G7 agrees on $50 billion loan for Ukraine from frozen Russian assets

Ukraine’s supporters have agreed to move forward with a $50 billion loan to Kyiv, financed by profits from frozen Russian assets in Europe and the U.S., the leaders of the Group of 7 countries announced on Thursday.

The agreement marks a significant achievement for President Biden, with the U.S. spearheading the effort to get the broad grouping of Ukraine’s supporters to agree on seizing Russian assets to support Kyiv and counter Russian President Vladimir Putin.

“I’m very pleased to share that this week… the G7 signed a plan to finalize and unlock $50 billion from the proceeds of those frozen assets, to put that money to work for Ukraine and other reminders to Putin, we’re not backing down. In fact, we’re standing together against this illegal aggression,” Biden said on Thursday at a press conference alongside Ukrainian President Volodymyr Zelensky.

“Thank you Mr. President for your leadership in the G7’s decision on $50 billion loan for Ukraine, it’s a vital step forward in providing sustainable support for Ukraine in winning this war,” Zelensky said. 

“Russian immobilized assets should be used for defending Ukrainian lives from Russian terror and for repaying the damage the aggressor caused to Ukraine. It’s fair and absolutely right.”

The proposal was led by the U.S. and agreed on during the first day of the G7 summit in Italy.

G7 members froze about $280 billion in Russian assets after the invasion began in February 2022 and the proposal would use the interest generated on the frozen assets, which is about $2.6 billion to $3.6 billion a year, to pay back a $50 billion loan to provide Ukraine immediately.

“This has been something that the United States has put a lot of energy and effort into,” National Security Advisor Jake Sullivan said in a briefing with reporters Thursday morning ahead of the day’s events. 

“We see proceeds from these assets as being a valuable source of resources for Ukraine at a moment when Russia continues to brutalize the country, not just through military action on the front end, but through the attempted destruction of its energy grid and its economic vitality.”

The commitment from G7 countries comes as Russia’s more than two-year illegal war against Ukraine is straining unity among Kyiv’s military and financial backers. 

That has translated into battlefield losses for Ukraine without adequate military resupplies, though Ukraine was able to largely push back Russia’s latest offensive around the city of Kharkiv. 

Last week, in a meeting with Zelensky on the sidelines of the 80th anniversary of D-Day, the president apologized for the seven-month delay in getting a billion-dollar aid package passed in Congress.  

And countries supporting Ukraine are under further pressure to lay the ground-work for long-term commitments amid shifting domestic political trends. 

There’s concern among Ukraine and its supporters that former President Trump, the presumptive Republican presidential nominee, would pull back U.S. commitments for Kyiv or the North Atlantic Treaty Organization (NATO) and that would benefit Putin. 

And while far-right parties demonstrated a strong showing in European Union parliamentary elections, analysts say that there’s not a major threat to European support for Kyiv in the short-term.

In particular, they point to Italian Prime Minister Giorgia Meloni, the G7 host who, despite being described as right-wing, has come out as a strong supporter for Ukraine and critic of Russia. Her party demonstrated a strong return in the EU elections.

The agreement to use profits from frozen Russian assets is an important stop-gap measure amid ongoing debates and disagreements over whether the frozen assets should be seized entirely. So far, each country is working out its own legal justifications for such a move.

In April, Biden signed into law the REPO Act, part of the national security supplemental package, that allows the U.S. to seize frozen Russian for Ukraine’s reconstruction. 

Estonia similarly passed its own version of such a bill in May. 

“I think it is very critical, first, to support Ukraine with financial resources, it’s evident that it’s needed, also for the rebuilding effort and keeping the Ukrainian state going,” Estonia’s Ambassador to NATO, Juri Luik, said in an interview with The Hill in Washington last week.

“It’s also a very important kind of punishment for the Russian regime because it’s a corrupt regime — they love power but they also love money, so I think this would also be a very good move, in that direction.”

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Netanyahu needs to speak truth on Saudi nuclear deal

Last week, Israeli Prime Minister Benjamin Netanyahu let it be known through his advisors  that he could support President Biden‘s cease-fire agreement with Hamas in principle while reserving the right to clarify certain details. Netanyahu has since been vocal about his reservations  concerning the permanence of any cease fire and his unwillingness to hand over any authority to Hamas to run Gaza.

