WEST TRYING TO STEER FROZEN RUSSIAN ASSETS TO UKRAINE
WASHINGTON — It’s been nearly two years since the United States and its allies froze hundreds of billions of dollars in Russian foreign holdings in retaliation for Moscow’s invasion of Ukraine. That roughly $300 billion in Russian Central Bank money has been sitting untapped as the war grinds on, while officials from multiple countries have debated the legality of sending the money to Ukraine.
The idea of using Russia’s frozen assets is gaining new traction lately as continued allied funding for Ukraine becomes more uncertain and the U.S. Congress is in a stalemate over providing more support. But there are tradeoffs since the weaponization of global finance could harm the U.S. dollar’s standing as the world’s dominant currency.
At this week’s World Economic Forum meetings in Davos, Switzerland, Ukrainian President Volodymyr Zelenskyy called for a “strong” decision this year for the frozen assets in Western banks to “be directed towards defense against the Russian war and for reconstruction” of Ukraine.
“Putin loves money above all,” he said. “The more billions he and his oligarchs, friends and accomplices lose, the more likely he will regret starting this war.”
Biden administration officials who previously dismissed the idea as legally cumbersome are showing growing openness to the idea.
Penny Pritzker, the Chicagoan and U.S. special representative for Ukraine’s economic recovery, said at the Davos forum that the U.S. and Group of Seven allies are still looking for an adequate legal framework to pursue the plan.
“Get all the lawyers and all the various governments and all the parties really to come together to sort that through,” she said. “It’s hard, it’s complicated, it’s difficult, and we need to work.”
Administration officials caution that even if a legal way can be found to transfer the frozen dollars to Ukraine, the war-torn nation has immediate needs for funds that must be met by other means since U.S. assistance to Ukraine’s military has ground to a halt.
Bipartisan legislation circulating in Washington called the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act would use assets confiscated from the Russian Central Bank and other sovereign assets for Ukraine.
Sergey Aleksashenko, a former Russian Central Banker who is now a member of the Russian Antiwar Committee with other dissidents, said that while he strongly believes Russia should be forced to compensate Ukraine, “I do not believe that there is any way to confiscate assets of the Russian Central Bank without a court deciding on the matter.” “Because if there is no legal basis to confiscate Russian assets, and if it is done by the decision of the administration, that means that there is no rule of law in the U.S. and there is no protection of private property.”
He said an administrative decision to confiscate Russia’s assets could prompt nations like China — the biggest holder of U.S. Treasuries — to determine that it is not safe to keep its reserves in U.S. dollars.