US proposes mechanism to G7 to raise US$50bn for Ukraine from Russian assets
Pravda Ukraine
The US has proposed its allies in the G7 group to create a special purpose company to issue at least US$50 billion of bonds from the income of frozen Russian sovereign assets and use these funds to support Ukraine.
Source: Bloomberg with reference to people familiar with the plan, as reported by European Pravda
Details: The proposal envisages merging US$280 billion of Russian Central Bank assets that have been frozen by G7 countries and the EU in the special purpose vehicle, the income of which will be used to provide so-called freedom bonds.
More than two-thirds of frozen Russian assets are blocked in the EU, where they bring about US$3.6 billion in net income annually. Proceeds from a potential bond offering would almost equal the US$60 billion of American aid stuck in Congress.
One of the participants stated that the discussions are at an early stage. Some G7 countries, including Germany and France, expressed their concerns about the new idea, another source said.
The effort could bring in much more than $50 billion, the source said. Some EU countries, specifically Estonia, urged the allies to be bolder and seize these assets.
Earlier, the G7 stated that the assets would remain frozen until Russia agrees to pay Ukraine for the damage it had caused.
The US argument is to come up with a solution that would maximise the income from frozen assets and provide for the value of the windfall profits in order to deliver more support to Ukraine faster.
Reportedly, some Western banks started lobbying against the EU’s proposal to redistribute the billions of euros of interest generated from the frozen Russian assets, fearing it may lead to costly court proceedings.
Austrian Chancellor Karl Nehammer stated that Vienna opposes the idea of using the revenue from frozen Russian assets to fund the armament for Ukraine.
At the same time, Chancellor of Germany Olaf Scholz and Prime Minister of Belgium Alexander De Croo approve the idea of using income from Russian assets to purchase weapons for Ukraine.
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