US President Joe Biden wants the Group of Seven (G7) nations to make progress on plans to tap frozen Russian sovereign assets to help support Ukraine by the time the leaders meet in June, according to people familiar with the matter.

Russian President Vladimir Putin warned that Nato risks a nuclear conflict if it sends troops to aid Ukraine, ramping up pressure on Kyiv’s US and European allies just as his own forces go on the offensive.

Splits over the conflicts in Gaza and Ukraine prevented the Group of 20 finance chiefs from issuing a closing communiqué after their meetings in São Paulo.

Biden seeks plan to tap Russian assets for Ukraine aid at G7 summit

US President Joe Biden wants the Group of Seven nations to make progress on plans to tap frozen Russian sovereign assets to help support Ukraine by the time the leaders meet in June, according to people familiar with the matter.

G7 officials have been discussing options to use the $280-billion of immobilised Russian Central Bank assets, including using the money as collateral to raise debt or issuing guarantees against the frozen funds, said the people, who spoke on the condition of anonymity.

The debate comes as Ukraine faces a critical shortage of artillery and other ammunition while allies struggle to source supplies at speed, and as $60-billion of economic aid remains stuck in the US Congress. Biden has also privately told allies, according to people briefed on recent talks, that if Ukraine falls, he believes the international order will be upended for at least the next five decades.

The allies all concur that the funds should remain off-limits from Russia unless it pledges to help with Ukraine’s reconstruction, but they’re at odds over whether it would be lawful to seize them outright. G7 leaders are due to meet in Italy in June.

A spokesman for the White House National Security Council declined to comment.

Biden would like to see the frozen assets used to help fund Ukraine’s budget needs, and later toward Ukraine’s reconstruction, said the people. The president doesn’t think using the frozen funds replaces the need for aid, one of the people said.

The US view is that it’s not right that Russia gets to decide when to compensate Ukraine for the damage it has caused, according to the people.

France and Germany, along with the European Central Bank, have so far resisted taking any path that would lead to the funds being seized. They worry about Russian retaliation targeting European assets there, and also the potential impact on financial stability and the euro’s status as a reserve currency, Bloomberg previously reported.

Treasury Secretary Janet Yellen and others have downplayed most of those concerns. In Brazil this week, Yellen said the G7 should work together to explore seizing the assets themselves, or using them as collateral to borrow from global markets.

Read more:

• US and Europe at odds on tapping $280-billion Russian assets
• Seizing frozen Russian assets wins endorsement of legal experts
• Macron’s ambiguity on Ukraine backfires as allies baulk at troops

The UK and Canada are also in favour of seizing the assets, according to one of the people.

One challenge is that the vast majority of the funds are in Europe, mostly held through the Belgium-based clearing house Euroclear, and any agreement will need the backing of all G7 nations. Another challenge is finding an option deemed by all allies to be legally sound and that helps mitigate any risks to the euro.

Separately, the EU is slowly making progress on plans to at least apply a windfall tax to the profits generated by the immobilised funds. Last year the assets enabled profits of $4.8-billion.

On Wednesday, European Commission President Ursula von der Leyen suggested using those proceeds to fund weapons for Ukraine.

Russia has threatened to retaliate if Ukraine’s allies move on the assets and has explored options to stall any effort to seize the funds.

Putin warns Nato it risks nuclear war if troops sent to Ukraine

Russian President Vladimir Putin warned that Nato risks a nuclear conflict if it sends troops to aid Ukraine, ramping up pressure on Kyiv’s US and European allies just as his own forces go on the offensive.

“There’s been talk of sending Nato military forces to Ukraine,” Putin said Thursday in his annual address to the Federal Assembly of lawmakers and top officials. “We remember the fate of those who sent their contingents to our country before and this time the consequences for the potential interventionists will be far more tragic.”

The US and Europe “must understand that we also have weapons that can hit targets on their territory and that all this really threatens a conflict with the use of nuclear weapons, and therefore the destruction of civilisation,” Putin said. He listed new Russian strategic weapons that are entering military service including Sarmat intercontinental ballistic missiles capable of carrying nuclear warheads.

