The G7 Finance Summit is expected to announce the allocation of a loan with a maximum amount estimated at 50 billion euros for the reconstruction of Ukraine using frozen Russian funds. According to reports, the Borgo Egnazia summit will make this announcement. However, there are still open issues that need to be resolved, such as the mechanism for payment to Kiev and potential opposition that could collapse the initiative.
Despite months of preparatory work, legal issues remain a fundamental point of contention between the USA and Europe. John Kirby, the spokesperson of the US National Security Council, expressed optimism in his last press briefing before the G7 meeting. Despite this, there are still gaps that need to be bridged on this issue.
The White House has asked the European Union to act as a guarantor for the funds, as they do not intend to do so themselves. The European Council could approve this without unanimity, bypassing a potential Hungarian veto. However, negotiations in Congress could be challenging given current political dynamics.
There is concern that these assets may stop generating returns or not generate enough to cover the full amount due due to a drop in interest rates. The involvement of all G7 members as guarantors for the loan is being requested to mitigate risks. Ultimately, an agreement in principle was reached at the G7 Finance Summit for using returns on Russian assets for the reconstruction of Ukraine; however, there are still open issues that need to be resolved before it can become a reality.
