Ukraine can neither survive nor succeed militarily without financial assistance. Meeting on Thursday, June 13 at Borgo Egnazia, near Bari in southern Italy, G7 leaders agreed in principle to provide a $50 billion loan to Kyiv by the end of the year. This arrangement has been discussed at length over the past few months by the world's seven wealthiest democracies – Canada, France, Germany, Italy, Japan, the UK, the US and the European Union. The goal is to activate this new credit line before Donald Trump's potential return to the White House in January 2025.

In an unprecedented move, this loan would be repaid over the years from the interest generated by Russian assets tied up abroad. However, the project is creating friction between Washington, Paris and Berlin. The G7 finance ministers will have to overcome these differences to finalize the practical details. Joe Biden and Volodymyr Zelensky praised a "historic agreement," without waiting for further details. "It's only fair that Russia should pay," stressed the Ukrainian president, after signing a bilateral security agreement with the US and Japan on the sidelines of the summit. "This is a signal that financial aid to Ukraine will cost European taxpayers nothing, since it will be financed by the interest generated by Russian assets," said European Commission President Ursula von der Leyen.

In recent months, the countries of the European Union (EU) have resisted pressure from the US and Ukraine to confiscate frozen Russian assets in Europe – some €300 billion – to finance Ukraine's war effort and reconstruction. The EU 27 took a first step in early May by adopting an agreement to seize the income from these assets, worth between 2.5 and 3 billion euros a year. According to EU member states, these sums will be used this year to finance European arms deliveries to Kyiv.

The European Union members have yet to establish a mechanism for permanently freezing the Russian assets in the future. Currently, sanctions are renewed every six months, at the risk of being blocked by a country like Hungary. Additionally, while the US, Canada and the UK are ready to provide the promised sums, France and Germany are dragging their feet. French officials are proposing that the funds should come from the EU instead.

One thing is certain: financial assistance is crucial, not only to support the war effort, but also to keep the economy afloat and help rebuild a country where half the energy infrastructure has been destroyed since winter. "The budget deficit is expected to reach $43 billion in 2024, and this will largely be covered by international aid," said Ukrainian Finance Minister Serhi Marchenko.

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