US, allies discuss $50Bln Ukraine aid fund using frozen Russia assets
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Assistance to Ukraine, totaling up to $50 billion, is proposed to be repaid through the windfall profits generated by frozen Russian assets, according to sources familiar with the matter.
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Firefighters inspect the debris of a building hit by shelling in Kharkiv, Ukraine, Friday, May 3, 2024 (AP Photo/Yevhen Titov)
A report by Bloomberg on Friday revealed that the US is engaged in discussions with allied states to form a coalition aimed at providing substantial financial assistance to Ukraine.
This assistance, totaling up to $50 billion, is proposed to be repaid through the windfall profits generated by frozen Russian assets, according to sources familiar with the matter.
The plan is currently under deliberation within the Group of Seven (G7), with efforts concentrated on reaching a consensus before the group's forthcoming summit in Italy, slated for June.
But discussions are reportedly heated, and it is expected that reaching an agreement could extend over several months, as per reports from unnamed sources.
Read more: No-longer-neutral Switzerland freezes $14.2bln of Russian assets
The potential implementation of this aid plan is expected to exert increased pressure on the EU to reconsider objections regarding the use of Russian assets.
US Treasury Secretary Janet Yellen has stressed the importance of collective participation from G7 members and advocated for a unified approach rather than individual efforts.
Recent figures indicate that seized Russian assets have generated approximately 3.9 billion euros ($4.2 billion) in net profit since the previous year.
A recent report by the Financial Times suggests a shift in strategy within the G7, with representatives acknowledging privately that complete confiscation of Russia's frozen assets may not be feasible. Instead, alternative measures to extract funds are being explored.
Moscow has strongly condemned efforts to seize its sovereign assets, characterizing such actions as theft and violations of international law.
Moreover, the European Central Bank has warned against potential reputational risks to the euro associated with asset seizure.
Read more: Russia to defend its interests if its assets were seized: Kremlin
The Wall Street Journal reported last Sunday that Germany has become one of the prominent countries in opposition to US plans.
The country is concerned about facing new claims for reparations regarding crimes it committed during World War II, as seizing around $300 billion in Russian central bank funds could cause the emergence of a precedent paving the way for the former, according to what officials told the WSJ.
Around $1.3 trillion of reparation obligations, as estimated by Poland, have been the center of a dispute between it and Germany. Such lawsuits might possibly extend to reach other G7 countries due to losses accumulated through centuries of colonial exploitation and slavery as reported by the WSJ.
Based on the WSJ report, the officials said that according to Germany's own set of rules, state-owned assets are immune to foreign seizure so backing the US and EU plan to seize frozen Russian assets, will go against those rules.