Read more: How serious is Putin’s threat to use nuclear weapons?: QuickTake

The threat came after French President Emmanuel Macron this week refused to rule out sending troops to Ukraine, an idea rebuffed by the White House and German Chancellor Olaf Scholz. That came as Russian troops were advancing in Ukraine, which is struggling to supply its forces with ammunition while more than $60-billion in US military aid is held up in Congress amid political disputes.

Europe is boosting defence production in response to Russia’s aggression. Still, Ukrainian officials are concerned Russia could gain momentum to break through defences by the summer unless allies increase the flow of ammunition, according to a person familiar with their analysis. Assessments in Kyiv of the battlefield situation are growing increasingly bleak.

Much of Putin’s flagship speech, which lasted a record two hours and six minutes, amounted to his manifesto for the 15-17 March presidential election that will prolong his almost quarter-century rule by another six years.

Read more: How Putin engineers longest Russia rule since Stalin: QuickTake

In language reminiscent of World War 2, which is known in Russia as the Great Patriotic War, he began his address by praising the contribution of citizens working around the clock at factories producing munitions and weapons for the army fighting in Ukraine.

“Everyone is playing their part for us to achieve victory,” said Putin, who reiterated that Russia remains committed to the goals of its February 2022 invasion.

Putin, 71, is already the longest-serving Russian ruler since Josef Stalin. Under constitutional changes adopted in 2020, he’s eligible to run for two more terms lasting to 2036, when he’ll be 83.

Ukraine and Gaza split prevents G20 from issuing communiqué

Splits over the conflicts in Gaza and Ukraine prevented the Group of 20 finance chiefs from issuing a closing communiqué after their meetings in São Paulo.

Brazil’s Finance Minister Fernando Haddad told reporters that the parties had been unable to agree on geopolitics, and that, as hosts, his government would issue what is known as a chair’s statement instead. The meetings ended on Thursday.

The statement, released minutes after Haddad’s comments, refers to “wars and escalating conflicts” without identifying them, as well as “geoeconomic fragmentation.”

People familiar with the matter said earlier that political disputes had created friction between some of the nations present, making a joint declaration impossible.

“In addressing the prospects for the global economy, Ministers exchanged views on ongoing wars, conflicts, and humanitarian crises, highlighting Ukraine and Gaza,” Brazil said in the text. “The Brazilian G20 Presidency noted that the finance track is not the most appropriate forum to resolve geopolitical issues and proposed that these issues shall continue to be discussed in relevant fora and meetings.”

This week’s meetings have broadly seen a split between a US-led bloc of advanced economies — which have strongly opposed Russia’s 2022 invasion of Ukraine and applied stringent economic penalties — and other countries that have been reluctant to back US sanctions, even if they’ve criticised the invasion. China, the world’s second-biggest economy, has tacitly sided with Russia over the conflict.

Read more: Two wars are poisoning the political debate everywhere

On the conflict in Gaza, most G20 members support the global consensus in favour of an immediate ceasefire. The US has vetoed United Nations resolutions demanding one.

Tension over such issues has overshadowed other parts of the G20 agenda in São Paulo, which is mainly focused on financial issues. Echoing an earlier draft, the text obtained by Bloomberg cites improved prospects for a “soft landing in the global economy” amid faster-than-expected declines in inflation rates.

Tusk says he’ll seek EU green deal changes to aid farmers

Polish Prime Minister Donald Tusk said he’ll push for changes to the European Union’s climate agenda to take the burden off the country’s farmers.

Polish farmers have taken to the streets in recent weeks and blocked border crossings with Ukraine and some other neighbouring countries as part of mounting protests. They’ve targeted what they call the uncontrolled influx of Ukrainian goods — as well as the EU’s so-called Green Deal, which aims to zero out greenhouse gas emissions by the middle of the century.

“This is not about rejecting the whole Green Deal,” Tusk told reporters on Thursday after meeting farmers. “But practically all of the Green Deal’s agricultural provisions are, especially now in the time of war and duty-free trade, another blow and must be suspended or withdrawn.”

Read More: Poland will analyze whether to ban Russian food imports

EU subsidies for farmers couldn’t be conditioned on observing Green Deal standards, he said. The premier said he’d meet farmers again next week as they plan another protest in Warsaw on 6 March. He’ll meet them before or after the protest, he said.

