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G7 finance chiefs seek common line on Russian assets, China
By Gavin Jones and Giuseppe Fonte
ROME (Reuters) – G7 finance chiefs meeting in Italy this week will try to find consensus on how to use frozen Russian assets to help Ukraine’s war effort and how to deal with China’s growing export strength in key markets, they said authorities.
Finance ministers and central bankers from the wealthy Group of Seven democracies – the United States, Japan, Germany, France, the United Kingdom, Italy and Canada – will meet in the northern Italian city of Stresa on Friday. fair and Saturday.
G7 negotiators have been discussing for weeks the best way to exploit around $300 billion in Russian financial assets, such as major currencies and government bonds, which were frozen shortly after Moscow invaded Ukraine in February 2022.
The United States is pushing to find a way to anticipate the future return on these assets, whether through issuing bonds or, more likely, granting Ukraine a loan that it says could provide it with up to 50 billion dollars in the short term.
However, many legal and technical aspects need to be resolved, meaning a detailed agreement is not expected to be reached in Stresa, several officials said.
In this case, informal talks should continue with the aim of presenting a proposal to the G7 heads of government, who will meet in Puglia, in southern Italy, from June 13th to 15th.
The idea of the G7 issuing a bond to Ukraine appears to have lost ground, with the US now proposing a loan guaranteed by the income stream from frozen assets.
Who would administer the loan – the World Bank or some other body – how it would be guaranteed, how future profits could be estimated and what would happen in the event of a peace agreement with Russia are aspects still to be clarified.
European officials are particularly cautious, with one EU diplomat saying it would take “weeks, if not months” for a final decision to be made.
‘LEGAL IMPLICATIONS’
Italy holds the G7 presidency this year and its Economy Minister Giancarlo Giorgetti said last week that US proposals on the use of Russian assets had “quite serious legal implications” that still need to be clarified.
Japanese Finance Minister Shunichi Suzuki also stressed that any agreement must comply with international law.
Russia has repeatedly warned the West of the consequences if its assets were touched and accused Washington of intimidating Europe into taking more radical steps to thwart it in Ukraine.
The outlook for global trade will be another central theme at Stresa, after the United States last week unveiled sharp tariff hikes on a range of Chinese imports, including electric vehicle batteries, computer chips and medical products.
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Giorgetti said after the US decision that a “trade war” was being fought, reflecting geopolitical tensions, and warned of the risk of “fragmentation” of global trade.
The United States is not calling on its partners to take similar action against China, but one official said it is likely to push for the G7 statement to express shared concern over what it calls Beijing’s industrial “excess capacity.”
US Treasury Secretary Janet Yellen said in Frankfurt on Tuesday that the United States and Europe need to confront the threat of Chinese imports in a “strategic and united way” to keep manufacturers viable on both sides. of the Atlantic and promote the development of its national clean energy industries. .
Other topics to be discussed at Stresa, according to an official program issued by the Italian presidency, will include the impact of artificial intelligence on the global economy and a “take stock” of sanctions against Russia.
Taxation will also be on the agenda, with Italy seeking to relaunch an agreement on a global minimum tax on multinationals, which was signed by around 140 countries in 2021 but has not been fully implemented due to opposition in the US and other countries.
A proposal for a global tax on billionaires’ wealth, which has been promoted by Brazil and France among the broader Group of 20 developed countries, would also be discussed at Stresa, but has met resistance from the US, one of the officials said.
(Additional reporting by David Lawder in Washington and Julia Payne in Brussels; Editing by Alex Richardson)