Yellen says Ukraine loan plan has support, more work needed By Reuters

By David Lawder

STRESA, Italy (Reuters) – U.S. Treasury Secretary Janet Yellen said on Saturday that a loan for Ukraine backed by the income from frozen Russian sovereign assets is the main option for G7 leaders to consider in June, but added that she doesn’t want to “take anything off the table as a future possibility.”

Yellen told reporters at the end of a G7 finance meeting in northern Italy that the plan has broad support but there is “quite a bit of work to be done” to make it a reality. The 27-member European Union also needs to endorse it, she said.

The G7 finance ministers and central bank governors agreed to explore ways of using the future income from some $300 billion in frozen Russian assets to help Ukraine, according to a draft statement expected to be issued on Saturday. The assets, mostly held in Europe, were immobilized in February 2022.

Yellen has said a loan based on the income could give Kiev as much as $50 billion up front, demonstrating to Russia that combined with EU and U.S. funding, Ukraine has ample resources to defend itself.

“It needs to be fleshed out within the EU so that it can become a proposal that the EU endorses, and that’s a lot of countries,” Yellen said of the loan plan. “It’s not a given, so I’m not saying this is a totally done deal.”

G7 finance leaders will put a lot of work into the plan over the next several weeks to get it “fleshed out enough” for G7 leaders to consider at a summit in Italy’s southern Puglia region in June, she said.

CHINA CONCERNS

Yellen also said G7 finance ministers voiced “broad-based concerns” about China’s vast subsidies for advanced manufacturing and the potential for harm to their own economies. They agreed to monitor the situation closely and noted that it may be appropriate for countries to take trade measures to counter China’s industrial policies.

China also may retaliate against the U.S. for new tariffs on Chinese electric vehicles, solar products, semiconductors and other key products, but Yellen noted that the action targeting $18 billion worth of Chinese imports this was not a broad one.

The U.S. imported $427 billion of goods from China last year and exported $148 billion worth to China.

“We’ve tried to make this rather targeted,” Yellen said. “I would hope that the Chinese would be judicious in their choice on what to do.”