G-7 Outlines $50 Billion Ukraine Loan Deal, New Security Agreements

Welcome back to World Brief, where we’re looking at G-7 and NATO security commitments for Ukraine, new U.S. sanctions on Russia, and controversial reform bills in Argentina.

Bloc Cohesion

G-7 leaders from Canada, France, Germany, Japan, Italy, the United Kingdom, and the United States convened in Fasano, Italy, on Thursday for a three-day summit to present unity in the face of global threats. But political turmoil at home underpinned much of their discussions as heads of state and government tried to negotiate agreements that would be difficult for potential future leaders to undo.

Italian Prime Minister Giorgia Meloni, who is hosting this year’s summit, emerged from European Union parliamentary elections over the weekend as a clear victor. But the other G-7 states face unstable political home fronts. French President Emmanuel Macron called for snap elections on Sunday after the country’s far-right National Rally party outperformed Macron’s own party in the EU elections. And German Chancellor Olaf Scholz was forced to reckon with the far-right Alternative for Germany party becoming the country’s second-most popular party after Europe’s elections concluded.

Elsewhere, U.S. President Joe Biden is polling neck-and-neck with former U.S. President Donald Trump, British Prime Minister Rishi Sunak risks losing snap elections in July to the opposition Labour Party, and both Japanese Prime Minister Fumio Kishida and Canadian Prime Minister Justin Trudeau are facing growing public discontent.

Still, G-7 leaders attempted to steer the conversation on Thursday toward bloc cohesion in the face of international challenges, particularly Russia’s war in Ukraine. For the summit’s first day, they agreed to issue Ukraine a $50 billion loan to help Kyiv rebuild its infrastructure. The loan would be funded using interest from the roughly $280 billion of frozen Russian assets in Western banks.

The deal’s announcement coincides with the United States and Ukraine signing a new security agreement on Thursday that pledges long-term U.S. support for Kyiv. It includes a commitment to work with the U.S. Congress to continue funding Ukraine’s war effort but does not promise to deploy U.S. forces in the event of a future attack. “By signing this, we’ll also be sending Russia a signal of our resolve,” U.S. National Security Advisor Jake Sullivan said. “If [Russian President] Vladimir Putin thinks he can outlast the coalition supporting Ukraine, he’s wrong.”

Ukrainian President Volodymyr Zelensky attended the G-7 summit on Thursday. Meloni also invited the leaders of Algeria, Argentina, Brazil, India, Kenya, Turkey, and the United Arab Emirates as well as Pope Francis—signaling the bloc’s desire to attract non-Western allies and curb its elitist reputation. The G-7 plans to also discuss investment in Africa, climate change, global migration, China’s industrial capacity, and the risks of artificial intelligence.

Meanwhile, NATO defense ministers gathered in Brussels on Thursday for a two-day conference to discuss Ukraine’s long-term security. “The whole idea is to minimize the risk for gaps and delays as we saw earlier this year,” NATO chief Jens Stoltenberg said, referring to the United States’ stalled aid package. The holdup “is one of the reasons why the Russians are now able to push and to actually occupy more land in Ukraine.”

The meeting follows Hungarian Prime Minister Viktor Orban promising on Wednesday not to veto NATO support for Kyiv, though he reiterated that Budapest would not provide Ukraine with military funds or personnel. NATO itself does not send weapons to Kyiv, but its members jointly make up more than 90 percent of the country’s military support.

Today’s Most Read

• Modi’s Taiwan Ties Have Rattled China by Rishi Iyengar
• Israel and Lebanon Won’t End Up at War by Ali Hashem
• Putin Cuts Ukraine’s Power by Keith Johnson

What We’re Following

U.S. sanctions on Russia. The Moscow Exchange halted trading in euros and U.S. dollars on Wednesday after Washington announced new sanctions targeting Russian financial systems. The measures aim to limit the Kremlin’s access to foreign markets as it continues its two-year war against Ukraine. “Russia’s war economy is deeply isolated from the international financial system, leaving the Kremlin’s military desperate for access to the outside world,” U.S. Treasury Secretary Janet Yellen said. The measures do not directly restrict transactions related to energy so as to avoid a fuel price crisis, according to the Biden administration.

The U.S. president also expanded “secondary” sanctions against Russia on Wednesday, giving Washington the ability to blacklist any foreign banks that try to do business with Moscow. The United States is particularly worried about China, which has recently increased its shipments of microchips and other materials critical to Russia’s war effort, though Beijing has so far not sent weapons to Moscow. Beijing’s yuan ousted the U.S. dollar last year to become the Moscow Exchange’s most traded currency.

Milei’s reform bills. In a marathon session, Argentina’s Senate narrowly approved President Javier Milei’s controversial reform package on Thursday to try to jump-start the nation’s struggling economy. The two bills include cuts to state spending, incentives for foreign investment, a plan to privatize several state-owned companies, and an expansion of presidential powers over some economic policy. “This is a triumph for the Argentine people and the first step towards recovering our greatness,” Milei’s office said.

But the Senate failed to pass an article that would have lowered the income tax threshold, and Milei’s party made several concessions to opposition senators, including agreeing not to sell off Argentina’s main airline, post office, or public media company. Both bills now face a final vote in Buenos Aires’s lower house, where they are expected to pass.

Rafah offensive. Israeli forces advanced farther into western Rafah on Thursday in one of the heaviest nights of bombardment on the Gaza city yet. Locals reported that Israeli attacks by land, air, and sea moved toward al-Mawasi, which Israel designated as a humanitarian area when it began its Rafah offensive in May. The Israeli military said the “intelligence-based, targeted operations” aimed to eliminate Hamas’s last intact combat units in Rafah.

Cease-fire talks remain ongoing, as Qatari, Egyptian, and U.S. mediators are reportedly encouraging Hamas to accept the United Nations-backed truce deal without amendments. Israeli officials have said they will not send a delegation to Cairo or Doha, Qatar, until the militant group agrees to accept the original deal. “I haven’t lost hope,” Biden said while in Italy for the G-7, though he did admit that the likelihood of a cease-fire deal being reached in the next few days remains low.

Odds and Ends

A local Chinese history buff recently got more than he bargained for. The collector purchased four discarded books for less than $1 at a neighborhood sale, only to find that they contained confidential military documents, Beijing’s Ministry of State Security posted on Thursday. The surprised customer reported his findings to the government. Further investigation discovered that two military employees in charge of shredding more than 200 books instead sold them to a local recycling plant for just $2.75. Agents have since seized the remaining volumes. Stay tuned to hear if this FP writer achieves similar success at local yard sales this weekend.