The G7 Summit: Holding Russia accountable for its brutality in Ukraine

Learn more about Albert Torres.
Albert Torres
Albert Torres
Program Manager, Global Policy
George W. Bush Institute

During a summit in Italy this month, the Group of Seven (G7) major industrialized democracies displayed solidarity with Ukraine by agreeing to a $50 billion loan backed by frozen Russian central bank assets. 

Why This Matters  

The issue of seizing Russia’s frozen assets remains a prevalent discussion amongst G7 countries. Though the action is warranted, complete confiscation of the assets will require consensus between the political alliance, which must navigate the legal challenges and potential economic ramifications of taking the next appropriate step. The concerns for the G7, namely its European partners, include complying with international law when dealing with Russia’s sovereign assets, the impact on Europe’s financial stability –which houses most of the frozen funds — and potential Russian retaliation on Western businesses still operating in the country. 

While trying to navigate the legal and economic challenges behind taking further action, the G7’s agreement to use the assets to back the loan demonstrates that democracies remain steadfast in their support for Ukraine. According to recent estimates by RAND, a leading U.S. think tank, Ukraine’s military will need between $17 and $61 billion in military assistance this year. This doesn’t take into account the roughly $500 billion that Kyiv will need for its recovery and reconstruction, according to the World Bank. The $50 billion loan will support Ukraine’s military, reconstruction, and humanitarian needs 

Following the announcement, President Putin promised retaliation against the G7,  alleging “theft” of Russia’s sovereign assets. However, that is not the case.  

The loan agrees to use the interest generated by Russia’s frozen central bank reserves as collateral. Most of the funds will stem from Russia’s holdings in Euroclear, a Belgium-based financial services company that focuses on securities, such as government bonds. Under Euroclear’s contract, any interest generated on securities that reach maturity belongs to the institution, not Russia, avoiding the legal concerns behind confiscating Russia’s frozen reserves. 

Most importantly, the loan will act as a grant, with Ukraine under no obligation to repay it. The interest earnings, roughly around $5 billion annually, will fully cover the loan.  

Bottom Line  

Now more than ever, Ukraine needs financial support to continue to fend off Russia’s brutality. Though the G7 agreement is an applaudable start, it should only be viewed as the first step on the path to complete confiscation of Russia’s frozen assets. The United States already has the legal standing to confiscate the assets under the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, which President Biden signed into law on April 24, 2024. International partners should do the same. Until then, unlocking new finances that hold Russia accountable is simply justice at play.