US, Europe eye possible seizure of Russian assets
If viable, over $300b could aid Ukraine recovery
The Biden administration is quietly signaling new support for seizing more than $300 billion in Russian central bank assets stashed in Western nations and has begun urgent discussions with allies about using the funds to aid Ukraine’s war effort at a moment when financial support is waning, according to senior American and European officials.
Until recently, Treasury Secretary Janet Yellen had argued that without action by Congress, seizing the funds was “not something that is legally permissible in the United States.” There has also been concern among some top US officials that nations around the world would hesitate to keep their funds at the New York Federal Reserve, or in dollars, if the United States established a precedent for seizing the money.
But the administration, in coordination with the Group of 7 industrial nations, has begun taking another look at whether it can use its existing authorities or if it should seek congressional action to use the funds. Support for such legislation has been building in Congress, giving the Biden administration optimism that it could be granted the necessary authority.
The talks among finance ministers, central bankers, diplomats, and lawyers have intensified in recent weeks, officials said, with the Biden administration pressing Britain, France, Germany, Italy, Canada, and Japan to come up with a strategy by Feb. 24, the second anniversary of the invasion.
The more than $300 billion of Russian assets under discussion have already been out of Moscow’s control for more than a year. After the invasion of Ukraine, the United States, along with Europe and Japan, used sanctions to freeze the assets, denying Russia access to its international reserves.
But seizing the assets would take matters a significant step further and require careful legal consideration.
President Biden has not yet signed off on the strategy, and many of the details remain under heated discussion. Policy makers must determine if the money will be channeled directly to Ukraine or used to its benefit in other ways.
They are also discussing what kinds of guardrails might be associated with the funds, such as whether the money could be used only for reconstruction and budgetary purposes to support Ukraine’s economy, or whether — like the funds Congress is debating — it could be spent directly on the military effort.
The discussions have taken on greater urgency since Congress failed to reach a deal to provide military aid before the end of the year. On Tuesday, lawmakers abandoned a lastditch effort amid a stalemate over Republicans’ demands that any aid be tied to a crackdown on migration across the US border with Mexico.
The Financial Times reported earlier that the Biden administration had come around to the view that seizing Russia’s assets was viable under international law.