G7 summit backs $50 billion Ukraine loan using frozen Russian assets amid Europe’s rightward shifts

A staff member cleans the podium at the entrance of the Borgo Egnazia resort in Puglia, Italy. Photograph: Tiziana Fabi/AFP/Getty Images
June 13, 2024

A Group of Seven summit opened Thursday with agreement reached on a U.S. proposal to back a $50 billion loan to Ukraine using frozen Russian assets as collateral, giving Kyiv a strong show of support even as Europe’s political chessboard shifts to the right.

Italian Premier Giorgia Meloni welcomed the heads of state of the G7 leading industrialized nations to a luxury resort in southern Italy, saying she wanted the message of the meeting to be one of dialogue with the global south and unity.

She likened the G7 to the ancient olive trees that are a symbol of the Puglia region, “with their solid roots, and branches projected toward the future.”

Beyond discussions on Ukraine, the war in Gaza and China’s industrial policy, Pope Francis will become the first pope to address a G7 summit, adding a dash of celebrity and moral authority to the annual gathering. He’ll be speaking Friday about the promises and perils of artificial intelligence, but is expected to also renew his appeal for a peaceful end to Russia’s full-scale invasion of Ukraine and the Israel-Hamas war in Gaza.

The G7 includes Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Italy, which is hosting the summit, has invited several African leaders — Algerian President Abdelmadjid Tebboune, Kenyan President William Ruto and Tunisian President Kis Saied — to press Meloni’s development and migration initiatives on the continent.

Other guests include Ukrainian President Volodymyr Zelenskyy, Brazilian President Luiz Inácio Lula da Silva, Indian Prime Minister Narendra Modi, fresh off his own election, and Turkish President Recep Tayyip Erdogan.

With Biden, U.K. Prime Minister Rishi Sunak and now French President Emmanuel Macron facing elections in the coming months, pressure was on the G7 to get done what it can while the status quo lasts.

The U.S. proposal involves engineering a $50 billion loan to help Ukraine in its fight against Russia that would use interest earned on profits from Russia’s frozen central bank assets, most of them held in the European Union, as collateral.

A French official, briefing reporters Wednesday, said a political decision by the leaders had been reached but that technical and legal details of the mechanism to tap into the assets still had to be worked out. The issue is complicated because if the Russian assets one day are unfrozen — say if the war ends — then the windfall profits will no longer be able to be used to pay off the loan, requiring a burden-sharing arrangement with other countries.

Zelenskyy listed the asset deal as one of many arrangements he hoped to see finalized during the summit, including a bilateral security agreement with the U.S.

“I am grateful to our partners for their belief in us and our victory,” he said in a post on social media platform X.

Sunak, for his part, announced up to 242 million pounds (286 million euros or $310 million) in nonmilitary aid to Ukraine and a new round of sanctions against suppliers of munitions and other aid to Russia’s military located in China, Israel, Kyrgyzstan and Turkey. Washington also sent strong signals of support, with widened sanctions against Russia to target Chinese companies that are helping its war machine.

Meloni goes into the meeting fortified at home and abroad after her far-right party had an even stronger showing in the European Parliament election than in the national general election in 2022 that made her Italy’s first female premier. Known for its revolving-door governments, Italy is now in the unusual position of being the most stable power in the EU.

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The leaders of the G7’s two other EU members, Germany and France, didn’t fare nearly as well, rattled after hard-right parties made strong showings in the vote. Macron called a snap election and German Chancellor Olaf Scholz saw his Social Democrats finish behind mainstream conservatives and the far-right Alternative for Germany.

As a result, Meloni is likely to be able to steer the three-day meeting to her key priority items as she further cements her role on the world stage, analysts said. One sign of her flexed far-right muscles: Meloni’s office denied media reports that Italy was trying to water down language about access to abortion in the final communique.

A French official, speaking anonymously in line with Macron’s office’s customary practices, said there were diverging views with Italian negotiators on some topics, including on sexual and reproductive health and vaccines.

Italian Foreign Minister Antonio Tajani confirmed abortion was being addressed, but said discussions were continuing.

“While it’s unlikely the recent results will radically shift the focus of the upcoming G7 summit, this electoral win offers Premier Meloni additional leverage to frame this as an essentially ‘Mediterranean Summit,’” said Nick O’Connell, deputy director of the Atlantic Council.

That includes pushing her migration agenda as Meloni seeks to leverage her program for a nonexploitative relationship with Africa to boost development while curbing illegal migration to Europe.

Pope Francis has called for an international treaty to ensure AI is developed and used ethically, acknowledging the promise it offers but emphasizing the grave and existential threats it poses.

He’ll bring that campaign to the world’s industrialized countries as wars are raging across multiple fronts. One of his greatest concerns has been on the use of AI in the armaments sector. But Francis is also concerned about what AI means for the poorest and weakest in daily life: technology that could determine the reliability of an applicant for a mortgage, the right of a migrant to receive political asylum or the chance of reoffending by someone previously convicted of a crime.

It’s happening where?

The G7 summit is taking place in a sprawling luxury resort that’s something of a theater set, a faux town made to resemble one of Puglia’s medieval white-stone hamlets but that actually only dates from 2010.

Located next to an actual archaeological park, Borgo Egnazia features narrow streets, villas, restaurants and a town square complete with a clocktower. A favorite of celebrities, it was sealed off to outsiders for the duration of the summit.

No such five-star accommodations await the 2,000-plus police and Carabinieri forces who have been brought in to provide security. Authorities on Wednesday sequestered the decommissioned cruise ship that had been housing them in Brindisi’s port, after the police union complained about unacceptable hygienic conditions on board.

As with any G7, an assortment of anti-global, anti-war and climate activists are staging protests around the summit venue, but far from where the leaders are meeting. One group is staging a “dinner for the poor” on Friday night calling for “peace, the rights of peoples and against the Big 7 who claim to decide the destiny of the world and our planet.”

Credit @ Associated Press