G7 to Back EU Line on Frozen Russian Assets, Italy Says

Finance ministers from the Group of Seven major democracies meeting in Italy next week will back a European Union plan to use the income from frozen Russian assets to help Ukraine’s war effort, an Italian Treasury official said on Thursday (16 May).

Italy, which holds the rotating presidency of the G7, will also try to revive an international deal on how to share taxing rights on large corporations which the United States is struggling to ratify in Congress, the official, who declined to be identified by name, told a media briefing.

The G7 froze around $300 billion worth of financial assets soon after Moscow’s attack on its neighbor in February 2022. Since then, the European Union and other G7 countries have debated whether and how to use the funds to help Ukraine.

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

The United States has proposed seizing the assets in their entirety, but Europe has balked, citing risks to the euro and legal repercussions.

The G7 will support the EU’s line to use the extraordinary revenues from the frozen Russian assets to the benefit of Ukraine, the official said ahead of the meeting in Stresa, northern Italy, on 24-25 May.

The talks are focused on using income from the assets, not the assets themselves, the official said, adding that any decision must have the backing of the EU and a “solid legal basis.”

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In the face of European resistance, Washington has more recently proposed using the assets as collateral to provide loans for Ukraine.

The Italian official said the finance chiefs will do the groundwork aimed at enabling G7 heads of government to reach a final decision at a summit in the southern Italian region of Puglia, in June.

Trade relations with China will also be discussed in Stresa, after the United States this week unveiled steep tariff hikes on a raft of Chinese imports, though the issue is not on the formal agenda of the meeting, the official said.

Italy has reservations about the use of tariffs because of their disruptive impact on world trade.

With a trade truce over digital services taxes between the US and several European countries set to expire in June, Italy will promote last-ditch talks to prevent the failure of plans for a global minimum tax on multinationals.

The first pillar of that agreement aims to reallocate to the countries where companies do business the rights to tax about $200 billion in corporate profits.

The official said the negotiations have made no progress ahead of next week’s meeting.