US leading efforts within G7 to develop $50B aid package to Ukraine

In a groundbreaking move, the US is spearheading discussions with its closest allies to orchestrate a coalition offering up to $50 billion in aid to Ukraine. This colossal sum would be reimbursed through the substantial returns from frozen Russian assets, primarily held in Europe and accruing interest. Talks are underway within the Group of Seven nations, with a push for a consensus by the G7 summit in Italy in June. However, the road to agreement is paved with challenges, and finalizing terms could extend over several months.

This initiative represents a robust affirmation of Washington's support for Kyiv, following the recent approval of $61 billion in aid by Congress. It also places pressure on the European Union to reconsider its objections to utilizing the immobilized Russian assets. Treasury Department and White House National Security Council representatives refrained from commenting on the matter.

US Treasury Secretary Janet Yellen hinted at broader G7 participation in the proposal, emphasizing the importance of collective action rather than unilateral efforts. The urgency stems from concerns in Kyiv about potential Russian advancements amid delays in financial and military assistance.

European reservations about risking the stability of the euro or inviting Russian retaliation have complicated discussions. The US is advocating for a swift and substantial aid delivery to Ukraine, leveraging the profits from the immobilized assets. This approach aims to shield assistance from geopolitical shifts and ensure sustained support amid uncertainties, including the upcoming US presidential election.

Approximately $280 billion of Russian central bank assets have been frozen, predominantly in Europe, generating significant profits. The proposal seeks to expedite the allocation of these profits to bolster immediate aid to Ukraine. The precise amount of assistance hinges on repayment terms and the duration of asset immobilization.

Alternate proposals include issuing bonds backed by windfall profits or utilizing a special purpose vehicle. However, consensus remains elusive, with concerns over repayment guarantees and the potential implications of unfreezing the Russian assets. Despite these challenges, the proposed plan represents a departure from previous EU initiatives and underscores a collective effort to address Ukraine's urgent needs.