G7 finance summit kicks off seeking unity on Ukraine, China

G7 finance summit kicks off seeking unity on Ukraine, China
German Finance Minister Christian Lindner, United States Secretary of the Treasury Janet Yellen, Bank of Canada Governor Tiff Macklem, Canada's Minister of Finance Chrystia Freeland, Italy's Economy Minister Giancarlo Giorgetti, Bank of Italy Governor Fabio Panetta, Japan's Finance Minister Shunichi Suzuki, Bank of Japan Governor Kazuo Ueda, France's Minister for Economy and Finances Bruno Le Maire, Eurogroup President Paschal Donohoe, Bank of France Governor Francois Villeroy de Galhau, European Central Bank (ECB) President Christine Lagarde, International Monetary Fund (IMF) Managing Director Kristalina Georgieva, President of Germany's Federal Reserve Bundesbank Joachim Nagel, World Bank President Ajay Banga, attend a family photo session at the G7 Finance Ministers and Central Bank Governors' meeting in Stresa, Italy, May 24, 2024.
PHOTO: Reuters

STRESA, Italy — Finance chiefs from the Group of Seven industrial democracies began a two-day meeting in Italy on Friday (May 24) 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 US push for a loan to Ukraine backed by the future income from some US$300 billion (S$405 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.

"So let's compare the proposals. Let's see what is the most convenient, the most efficient, the most rapid proposal that could be put in place," Le Maire said.

US Treasury Secretary Janet Yellen has said a loan could amount to some US$50 billion, but that no amounts have been agreed. Other G7 officials involved in the negotiations voiced caution, citing thorny legal and technical aspects to be hammered out.

The ministers will be joined on Saturday by Ukraine's Finance Minister Serhiy Marchenko, whose war-torn country is struggling to contain a Russian offencive in the north and the east, more than two years after Moscow invaded its neighbour.

German Finance Minister Christian Lindner said many questions remained open on the loan proposal and he did not expect the G7 to reach any concrete decision in Stresa.

In that case, officials will continue to negotiate in the hope of making progress by the time G7 heads of government meet in the southern Italian region of Puglia on June 13-15.

Combating China's growing export strength will be another central theme of the meeting, after the US 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 US' G7 partners — Japan, Germany, France, Britain, Italy and Canada — to show they stood with Washington.

Avoiding trade war

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.

"A trade war is neither in the interest of the US, nor China nor Europe nor any country in the world," he said.

"Nevertheless, we have an issue with the unfair trade practises, with the high level of subsidies, and with (China's) industrial overcapacities."

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 US lead on tariffs.

"The United States have 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 US, 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.

Yellen said on Thursday the US could not back it in the formulation currently proposed.

Le Maire said on Friday that France would continue to push for the scheme. "It is no longer acceptable for the wealthiest to escape taxation and everyone — everyone — must pay their fair share," he said.

ALSO READ: World Court to rule on request to halt Israel's Rafah offensive

Source: Reuters

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