Ukraine’s President Volodymyr Zelensky and US President Joe Biden have signed a landmark bilateral security deal as the G7 announces a significant financial package for Ukraine. The G7 has agreed to utilize frozen Russian assets to secure a $50bn (£39bn) loan for Ukraine, aiming to bolster its defense against the ongoing Russian invasion.
US President Joe Biden emphasized this decision as a strong message to Russia, reinforcing that the international community remains resolute. Moscow has responded with threats of severe retaliatory measures.
The funds from this loan are expected to be available by the end of the year, providing a long-term solution to support Ukraine’s war efforts and its economy. The G7 summit in Italy also saw the signing of a 10-year bilateral security agreement between Ukraine and the US, which Ukrainian President Zelensky described as “historic.” This agreement includes US military and training aid but stops short of committing US troops to fight in Ukraine.
Following Russia’s full-scale invasion of Ukraine in 2022, the G7 and the EU froze approximately $325bn worth of Russian assets. These assets generate about $3bn annually in interest, which will be used under the G7 plan to cover the annual interest on the $50bn loan taken out on international markets for Ukraine.
At a joint press conference in Puglia, southern Italy, President Biden reiterated that the $50bn loan would be a powerful tool for Ukraine and a clear message to Russian President Vladimir Putin that the US and its allies are unwavering in their support. Biden asserted that Putin “cannot wait us out, he cannot divide us, and we’ll be with Ukraine until they prevail in this war.”
President Zelensky expressed profound gratitude to the US and other allies for their steadfast support. He highlighted the new security deal as the strongest agreement between Ukraine and the US since Ukraine’s independence in 1991.
The G7, comprising Canada, France, Germany, Italy, Japan, the UK, and the US, has been a crucial source of financial and military aid for Ukraine. UK Prime Minister Rishi Sunak praised the $50bn loan as “game-changing.”
This $50bn loan is substantial compared to the $61bn in US military aid agreed upon in May. Some in Kyiv had hoped the G7 would release the entire $300bn in frozen funds rather than just the interest. However, the European Central Bank ruled out this possibility.
Unlike the immediate impact of the US aid package, which provided more missiles for the frontline, the $50bn loan is not expected to be available until the end of the year. Consequently, it will not affect the current phase of the war. Ukraine continues to urgently need more weapons, particularly air defense systems and F-16 fighter jets, which it hopes to receive as early as this summer.
At the G7 summit, Zelensky noted that the new security agreement includes US shipments of these warplanes. The loan deal is symbolically significant for Ukraine, as it implies that Russia must contribute to Ukraine’s defense and reconstruction.
One of Zelensky’s top advisers mentioned that this financial strategy marks a turning point in the war by the West. However, it is unlikely to prompt a reversal in Russia’s stance on the conflict.
Most of the frozen assets of the Central Bank of Russia are held in Belgium. According to international law, countries cannot confiscate these assets and transfer them to Ukraine. Russian Foreign Ministry spokeswoman Maria Zakharova warned of “extremely painful” retaliatory measures in response to the G7’s decision.
