By Christian Kraemer and David Lawder
STRESA, Italy (Reuters) -Finance chiefs from the Group of Seven industrial democracies began a two-day meeting in Italy on Friday seeking to present a common front on the need to provide a loan to Ukraine and oppose China’s “unfair” industrial policies.
However, comments from officials ahead of the gathering in Stresa, northern Italy, suggest no hard details will emerge on a U.S push for a loan to Ukraine backed by the future income from some $300 billion of frozen Russian assets.
“We will be putting a proposal to use the windfall profits for the Russian assets for the years to come,” French Finance Minister Bruno Le Maire told reporters ahead of the opening session, a broad review of the global economy.
U.S. Treasury Secretary Janet Yellen has said a loan could amount to some $50 billion, but that no amounts have been agreed.
Yellen’s Undersecretary for International Affairs Jay Shambaugh told CNBC on Friday he did not expect ministers to discuss technical aspects such as the structure of the loan, who would manage it or how it would be backstopped.
“That’s probably a little bit more into the weeds than we expect the ministers to discuss in fine detail, but we think they’ll make important progress on the principle,” he said.
The ministers will be joined on Saturday by Ukraine’s Finance Minister Serhiy Marchenko, whose war-torn country is struggling to contain a Russian offensive in the north and the east, more than two years after Moscow invaded.
The European Union on Tuesday finalised its own deal to use the “unexpected and extraordinary” profits earned by European-based depositories holding the Russian assets, expected to yield 15-20 billion euros ($37.93 billion) for Ukraine by 2027.
Ukrainian Foreign Minister Dmytro Kuleba thanked the EU for the decision but reiterated that Kyiv hoped for the full seizure of the Russian assets, not just the interest – something several European countries have ruled out for legal reasons.
German Finance Minister Christian Lindner told reporters on Friday the G7 was now discussing a “legally secure” loan proposal though “many legal and technical issues are still unresolved.”
A European negotiator in Stresa said the final communique would contain “positive language” on the subject and present options for G7 heads of government to consider at a summit in the southern Italian region of Puglia on June 13-15.
AVOIDING TRADE WAR
Combating China’s growing export strength will be another central theme of the meeting, after the U.S. last week unveiled steep tariff hikes on an array of Chinese imports including electric vehicle batteries, computer chips and medical products.
The United States is not calling on its partners to take similar measures, but Yellen said on Thursday she wanted the U.S’ G7 allies – Japan, Germany, France, Britain, Italy and Canada – to show they stood with Washington.
France’s Le Maire said it was necessary to avoid a trade war with Beijing, which was “our economic partner”, but the G7 needed to protect its industrial interests in the face of China’s “unfair trade practices.”
Germany’s export-driven economy would have much to lose from an escalation of trade tensions and Lindner told reporters that “trade wars are all about losing, you can’t win them.”
However, Italian Economy Minister Giancarlo Giorgetti, chairing the Stresa gathering as Rome holds the G7 presidency this year, said it may only be a matter of time before the European Union followed the U.S. lead on tariffs.
“The United States has taken very tough decisions and Europe will probably have to consider whether to do the same,” he told Italian state television RAI on Friday.
Italy had been hoping to use the summit to revive blocked talks on a global minimum tax on multinationals, but Giorgetti said the deal would not be finalised by June, as was previously planned.
He said the U.S, India and China all have reservations over the terms of the deal, which was signed by around 140 countries in 2021 but has never been fully implemented.
The G7 will also address a proposed global wealth tax on billionaires, promoted by Brazil and France among the broader Group of 20 developed countries.
However, Yellen said on Thursday the U.S. could not back it in the formulation currently proposed, and Lindner said the world had enough on its plate to reform corporate taxation.
“The German government therefore views new components of a global tax agenda with the greatest scepticism,” he said.
($1 = 0.9227 euros)
(Additional reporting by Giuseppe Fonte and Jan Strupczewski, writing by Gavin Jones, editing by Keith Weir and Susan Fenton)
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