G7 agrees to use frozen Russian assets to fund $50 billion loan for Ukraine

Volodymyr Zelenskiy hails Kyiv’s new security deals with United States and Japan

G7 leaders at the summit hosted by Italy in Apulia region. Photograph: Mandel Ngan/AFP via Getty Images

Leaders of G7 states have agreed to use frozen Russian assets to provide Ukraine with a $50 billion (€46 billion) loan for weapons and other urgent needs, as Kyiv prepared to sign a security pact with the United States after finalising one with Japan.

Western officials said details of the loan would be unveiled on Friday during a G7 summit in Italy, but revealed that the debt would be funded from interest and other profits from about $300 billion in Russian assets that have been locked up in the western banking system since the Kremlin launched all-out war on Ukraine in 2022.

The loan is expected to be underwritten by the United States and to include contributions from some European countries. The agreement may also include a commitment from western states to maintain control of frozen Russian assets until Russia ends its invasion of its neighbour and pays reparations for the destruction caused.

Kyiv and several allies want the Russian assets themselves – not just interest and other profits accruing to them – to be spent on Ukrainian security and reconstruction, but some western capitals and major financial institutions are concerned about the legality and market repercussions of such a move.

The signing of a 10-year bilateral security agreement with the United States is a "bridge" to Ukraine's future membership of Nato, Volodymyr Zelenskiy has said.

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Ukrainian president Volodymyr Zelenskiy met G7 leaders on Thursday and signed a deal on security co-operation with Japan, ahead of talks with US president Joe Biden at which they were expected to sign a similar pact between Kyiv and Washington.

Mr Zelenskiy said the agreement with Japan was “a unique document with one of the world’s most economically and technologically advanced countries”.

“In 2024, Japan will provide Ukraine with $4.5 billion and will continue to support us throughout the agreement’s entire 10-year term. This includes security and defence assistance, humanitarian aid, technical and financial cooperation… For Japan, this type of agreement and this level of support is a breakthrough,” he added.

Ukraine’s 10-year deal with the US is expected to include provisions for continued co-operation in military supplies and training, intelligence sharing and joint weapons production. Just like Kyiv’s similar agreements with more than a dozen other western states, it will not oblige Washington to send troops to Ukraine.

“The document with the United States will be unprecedented, as it should be for leaders who support Ukraine,” Mr Zelenskiy said.

Defence ministers from Nato members and other states that supply weapons to Ukraine met in Brussels on Thursday, amid repeated calls from Kyiv for additional air defence systems to fend off Russian missile strikes on its cities and infrastructure.

“We will continue to stand up to [Russian] aggression, we will continue to find new options to get Ukraine the air defences that it needs to defend its skies, and we will continue to move heaven and earth to get Ukraine what it needs to live in freedom,” said US defence secretary Lloyd Austin.

US media reported this week that an advanced Patriot air defence system would be transferred to Ukraine from neighbouring Poland, but several officials in Warsaw reacted to the news with surprise and alarm.

“The American battery will be replaced by a battery from another part of the world,” said Polish deputy defence minister Cezary Tomczyk. “Poland did not agree to transfer the Polish battery. Polish Patriots defend the Polish sky and this will not change.”

Daniel McLaughlin

Daniel McLaughlin

Daniel McLaughlin is a contributor to The Irish Times from central and eastern Europe