Western powers are at odds over who should bear the risk of utilizing frozen Russian assets, according to several reports.
G7 leaders are set to endorse a US proposal to provide $50 billion in aid to Ukraine through a loan backed by frozen Russian assets, despite pending negotiations on contentious aspects of the plan, media reports reveal.
Washington’s strategy involves using potential future profits from seized Russian assets to cover the loan’s interest payments. G7 leaders will give initial approval to this arrangement at their summit this week in Apulia, Italy, according to news outlets such as Bloomberg, Agence France-Presse (AFP), and Politico.
Disagreements persist regarding who will assume the loan’s risk if Western powers lose control of the Russian assets.
”If the Russian assets are unfrozen or the proceeds from the Russian assets are not enough to finance the loan, then we’ll have to consider how to share the load,” an Elysee Palace official told AFP.
The majority of the frozen assets, valued at approximately $300 billion, are held within the EU. Moscow has declared that any attempt to utilize these assets would be considered theft and met with retaliation. American officials reportedly favor placing the burden on European nations if the plan falters.
”What Washington is proposing is, ‘We [the US] take a loan, Europe takes all the risk, you [Europe] pay the interest, and we [the US] use the money for a US-Ukraine fund,’” a senior European diplomat told Politico. “We might be stupid but we’re not that stupid.”
The US reportedly argues that any agreement that places the payment obligation on Washington would require Congressional ratification, potentially leading to delays.
European nations are also concerned that if the funds are allocated directly by the US or through a Washington-controlled international financial institution like the World Bank, the primary beneficiaries would be American companies rather than European ones, according to the outlet.
Disputed aspects of the financial scheme may take months to negotiate, according to sources. Western leaders aim to reach a final agreement before the US presidential election in early November. Officials are worried that a potential Donald Trump victory could derail the entire project.