G7 to Endorse EU Strategy on Frozen Russian Assets to Aid Ukraine

In a significant development ahead of next week’s Group of Seven (G7) meeting, finance ministers from the world’s major democracies are poised to endorse a European Union (EU) proposal to leverage income from frozen Russian assets to support Ukraine’s war effort.

An Italian Treasury official disclosed this plan during a media briefing on Thursday.

G7 Meeting and Key Agendas

Scheduled to convene in Stresa, northern Italy, on May 24-25, the G7 finance chiefs will discuss the utilisation of extraordinary revenues generated from approximately $300 billion in Russian assets, frozen following Russia’s invasion of Ukraine in February 2022.

The EU and other G7 countries have been deliberating on the best approach to use these funds to assist Ukraine, with a consensus now seemingly within reach.

The G7 includes the United States, Japan, Germany, France, Britain, Italy, and Canada.

While the United States has suggested seizing the assets outright, European nations have expressed reservations due to potential risks to the euro and the legal complexities involved.

Support for EU Proposal

The Italian Treasury official, who preferred to remain anonymous, stated that the G7 would align with the EU’s stance of using income from these frozen assets rather than the assets themselves.

This approach is intended to ensure legal soundness and minimise economic risks.

The discussions in Stresa are expected to lay the groundwork for G7 leaders to finalise their decision at the upcoming summit in Puglia, southern Italy, in June.

Additional Economic Discussions

In addition to the focus on Russian assets, the G7 finance ministers will address several other critical economic issues.

One major topic is the international agreement on the taxation of large corporations, which has encountered hurdles in the U.S. Congress. Italy, holding the rotating G7 presidency, aims to break the deadlock on this front.

Trade relations with China will also feature in the discussions, following recent significant tariff hikes by the United States on Chinese imports.

Although not formally on the meeting’s agenda, these discussions reflect broader concerns about the impact of tariffs on global trade. Italy has voiced reservations about tariff use, citing their disruptive effects.

Digital Services Taxes and Global Minimum Tax

With the impending expiration of a trade truce over digital services taxes between the U.S. and several European nations, Italy is pushing for renewed negotiations.

The goal is to salvage plans for a global minimum tax on multinationals, which seeks to redistribute taxing rights for approximately $200 billion in corporate profits to countries where businesses operate.

Progress on these negotiations has been slow, and next week’s meeting will be crucial for advancing this agenda.

Read also: 

Euroclear Opposes the Use of Frozen Russian Assets in Favour of Ukraine

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