The G7 agreed to use frozen Russian assets to raise $50bn (£39bn) for Ukraine to help it fight invading Russian forces.
U.S. President Joe Biden said it was another reminder to Russia that “we will not back down,” but Moscow threatened “extremely painful” retaliatory measures.
The funding is not expected to be available until the end of the year, but is seen as a long-term solution to support Ukraine’s war effort and economy.
Also at the G7 summit in Italy, Ukrainian President Zelensky and Biden signed a ten-year bilateral security agreement between Ukraine and the United States, which Kyiv called “historic.”
The deal envisions U.S. military and training assistance to Ukraine but does not commit Washington to sending troops to fight for its ally.
Following Russia’s full-scale invasion of Ukraine in 2022, the G7 and the European Union froze assets worth approximately $325 billion.
The asset generates approximately $3 billion in interest annually.
According to the G7 plan, the $3 billion will be used to repay annual interest on $50 billion in loans to Ukraine on the international market.
President Biden told a joint press conference at the summit in Puglia, southern Italy, that the $50 billion loan would “put this money to work for Ukraine and serve as another reminder [Russian President Vladimir] Putin said we will not back down.”
The American leader stressed that Putin “cannot wait for us, he cannot divide us, and we will stand with Ukraine until they win this war”.
President Zelensky thanked the United States and other allies for their unwavering support.
Speaking about the new security deal, he said: “This is truly a historic day, we have signed the strongest agreement between Ukraine and the United States since independence. [in 1991]”.
The Group of Seven, made up of wealthy countries including Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, has been a key financial and military backer of Ukraine’s efforts to contain Russia’s occupying forces.
Other G7 leaders also welcomed the $50 billion loan deal, with British Prime Minister Sunak calling it a “game changer.”
Most of the assets frozen by the Russian Central Bank are held in Belgium.
Under international law, countries cannot confiscate these Russian assets and hand them over to Ukraine.
Hours before the G7 decision was announced, Russian Foreign Ministry spokesperson Maria Zakharova warned of “extremely painful” retaliatory measures.