What he and his advisors have been mum about, however, are the ramifications of another aspect of Biden’s Middle East bargain: encouraging the Saudis to normalize relations with Israel by offering to help Saudi Arabia produce nuclear power and enrich uranium.

Enriching uranium is a proliferation red flag. It’s the process that brought Iran to the very brink of acquiring nuclear weapons. Netanyahu would do well to clarify his thinking on this nuclear bit before he addresses Congress on July 24 .

In fact, Biden’s nuclear generosity toward Saudi Arabia runs the risk of not just creating a Saudi nuclear weapons option, but of prompting Saudi Arabia‘s neighbors — the United Arab Emirates and Turkey — to demand similar treatment.

It’s not well known, but the UAE’s nu c lear cooperative agreement with the U.S. specifies that if another nation in the region strikes a nuclear agreement with Washington with more generous terms, the UAE reserves the right to reopen negotiations to secure similar terms. As such, offering to help Saudi Arabia enrich uranium on its soil risks catalyzing a nuclear competition in the Middle East that would make Iran getting a bomb look relatively manageable.  

Meanwhile, South Korea has long demanded  that its current nuclear cooperative agreement with Washington be amended to allow for uranium enrichment and plutonium recycling. Washington, though, has rightly been wary: Seoul has engaged in covert nuclear weapons activities more than once. The last thing the United States wants is a repeat performance. Should South Korea get nuclear weapons, Japan would likely follow suit, introducing major uncertainties in an already tense security alliance triangle.

Biden’s diplomats deflect these grim prospects with elaborate operating conditions that optimists might think can prevent the Saudis from using U.S. nuclear energy assistance for nefarious purposes. However, possession — actually having a uranium enrichment plant operating on Saudi soil — is 90 percent of the law.

Even if (as proposed) such a plant is run by Americans, Saudi Arabia can seize it as their own whenever they wish. More important, once they begin enriching, it will be extremely difficult for outside intelligence agencies to know what illicit nuclear activities they might be conducting away from the declared site. 

This is precisely what happened in Iran. Once the mullahs began construction of their internationally inspected “peaceful” nuclear power plant at Bushier, they used it as an acquisition front  to get all of the other bits and pieces they needed to secretly enrich uranium and test various parts of their weapons design. 

By the time Western intelligence agencies uncovered this buying spree, it was too late — they had the goods. One might hope that Western intelligence would do better in Saudi Arabia. But so far, it hasn’t. Instead, Saudi Arabia secretly acquired at least two types of nuclear capable missiles, a missile factory and the basics for mining and processing uranium from China . Western intelligence was able to confirm this, but only after the fact.

Why does this matter? Saudi Crown Prince Mohammed bin Salma Al Saud (MBS) who runs the kingdom, has repeatedly said if he thinks Iran has acquired a nuclear weapon, he will violate the Non-Proliferation Treaty and get one as well. 

Those in the know in Washington understand this. Five years ago, Sen. Lindsay Graham (R-S.C.) argued that Iran and its Arab neighbors had no need to enrich or reprocess and should stay clear of such activities. More recently, 20 Senate Democrats wrote President Biden taking the same position .

Administration officials have yet to brief anyone in Congress on the deal’s details. That has prompted some to act. Last week, Rep. Brad Sherman (D-Calif.) of the House Foreign Affairs Committee proposed legislation  that would block U.S. nuclear transfers to the kingdom if the Saudis began enriching uranium or recycling plutonium. Sen. Ed Markey (D-Mass.) is expected to propose similar legislation.

Meanwhile, Republicans, including Donald Trump ) have kept mum about Biden’s nuclear offer. What’s allowed them this luxury is Israel’s official silence.

In 2018, Netanyahu opposed U.S. nuclear assistance to Saudi Arabia . More recently, he denied pressuring his nuclear experts to support Washington helping MBS enrich uranium on Saudi soil. The concerns they shared with him are quite real.

We can only hope that before he speaks before Congress July 24, Mr. Netanyahu will be as candid and specific on the nuclear portion of the Biden deal as he has been about the rest of it. More than just reaching an immediate peace in the Middle East depends on getting this right.

Henry Sokolski is executive director of the Nonproliferation Policy Education Center in Arlington, Va. and served as the Pentagon’s deputy for Nonproliferation Policy (1989-93).

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Elon’s payday