G7 considering plan to provide $50 bln in aid to Ukraine, initiated by USA
The United States is in talks with close partners to lead a group of allies that will provide $50 billion in aid to Ukraine, with the massive outlay to be repaid by profits from sovereign Russian assets that have been frozen - and accrued on them interest - mainly in Europe, Bloomberg reports.
The plan is being discussed among the Group of Seven nations, with the U.S. pushing to have an agreement when G7 leaders meet in Italy in June, according to people familiar with the proposal. Discussions on this topic have been difficult and an agreement could still take months, they said.
When asked about this type of proposal in which the U.S., or a subset of G7 countries, put up the aid money, which the EU would repay using the frozen assets, U.S. Treasury Secretary Janet Yellen said that "it's something we're discussing."
"Ideally, this is something we would like the entire G7 to participate in, be part of, not just have the United States doing it alone," she told Bloomberg in an interview in Sedona, Arizona, Friday.
Most European nations have pushed back against outright confiscation of the assets and have been skeptical of proposals they fear would undermine the euro's stability or expose them to Russian retaliation. The U.S. push essentially boils down to finding a way to provide Ukraine with the largest possible support quickly rather than in smaller amounts, by better mobilizing the profits produced by the frozen assets, said the people.
The G7 countries have immobilized about $280 billion of Russian central bank assets in response to President Vladimir Putin's February 2022 invasion of Ukraine, with the majority held in Europe through the Belgium-based clearing house Euroclear. Some EUR 159 billion of frozen Russian assets have generated net profit of EUR 557 million ($601 million) from February 15, according to Euroclear's first quarter financial results. Since last year, the assets have generated about EUR 3.9 billion in net profit.
Russian sovereign assets held by the company could grow to as much as EUR 190 billion by 2028 as they mature into cash, one of the people said. The assets are expected to generate about EUR 5 billion in windfall profits annually and a central element of the U.S. proposal is to bring forward those proceeds to increase the amount of support Ukraine receives in the near term.
The size of the aid that would be immediately provided to Kyiv would depend on the length of their repayment terms and how long the assets were immobilized to fund the bonds, according to the people.
Another option, previously reported by Bloomberg, would see allies issue some $50 billion worth of bonds through a special purpose vehicle backed by the windfall profits. The updated plans would look to raise similar amounts.