Frankfurt, Germany — The US sought to build support to squeeze more money for Ukraine from frozen Russian assets and to unite against China's trade practices, as finance ministers from the Group of Seven wealthy democracies opened a two-day meeting on Friday on the shores of the picturesque Lago in Northern Italy. Maggiore.
US Treasury Secretary Janet Yellen urges 'more ambitious options' at meeting in Stresa to free up money from some $260 billion in Russian central bank reserves frozen in Europe and the US after the invasion of February 24, 2022.
Aid to Ukraine has become more urgent as Kiev's finances appear shakier given the prospect of the conflict continuing next year and beyond, and as Russia steps up its destruction of civilian infrastructure such as power stations.
The US Congress has passed legislation allowing the Biden administration to seize the approximately $5 billion in Russian assets located in the US, but most of the funds are in Europe. Citing legal concerns, European officials have argued against seizing the money outright and handing it over to Ukraine as compensation for the destruction caused by Russia. Instead, they plan to use the interest on the assets, but that is only about $3 billion per year – about one month of financing needs for the Ukrainian government.
Proposals include borrowing against the future interest income from the frozen assets, so that Ukraine could get as much as $50 billion immediately.
Host country Finance Minister Giancarlo Giorgetti said extracting Ukraine “is a very complicated discussion legally, but also politically sensitive.”
French Finance Minister Bruno Le Maire praised Yellen for setting aside a proposal that he said would have undermined the international rule of law, adding that “the US proposal now complies with international law.”
“Let's compare the proposals, let's see what is the most convenient, the most efficient and the fastest proposal that can be implemented,” he said. “The most important point is not the method we use, the most important point is to ensure proper, strong and long-term financing of the Ukrainian government.”
Ukraine spends almost all its tax revenue on the military and needs another $40 billion a year to continue paying the pensions and salaries of doctors, nurses and teachers. Support from allies and a $15.4 billion loan from the International Monetary Fund were initially thought to secure the budget for four years, but the prospects of a protracted conflict have made the outlook for next year bleaker.
Yellen has also called for a clear united front against Chinese state subsidies for the production of solar panels, semiconductors and electric cars, arguing that China's manufacturing capacity exceeds not only its needs, but also those of the global economy as a whole, and threatens the existence of competing countries. companies in both the Group of Seven and developing countries. Ahead of the meeting, she said countries must take a common position so that Chinese leaders understand that “they face a wall of opposition to this strategy that they are pursuing.”
Finance ministers are working on final decisions at the G7 leaders' summit that will take place from June 13 to 15 in Fasano, in the southern Italian region of Apulia.
The G7 is an informal forum that holds an annual summit to discuss economic policy and security issues. The member states are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Representatives of the European Union also participate, but the EU does not serve as one of the rotating chairs.
