The G7 finance chiefs, who are gathering this week in Italy, are expected to try to reach a consensus on how to deal with China’s increasing export power in important markets and how to use frozen Russian assets to support the war effort in Ukraine.
The Group of Seven affluent democracies—the US, Japan, Germany, France, Britain, Italy, and Canada—will bring together finance ministers and central bankers on Friday and Saturday in the northern Italian lakeside town of Stresa.
For weeks, G7 negotiators have been debating the best ways to take advantage of over $300 billion worth of Russian financial assets, including government bonds and major currencies, which were placed under lockdown soon after Moscow invaded Ukraine in February 2022.
In order to forward the future income from those assets, the US is pressing for a solution. This may involve issuing a bond or, more likely, giving Ukraine a loan that could give it access to as much as $50 billion in the near future.
A comprehensive agreement is not anticipated to be reached in Stresa, according to many officials, as numerous legal and technical issues still need to be worked out.
If so, unofficial discussions are scheduled to proceed with the goal of submitting a proposal to the G7 leaders of government, who are scheduled to convene in Puglia, southern Italy, from June 13–15.
Read more-
Spain, Norway, and Ireland will acknowledge Palestine.
The U.S. is now suggesting a loan secured by the revenue stream from the frozen assets, suggesting that the concept of the G7 issuing a bond for Ukraine may not have gained traction.
There are still questions about how the loan would be guaranteed, who would manage it (the World Bank or another organization), how future earnings would be calculated, and what would happen if Russia and the United States reached a peace agreement.
European diplomats are especially reticent; one stated that it would take “weeks if not months” to reach a decision.
‘LEGAL IMPLICATIONS’
This year, Italy is the G7 president. Giancarlo Giorgetti, Italy’s minister of economics, stated last week that the American plans regarding the use of Russian assets had “quite serious legal implications” that still require explanation.
Shunichi Suzuki, the Japanese Finance Minister, emphasized that any deal must abide with international law.
Russia has accused Washington of pressuring Europe to adopt more drastic measures to obstruct it in Ukraine and has warned the West repeatedly that there would be consequences if its assets were compromised.
Following the United States’ announcement this week of significant tariff hikes on a variety of Chinese goods, including computer chips, medical supplies, and batteries for electric vehicles, the prospects for international trade will also be a major topic of discussion at Stresa.
Following the U.S. action, Giorgetti stated that a “trade war” reflecting geopolitical tensions was being waged and cautioned about the possibility of “fragmentation” to global trade.
Although an official stated that the US is not urging its allies to take comparable action against China, it is expected to advocate for the G7 communiqué to register a shared apprehension over Beijing’s alleged industrial “overcapacity”.
The threat posed by Chinese imports, according to U.S. Treasury Secretary Janet Yellen, must be addressed by the United States and Europe in a “strategic and united way” in order to maintain manufacturing viability on both sides of the Atlantic and promote the growth of their own clean energy sectors.
An official program released by the Italian presidency lists the impact of artificial intelligence on the world economy and a “stocktaking” of sanctions against Russia as additional subjects to be discussed at Stresa.
The topic of taxes will also be discussed. Italy is attempting to resurrect an agreement on a worldwide minimum tax on multinational corporations that was agreed by about 140 nations in 2021 but has not yet been fully implemented because of opposition in the US and other countries.
One of the sources stated that while a worldwide wealth tax on billionaires, which has been pushed by France and Brazil among the larger Group of 20 industrialized nations, will be addressed at Stresa, the United States would not support it.