The controversial decision by the United States and its key allies on Thursday to use profits from Russian state assets to support Ukraine is based on a simple principle: Moscow must make amends.
“Russia has to pay,” European Council President Charles Michel told CNBC’s Steve Sedgwick after leaders of major democracies in the Group of Seven (G7) agreed in principle to give Ukraine loans worth To grant $50 billion backed by the profits generated by around 300 billion euros ($322 billion) in assets of the Russian Central Bank were frozen by the West.
The G7 includes the USA, Canada, Great Britain, France, Germany, Italy and Japan.
US President Joe Biden publicly announced the “significant outcome” of the G7 consensus during a press conference on Thursday alongside his Ukrainian counterpart Volodymyr Zelensky after the two leaders signed a 10-year bilateral security agreement.
“I am very pleased to announce that this week the G7 signed a plan to finalize and release $50 billion from the frozen proceeds [Russian] assets to use this money for Ukraine, [in] “Another reminder to Putin that we are not giving in,” Biden said.
Moscow has previously denounced such a move and warned of dramatic consequences if Western leaders follow the proposal. Questions have also been raised about the legality of such a precedent: Russia has been cut off from its frozen assets but retains ownership of them. Their forfeiture would require a lengthy legal process – but the profits made from the confiscated assets are more readily available.
A move similar to the G7 decision was taken in 1992, when the UN Security Council approved a measure to seize frozen Iraqi assets and order them to compensate victims of Baghdad’s invasion of Kuwait.
Michel sticks to the decision. “There is a blatant violation of international law, there is a blatant aggression against Ukraine.” [Moscow] are the aggressor, there is a victim, there are rules at the international level. You have to pay,” he said.
“And that’s why … this money is blocked, that’s why this money is frozen, and I’m very confident that we can use this money to support Ukraine because it’s fair.”
The proposal must now overcome various legal hurdles and be supported by European states where the majority of frozen Russian assets are located.
Michel said that the G7 allies can finalize the details of the agreement “in the coming weeks” in order to provide the funds to Kiev as quickly as possible, pointing out that “50 billion euros additional for Ukraine more military equipment and “More capacity and capabilities mean that Ukraine defends itself and defends our common European values.”
More loans secured against the interest on frozen Russian assets could be granted soon, US Treasury Secretary Janet Yellen hinted on Thursday.
“This is not the last time this is possible. This is the first tranche and there is more to it if necessary,” said Yellen, who was actively involved in negotiating the deal. “We ask the Russians to pay for the damage caused.”
Russia’s all-out invasion of Ukraine, now in its third year, has seen sustained airstrikes destroy settlements and key infrastructure in the country. The World Bank estimated in February that Ukraine’s reconstruction and recovery will require $486 billion over the next decade – although costs have likely increased since that assessment.
In discussions about rebuilding Ukraine, Kiev’s allies have increasingly come to the realization that war must come before peace.
“I think if we want to enable the reconstruction of Ukraine as quickly as possible, we need to provide more air defense systems, that is a top priority,” Michel said. “And today it is also an important decision about how we can provide the Ukrainians with more support, more military equipment, including in the area of air defense.”
A formal G7 statement is expected at the end of Friday, capping a two-day summit in Borgo Egnazia in Puglia, Italy, attended by senior EU officials including Ursula von der Leyen, the president of the European Commission, and a number of others Participants included other heads of state and international organizations.
The annual summit comes at a time when most G7 leaders are facing their own domestic political upheavals such as national elections and falling approval ratings. Only Georgia Meloni, Italy’s prime minister, is high in the polls after her nationalist Fratelli d’Italia party won last weekend’s European Parliament elections.
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2024-06-14 07:50:50
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