(Washington) US Treasury Secretary Janet Yellen on Tuesday offered her strongest public support for the idea of liquidating about 300 billion in frozen assets of the Russian Central Bank and using them for the long-term reconstruction of Ukraine.
“It is necessary and urgent that our coalition find a way to unlock the value of these stranded assets to support Ukraine’s continued resistance and long-term reconstruction,” said Mr.me Yellen during a speech in Sao Paulo, Brazil, where foreign ministers and central bank governors from G20 member countries are meeting this week.
“I believe there are strong international legal, economic and moral arguments to move forward. This would be a decisive response to the unprecedented threat Russia poses to global stability,” she said.
The United States and its allies froze hundreds of billions in Russian assets abroad in retaliation for Moscow’s invasion of Ukraine. Those billions remain untapped as the war continues, now in its third year, while officials in several countries debate the legality of sending that money to Ukraine. More than two thirds of the Russian central bank’s locked-up funds are located within the European Union.
Using the money to help Ukraine “would make it clear that Russia cannot win by prolonging the war and would encourage it to come to the table to negotiate a just peace with Ukraine,” Mr.me Yellen.
The idea of using Russia’s frozen assets has gained traction recently as continued funding to Ukraine from allies becomes more uncertain and the U.S. Congress deadlocks over adding extra support. But there are tradeoffs to be made, as the weaponization of global finance could harm the U.S. dollar’s position as the world’s dominant currency.
Janet Yellen argued Tuesday that it was “extremely unlikely” that the use of frozen funds would harm the dollar’s position in the global economy. “Especially given the uniqueness of the situation in which Russia brazenly violates international norms. In reality, there are no alternatives to the dollar, the euro and the yen,” added Mr.me Yellen.
“We still believe that Russia must be responsible for the damage (caused to Ukraine) by exploring the possibility of using these frozen assets,” said John Kirby, President Joe Biden’s security spokesperson. national, Tuesday during a press briefing at the White House.
He argued he needed more legislative authority from Congress to spend the locked-in funds and gain support from coalition partners.
The 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. Leading lawmakers had tried to promote the measure as a way to help provide aid to Ukraine, but it has since failed.
Earlier this month, the European Union passed a law aimed at setting aside windfall profits generated by the Russian central bank’s asset freeze. “An action that I fully support,” said Mr.me Yellen.
Brazil began its presidency of the Group of 20 this month, with a meeting of finance ministers this week. Topics of discussion include poverty reduction, climate change and conflicts in the Gaza Strip and Ukraine. G20 leaders are expected to meet at a summit on November 18-19 in Rio.
With Josh Boak and Lisa Mascaro, Associated Press