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G7 finance summit kicks off seeking unity on Ukraine, China
Global Banking & Finance Review®
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By David Lawder and Gavin Jones
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.
“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.
U.S. Treasury Secretary Janet Yellen has said a loan could amount to some $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 offensive 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 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 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 U.S., nor China nor Europe nor any country in the world,” he said.
“Nevertheless, we have an issue with the unfair trade practices, 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 U.S. 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 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.
Yellen said on Thursday the U.S. 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.
(Additional reporting by Giuseppe Fonte, editing by Keith Weir)
A loan is a sum of money that is borrowed and expected to be paid back with interest. Loans can be used for various purposes, including purchasing assets or funding projects.
Financial stability refers to a condition where the financial system operates effectively, allowing for the smooth functioning of financial markets and institutions without significant disruptions.
Economic growth is the increase in the production of goods and services in an economy over a period of time, often measured by the rise in Gross Domestic Product (GDP).
A global minimum tax is a tax rate that countries agree to impose on corporations to prevent them from shifting profits to low-tax jurisdictions, aiming to ensure fair taxation globally.
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