Tusk also said he’d talk to the leaders of Poland’s ruling coalition Friday about a parliamentary resolution designed to ban food imports from Russia and Belarus.

Ukraine fears Russia could break through defences by summer

Ukrainian officials are concerned that Russian advances could gain significant momentum by the summer unless allies increase the supply of ammunition, according to a person familiar with their analysis.

Internal assessments of the situation on the battlefield from Kyiv are growing increasingly bleak as Ukrainian forces struggle to hold off Russian attacks while rationing the number of shells they can fire.

Commander-in-Chief Oleksandr Syrskyi said on Thursday that mistakes by frontline commanders had compounded the problems facing Ukraine’s defences around Avdiivka, which was captured by Russian forces this month. Syrskyi said he’d sent in more troops and ammunition to bolster Ukrainian positions.

Pessimism among Ukraine and its allies has been mounting for weeks as they’ve seen Russian forces seize the initiative on the frontline with vital aid from the US held up in Congress. The fall of Avdiivka and several nearby villages is fuelling fears that Kyiv’s defences may not be able to hold.

Those losses should act as a wake up call to Ukraine’s allies, a European official said.

“Ukraine can start losing the war this year,” Michael Kofman, a specialist on Russia and Ukraine at the Carnegie Endowment for International Peace, said on the War on the Rocks podcast.

Russian President Vladimir Putin hasn’t given up his original goal of seizing major cities including the capital Kyiv and Odesa, according to Ukrainian intelligence assessments, the person said, asking for anonymity to discuss matters that aren’t public. If Russian forces reached Odesa, they would be able to shut off Ukraine’s crucial grain export routes through the Black Sea and also open up access to Moldova, where the breakaway region of Transnistria on Wednesday appealed to Moscow for political support.

Read more:

• War in Ukraine turning in Putin’s favour after months of stalemate
• Understanding the roots of Russia’s war in Ukraine: QuickTake
• Moldova’s rebel region appeals to Putin as its leverage slips
• Europe’s east is losing faith in its west over arming Ukraine

Depending on the results of the current campaign, Russia will decide whether to continue with a slow, grinding advance or to accumulate resources for a bigger strike to break through Ukrainian lines this summer, the person close to Ukraine’s leadership said.

Putin repeated on Thursday that he still planned to achieve the goals set out at the start of the invasion, which have remained unchanged since 2022, during an address to his Federal Assembly.

Ukrainian President Volodymyr Zelensky said Sunday that munitions shortages were affecting the battlefield situation and warned that Russia was planning a new offensive in the spring or early summer.

“It will be difficult for us in the coming months because there are fluctuations in the US that have an impact on some countries, though the European Union showed it is capable of being a leader with its support,” Zelensky said.

With Ukrainian forces desperate for more ammunition, some allies, led by the Czech Republic, are looking into buying about 800,000 artillery shells from outside the EU to give to Ukraine.

A major offensive would still be a challenge for the Kremlin after two years of war that have depleted its forces. Russian efforts to take Kyiv, Kharkiv and move on Odesa in the early weeks of the war failed spectacularly.

Despite Ukraine’s shortages, Russia would need far more soldiers but also heavy tanks and vehicles to launch an offensive, Admiral Rob Bauer, Nato’s military committee chairman, said in an interview on 17 February. So far, Moscow hasn’t been able to ramp up production quickly enough in those areas, he said.

Putin “has more artillery, he has an ability to replace a certain amount of missiles every month, which he’s using, but he’s not been fully successful in terms of the increase in, for example, tanks and armoured vehicles,” Bauer said.

He pointed to recent Ukrainian reports that, despite the loss of Avdiivka, Russian troops were killed at a high rate of seven for every soldier Kyiv lost.

“The one-to-seven ratio means he will need a lot of forces to defeat the Ukrainians,“ Bauer said.

Ukraine’s strategy is to try to hold the front line as much as possible until the second half of the year, when it may get F-16 fighter jets and western ammunition production is due to ramp up. That would allow Kyiv to plan for another possible counteroffensive in 2025. DM