President of the European Commission Ursula von der Leyen with President of Ukraine Volodymyr Zelenskyy at the G7 meet in Italy. Photo courtesy: X/@vonderleyen

Ukraine, which has been resisting a Russian invasion for more than two years now, is set to get a loan of USD 50 billion from “windfall profits” earned on frozen Russian assets. This development follows leaders of the Group of Seven (G7) nations agreeing to such a deal.

President of the European Commission Ursula von der Leyen posted on the social network X late last night: “The G7 has agreed to provide Ukraine with loans worth around $50 bn by end of year. We’ll use the windfall profits from Russia’s sovereign assets to repay them. This builds on EU action, where we are already directing these windfall profits to Ukraine’s defence & reconstruction.”

The Associated Press reported today that the specifics of the Ukraine loan deal were being “hashed out by G7 leaders at their summit in Italy”. The G7 summit runs from June 13 to 15.

President of Ukraine Volodymyr Zelenskyy, who was at the G7 summit, said that giving his country a loan using Russian assets was “a vital step forward in providing sustainable support for Ukraine in winning this war”.

Explaining the lending process, AP said: “Most of the money would be in the form of a loan mostly guaranteed by the U.S. government, backed by profits being earned on roughly $260 billion in immobilized Russian assets. The vast majority of that money is held in European Union nations.”

Some of this USD 50 billion loan could include contributions of nations supporting Ukraine in its efforts to push back Russia.

Russian assets held outside Russia may have been frozen as part of international sanctions, but those assets cannot be confiscated altogether without crossing some legal boundaries. This is why the profits generated from those assets are being rolled into a loan for Ukraine.

To work around the legal barrier, the European Union has accumulated the profits from the Russian assets and plans to use it for Ukrainian benefit. “That pot of money is easier to access,” said AP.

The massive loan will help Ukraine shore up its military and begin reconstruction of its destroyed cities wherever possible.

While at the G7 summit, President Zelenskyy met Indian Prime Minister Narendra Modi. They talked about the Black Sea corridor, whose functioning is vital for Ukraine to sell its grain in overseas markets; and about the Ukraine-led peace summit being hosted by Switzerland right after the G7 summit.

“I thank Prime Minister Modi for sending a high-level delegation to the [peace] Summit,” wrote Zelenskyy on X.