G7 agrees on use of frozen Russian assets

On June 12, the French President's Office said that leaders of the Group of Seven (G7) industrialized nations agreed to use profits from frozen Russian assets to provide Ukraine with a $50 billion loan by the end of this year.

An official at the French President's Office said the agreement was reached ahead of the G7 summit - taking place in Italy from June 13-15 with a focus on supporting Ukraine.

G7 leaders agreed to use the proceeds from frozen Russian central bank assets estimated at 300 billion euros ($325 billion) to support Ukraine by providing it with a $50 billion loan.

However, the source added that if for some reason Russian assets are released or the interest earned on these assets is not enough to provide the above loan to Ukraine, the countries will have to consider how to share the responsibility.

According to the official, this was initially an American initiative and was then discussed by other countries.

US President Joe Biden is expected to meet his Ukrainian counterpart Volodymyr Zelensky on June 13 on the sidelines of the G7 Summit in Italy.

Meanwhile, Russia has said any move to divert profits from its frozen assets would be “asset expropriation,” violating the rules and norms of the international economic and financial system.

Russian press on May 26 quoted the country's Finance Minister Anton Siluanov declaring that Moscow will respond if Western countries "illegally use" Russian assets.

Previously, on May 23, President Vladimir Putin signed a decree allowing Russia to take US assets, including securities, to compensate for Moscow's assets frozen and confiscated by Washington.

Regarding the imposition of sanctions on Russia, on June 12, the US said it had expanded its sanctions, including targeting China-based companies that sell semiconductors to Russia.

The US Commerce Department said it is targeting companies in Hong Kong that sell semiconductors to Russia, a measure that could affect nearly $100 billion worth of high-priority goods to Moscow, including memory chips.

A senior US Commerce Department official added that the department will also expand the list of items that Russia cannot import from other countries, not only products of US origin but also goods with US trademarks, meaning products made with US technology.

The US Treasury Department also said it had imposed sanctions on important institutions in the Russian financial system, including the Moscow Stock Exchange (MOEX).

MOEX and its related subsidiaries facilitated clients to evade sanctions by concealing their identities, according to a senior ministry official.

After the US introduced new sanctions, MOEX was forced to immediately suspend transactions in USD and euro.

The US Treasury Department has warned that foreign financial institutions could lose access to the US financial system if they transact with the Russian economy.

The ministry is also moving to restrict Russia's military engineering sector from exploiting certain US information technology services and software, and together with the State Department, is sanctioning more than 300 individuals and entities in Russia and abroad, including in Asia, Europe and Africa.