By Benjamin Fox

NAIROBI - The preparations for next week’s G7 summit in southern Italy have been overshadowed by the European elections.

Even so, the summit in Apulia, which starts on 13 June, will be a major diplomatic test for the EU, and particularly Italian prime minister Giorgia Meloni.

Leaders are expected to discuss a plan to use windfall profits generated by Russian assets seized by the West since Russia’s full-scale invasion of Ukraine in 2022. Around $300 billion [€277bn] of Russian assets are in the hands of Euroclear, a securities depository based in Brussels, which are generating annual profits of around €3bn per year.

Under the G7 plan, which EU finance ministers are expected to debate after the summit, profits from the frozen assets could service the interest and capital of a loan to Ukraine by the international community.

Following a remote Eurogroup meeting on 5 June, Irish finance minister and eurogroup chair Paschal Donohue, said “the discussion among ministers showed appreciation for the constructive engagement with G7 partners in this regard and full support for it to continue.”

US Treasury Secretary Janet Yellen has said the loan could be worth $50 billion, although the terms and size of the loan are still being debated.

However, much of the rest of the three day gathering is set to focus on Africa.

Meloni, who holds the G7 presidency this year, has invited an unprecedented five African heads of state, as well as African Union commission chair Moussa Faki Mahamat.

The Africa focus is not a surprise.

Since unveiling her ‘Mattei plan’, which aims to support African governments on energy, health and education policy, at a summit in January attended by more than two dozen African leaders and European Union officials, the Meloni government has briefed that it wants to make African development a central theme of its G7 presidency.

Italy has a tradition of relatively close relations with Mediterranean countries such as Tunisia, Libya, partly Algeria and Egypt as well, but less so with sub-Saharan Africa.

The new 'Mattei' plan

Within the context of Meloni’s new ‘Mattei’ plan – named after Enrico Mattei, the former chairman of Italian oil and gas giant ENI - we can expect some offers to Africa, including proposals to support clean energy and food security in Africa. A so-called ‘Food Systems Initiative’, that could be unveiled in Apulia, aims to provide technical support to African nations to help them integrate food provision in their climate plans.

Italian officials are also pushing for the G7 to agree a plan to develop new financial instruments with the African Development Bank to help bolster growth on the continent.

Diversifying energy supply and migration control are two key priorities for Meloni’s nationalist government, which explains the presence of leaders from Algeria, Egypt and Tunisia.

Italy is also concerned about the effects on employment from AI on Africa leading to higher migration.

The first Mattei Plan operations include a contribution of €75 million to finance Eni's biofuels supply chain in Kenya.

More likely to be contentious are debates on a new debt restructuring programme for poor countries.

Kenya’s president William Ruto who, together with South Africa’s Cyril Ramaphosa, the latter at his first international gathering since the African National Congress lost its parliamentary majority last week for the first time since the end of apartheid, has been leading the campaign for leaders to commit to ambitious financing and debt restructuring.

Ahead of the summit, Ruto has urged G7 leaders to "demonstrate solidarity with Africa" by committing to support debt-restructuring and cancellation, as well as make provisions for greater concessional and longer-term development financing. That means, among others, agreeing to reallocate the International Monetary Fund’s Special Drawing Rights to the African Development Bank, and committing funds to the International Development Association, he says.

Earlier this week, US president Joe Biden’s press secretary Karine Jean-Pierre told reporters that leaders “will also redouble commitments to support developing countries seeking to make investments in their future and to help strengthen food security and health financing.”

The IMF, meanwhile, has approved the use of SDRs – the fund’s reserve currency – worth up to $20bn for the acquisition of hybrid capital instruments by development banks.

G7 leaders are also likely to use the summit to make new financial commitments to the International Development Association, the arm of the World Bank which provides soft loans to developing countries, and which is meant to be replenished every three years, including in 2024.

On debt, however, there is likely to be little movement. The communiqué following a G7 Finance Ministers and Central Bank Governors’ meeting between 23-25 May contained no new commitments on debt treatment, despite a group of countries, including Sri Lanka, Ghana and Zambia having completed – or are close to completing – multi-billion euro debt relief deals with creditors.