G7 agrees to a $50 billion financing for Ukraine from Russian assets.
The G7 has agreed to utilize blocked Russian assets to fund $50 billion (£39 billion) for Ukraine to combat invading Russian military.
US President Joe Biden stated that it was "another reminder to Russia that we're not backing down," but Moscow has warned "extremely painful" retaliation.
The funds are not scheduled to come until the end of the year, but they are viewed as a long-term solution to help Ukraine's war effort and economy.
At the G7 conference in Italy, Ukrainian President Volodymyr Zelensky and Mr Biden inked a 10-year bilateral security agreement between Ukraine and the United States, which Kyiv described as "historic".
The deal envisions US military and training assistance to Ukraine, but it does not commit Washington to sending troops to fight alongside its friend.
Following Russia's full-scale invasion of Ukraine in 2022, the G7 and the EU froze approximately $325 billion in assets.
The pot of assets generates approximately $3 billion in interest every year.
Under the G7 arrangement, the $3 billion will be used to pay off the annual interest on the Ukrainians' $50 billion debt from international markets.
President Biden said the $50 billion loan will "put that money to work for Ukraine and send another reminder to [Russian President Vladimir] Putin that we're not backing down" during a joint news conference at the summit's venue in Puglia, southern Italy.
The US leader emphasized that Mr Putin "cannot wait us out, he cannot divide us, and we will support Ukraine until they win this war.
" President Zelensky praised his US and other allies for their continuous support.
In reference to the new security agreement, he stated: "It's a truly historic day, and we have signed the strongest agreement between Ukraine and the United States since our independence [in 1991]."
The G7 group of rich nations, which includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, has been a significant financial and military supporter to Ukraine as it battles to restrain occupying Russian forces.
Other G7 leaders praised the $50 billion loan agreement, with UK Prime Minister Rishi Sunak hailing it as "game changing".
The $50 billion loan is a sizable sum when compared to the $61 billion in US military funding agreed to in May.
Some in Kyiv who had been pressing for this cash had hoped that the G7 would release the entire $300 billion frozen fund, rather than just the interest. The European Central Bank had ruled this out.
Unlike the US aid package, which resulted in more missiles being supplied to the front lines, this money will most likely not come until the end of the year, leaving little impact on the current trajectory of the war.
For now, Ukraine claims it still desperately needs more weapons, especially air defense systems to blunt Russia's missile and drone attacks on its towns and power stations, as well as long-awaited F-16 fighter jets, which it expects will start coming as early as this summer.
At the G7 conference, Mr Zelensky stated that the new security deal included US delivery of the airplanes.
The financing agreement is also highly symbolic for Ukraine. Its attacker is now compelled to pay not just for the devastation it has caused, but also for Ukraine's defense.
One of Mr Zelensky's closest aides believes that the West's choice to punish Russia in this manner represents a watershed moment in the war.
However, the financing is unlikely to convince Russia to abandon its campaign in Ukraine.
The majority of the Central Bank of Russia's frozen assets are held in Belgium.
According to international law, governments cannot seize those assets from Russia and deliver them to Ukraine.
Several hours before the G7 decision was announced, Russian Foreign Ministry spokesperson Maria Zakharova warned of "extremely painful" punitive actions.
