No agreement in sight: At the meeting in Italy, Christian Lindner discussed with his counterparts how frozen assets should finance Ukraine. A complex debate.
The clouds hang low over Lake Maggiore. But it’s not raining, at least. Christian Lindner, FDP, without a tie this evening, treats himself to a quick look over the lake, just a very quick one. Then he gets down to business. “It looks like a holiday here, but we have a lot of work to do,” says the Vice-Chancellor, nodding emphatically into the television camera.
Please don’t let anyone get the idea that the German finance minister is taking a break from the budget dispute of the traffic light coalition in front of a picturesque backdrop. Where Lindner is, of course, work is done. The meeting of the G7 finance ministers in Stresa, northern Italy, may not be quite as exhausting as the budget negotiations with the unreasonable Social Democrats and Greens at home, but there is a bit of dispute here too.
For months, the leading western industrial nations have been wrangling over how to deal with the frozen Russian assets. How could the money be used sensibly to finance Ukraine’s long-term defensive struggle? The issue is up to 300 billion dollars that were frozen in the West after the Russian war of aggression, especially in Europe. And the question is how far one can go without setting a problematic precedent. Isn’t the global economic order based on reliable agreements that no one should just unilaterally terminate?
The debate is in Christian Lindner’s interest
The finance ministers want to deal with the matter on Saturday, and their Ukrainian counterpart is also expected to attend. “I don’t expect any decisions; the matter is too complex for that,” said Lindner at the lake. “Far too many questions remain unanswered.” There are new proposals from US Treasury Secretary Janet Yellen that they want to discuss. The end result will probably be a declaration of intent, an order to the heads of state and government to continue working on a solution at their G7 summit in mid-June.
Lindner can take comfort in the fact that the debate is going in his direction. At the end of February, at the meeting of the G20 finance ministers in Brazil, the USA had pushed for the assets to be confiscated in order to support Ukraine. The German government and other European states, on the other hand, wanted from the outset to only use the interest accruing on the Russian central bank money – if at all. The European Union has now passed a corresponding resolution on this. “This is legally secure and will help Ukraine quickly,” praises Lindner. Revenues of around three to five billion euros are realistic, depending on how interest rates develop. Revenues of 15 to 20 billion euros are expected by 2027.
Why not confiscate the assets themselves? The finance minister fears that this approach would set a precedent that could permanently damage state immunity. This principle of international law protects assets of states abroad from confiscation. But it regulates much more because it generally stipulates that one state may not judge another. Germany, for example, likes to invoke this when it comes to reparations claims from former colonies such as Namibia.
What is behind the US initiative?
The USA’s offensive advance in the spring can be explained by domestic political reasons. At the time, a 61 billion euro aid package for Ukraine was stuck in Congress. It was unclear whether and when it would be approved. President Joe Biden’s government was under pressure to find and promote alternative financing options. The package has now been approved, the money can flow, and no one in Stresa is talking about wanting to confiscate the assets themselves. But the USA remains adamant that it does not just want to use the proceeds.
US Treasury Secretary Janet Yellen has just outlined her latest proposal in an interview with the New York Times. Her idea: The G7 states will grant Ukraine a loan, which they will then secure with the interest on the frozen assets. This leverage could probably mobilize up to 46 billion euros. A payout should therefore be possible this summer.
Why the renewed American initiative? Observers see it as an attempt to make Ukraine’s financing more independent in the long term. More independent, above all, of the twists and turns of US politics. After all, no one knows how the presidential election in November will turn out. Even if Biden were to win against Donald Trump, he would still be dependent on the majority in Congress, where parts of the Republicans had already held up the latest package.
And what does Russia say about this?
The European G7 states are amused and even surprised by the American persistence on this issue. After all, the frozen assets mainly concern around 210 billion euros of the Russian central bank, which are held by the Brussels-based financial institution Euroclear. In the USA, on the other hand, only around 4.6 billion euros are held. So Yellen is primarily talking about other people’s money. And what exactly does her plan look like?
There is not much to be learned about this in Stresa. No one here knows more than the public statements of the US Treasury Secretary. A detailed proposal? Apparently not yet available. Many questions remain unanswered: What happens, for example, when the war ends and Russia can once again access its assets in the West? Who will then be liable for the outstanding loans to Ukraine that were once secured with the proceeds?
It is rather unlikely that this meeting of finance ministers will provide conclusive answers. “First of all, we are satisfied with what we have already achieved and what would have been unthinkable a few months ago,” praises Lindner.
Russia, by the way, considers the use of the proceeds from its frozen assets to be theft. It is a violation of all norms of the global economic system, Kremlin spokesman Dmitry Peskov said on Wednesday. A response to such a step is being worked on.
Source: Stern
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.
