President Joe Biden in Italy to push G7 on plan to use frozen Russian assets to aid Ukraine

G7 leaders met in Italy Thursday as they work to reach an agreement on a plan to use frozen Russian funds to support Ukraine. Photo by Donato Fasano/EPA-EFE

June 13 (UPI) -- Global leaders attending a Group of Seven summit getting underway Thursday in Italy are set to try to iron out a plan to use the assets of Russia frozen in Western banks and financial institutions to provide Ukraine with as much as $50 billion a year.

Getting an agreement is U.S. President Joe Biden's priority at the three-day gathering in the port city of Bari as a way of replacing taxpayer funding for the defense of an increasingly embattled Ukraine with profits raised from Russian foreign-currency deposits, equities and sovereign bond holdings, according to ABC News.

Addressing G7 leaders in Savelletri, Biden pointed to more than $60 billion in infrastructure investments in regions such as sub-Saharan Africa and in the Philippines as examples of what G7 countries can do together.

"Now, we've still got a long way to go to close the infrastructure gap that holds too many countries back," Biden said. "But together, I think we're showing that democracies can deliver. This is an important moment to be able to do that."

G7 countries -- Britain, France, Germany, Japan, Italy and Canada along with the United States -- are not yet all on the same page but are scheduled to negotiate on the details in a special two-hour session set aside for Thursday afternoon, with the aim of announcing an agreement in their end-of-summit communique.

The U.S. proposal is for a loan secured with interest earned on the $325 billion in Russian assets frozen by G7 nations and the European Union following Russia's invasion of Ukraine in Feb. 2022.

The plan provides a way around international law which prohibits governments from confiscating the assets and sending them to Ukraine, relieves pressure on the coffers of Western donors and acts as a deterrent to other would-be aggressors.

However, concerns remain around possible knock-on ramifications on the risk premium countries like China, India and Saudi Arabia may demand on their assets as well as reciprocal action by Moscow against Western-controlled assets in Russia that could wipe any financial benefits of the plan.

Ukrainian President Volodymyr Zelensky who is in Bari for a series of bilateral meetings, including with Italian Prime Minister Giorgia Meloni, British Prime Minister Rishi Sunak, Canadian Prime Minister Justin Trudeau and the heads of the European Council and IMF, welcomed the focus on the funding plan as well as Ukraine's "defense and economic resilience."

"For us, the main issues are developing our fighter jet coalition, expediting pilot training, and accelerating aircraft delivery. Development of the Ukrainian air defense system based on the most powerful Western systems, as well as an increase in long-range capability," he wrote on X.

"Approval of the format for using Russian assets to benefit Ukraine, particularly in the development of our defense industry, and joint weapon production."

Biden and Zelensky on Thursday also signed a bilateral security agreement that establishes a long-term security relationship between the United States and Ukraine.

The agreement allows the United States to help bolster Ukraine's military and cybersecurity capabilities through training, equipment and information sharing, and also to help support Ukraine's economic recovery from the war.

Zelensky in a join press conference with Biden said it was a "truly historic day" after signing the agreement.

"This is an agreement on security and thus on the protection of human life. This is an agreement on cooperation and thus on how our nations will become stronger. This is an agreement on steps to guarantee sustainable peace and therefore it benefits everyone in the world," Zelensky said, adding the agreement will serve as a bridge to his country's attempt to join NATO.

Zelensky also plans to sign a final bilateral security agreement with Japanese Prime Minister Fumio Kishida following on from Declaration of Support for Ukraine announced by G7 chair Japan at the NATO Summit in Vilnius in July.

"The entire Ukrainian people, including our warriors, see that the G7 will always support Ukraine. I am grateful to our partners for their belief in us and our victory," said Zelensky.