for their unwavering support towards Ukraine, including their warriors. He acknowledged that the Ukrainian people are aware of the G7’s commitment to stand by them and aid in their victory.
