G7 states have agreed to lend Ukraine $50 billion using money generated from frozen Russian state assets, diplomats told dpa on Thursday, the first day of a summit in Italy among the leaders of the world’s economically advanced democracies.

War-ravaged Ukraine is to use the loan package to strengthen its military defence against Russia, pay for the reconstruction of infrastructure and funding for Ukraine’s state budget.

Advertisement

The US government says around $280 billion of Russian central bank money has been immobilised in Western countries due to sanctions imposed since the full-scale Russian attack on Ukraine more than two years ago.

The bulk of the money is within the European Union. The bloc’s member states recently approved the use of interest income generated from Russian state assets to finance aid for Ukraine.

The Brussels-based financial institution Euroclear – by far the largest holder in the EU of frozen Russian central bank assets – recently said that it had collected around $4.7 billion in interest in 2023.

Planning for the structure of the loan package has been underway for months. The US had originally campaigned in favour of collecting not only the interest income but also the frozen assets themselves and using them to provide financial support to Kyiv. Some European capitals, however, had major reservations about this.

G7 leaders are meeting for a summit in southern Italy from Thursday to Saturday.