The President of the Group of Seven (G7) is seeking to finalize a $50 billion loan to Ukraine that will be repaid using frozen Russian funds. Using Moscow’s money to pay for Kiev’s war effort will be a major escalation in the economic war Washington is waging against Russia. 

European Commission Executive Vice President Valdis Dombrovskis explained, “The G7 presidency is now aiming for a political commitment on participation in this … loans initiative around the end of October, which would allow all G7 lenders sufficient time to operationalize loans by the end of this year.”

The scheme calls for giving Ukraine $50 billion, which will be dubbed a loan. However, rather than Kiev repaying the money, funds from frozen Russian assets in G7 nations will repay the loan. 

The G7 includes the US, UK, France, Canada, Japan, Germany, Italy, and the European Union. The bulk of the money will come from members of the EU, $35 billion. 

Dombrovskis reports that Canada, the UK, and Japan are on board with the proposal. Washington is withholding support over unease that the EU will unfreeze the Russian funds, leaving no clear method for the loan to be repaid. The EU is seeking to alleviate the White House’s concerns by voting to extend the freezing of the Russian funds by three years. 

Using Russian money to fund the Ukrainian army’s killing of Russian soldiers will likely be viewed as a major provocation by Moscow. Throughout the conflict, the White House has waged an economic war – alongside the proxy war – against Russia in Ukraine. 

Washington and its allies have instituted numerous rounds of sanctions and other economic penalties against Moscow aimed at slowing the Kremlin’s war machine. However, the Russian economy has largely adapted to the sanctions, while cutting trade with Moscow has harmed some European economies.