FRANKFURT, Germany (AP) — Finance ministers from the Group of Seven advanced democracies opened a two-day meeting Friday on the shores of northern Italy’s scenic Lake Maggiore as the United States sought to build support for squeezing more money for Ukraine from frozen Russian assets and unite in a standoff against Chinese trade practices.
US Treasury Secretary Janet Yellen, speaking at the Stresa meeting, argued for “more ambitious options” to release around $260 billion in Russian central bank reserves frozen in Europe and the US after the February 24, 2022 invasion.
The need to help Ukraine has become more urgent as the prospect of the conflict continuing into next year destabilizes Kiev’s finances and Russia steps up its destruction of civilian infrastructure such as power plants.
The U.S. Congress passed a bill that would allow the Biden administration to seize about $5 billion in Russian assets in the United States, most of which is in Europe. Citing legal concerns, European authorities are reluctant to seize the money and give it to Ukraine as reparations for the destruction Russia caused. Instead, they plan to use interest accruing on the assets, which amounts to only about $3 billion a year, enough to cover just one month’s financial needs of the Ukrainian government.
Associated Press reporter Charles de Ledesma reports that G7 finance ministers are due to meet to discuss ways to provide additional financial assistance to Ukraine.
The proposal also includes borrowing against future interest income from the frozen assets, which could give Ukraine an immediate payment of $50 billion.
Organiser Finance Minister Giancarlo Giorgetti said extracting more funds for Ukraine was “not only a very complex legal discussion, but also a politically sensitive issue”.
French Finance Minister Bruno Le Maire praised Yellen for shelving proposals that would undermine the rule of international law, adding that “the US proposal is now in line with international law.”
“Let’s compare the proposals and see which one is the most convenient, the most efficient and the fastest to implement,” he said. “The point is not which method we use, but to ensure adequate, strong and long-term financing of the government of Ukraine.”
Ukraine spends nearly all its tax revenue on its military and needs an additional $40 billion a year to continue paying pensions and salaries for doctors, nurses and teachers. International Monetary Fund It was initially thought that the budget would be secured for four years, but the outlook for next year has darkened due to the prospect of a protracted conflict.
Yellen also called for a clear united front in opposition to state subsidies for Chinese solar panel, semiconductor and electric vehicle manufacturing, saying China’s production capacity exceeds demand not just in China but across the global economy, threatening the existence of competitors in both the G7 and developing countries. Ahead of the meeting, Yellen said countries needed to take a common position so Chinese leaders understand “there is a wall of opposition to this strategy that they are pursuing.”
Finance ministers are working to make a final decision at the G7 summit to be held in Fasano, Puglia, southern Italy, from June 13-15.
The G7 is an informal forum that meets annually to discuss economic policy and security issues. The member countries are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. The European Union is also represented, but the EU does not hold a rotating presidency.
